ALGIERS (Reuters) – Algeria has gotten a boost from Europe’s efforts to stop getting its gas from Russia.
After Russia’s invasion of Ukraine drove up demand for its oil and gas, the government has more money to spend on social benefits and is taking a more assertive stance abroad. This is a change from the years when a mass protest movement led to a drop in wealth and political chaos.
President Abdulmadjid Tebboune said that public sector wages, pensions, and unemployment payments will likely go up. This is a return to the model of generous social spending that Algerians have been used to for a long time.
Read More: Walmart.com attracted people with more money who wanted to buy food.
The Ukraine war has made more European countries, like Spain, more dependent on North African gas. In response to more active efforts by its main rival, Morocco, to get their support on regional issues, the government has taken a stronger stance toward these countries.
A government adviser said, “The government is no longer under social and political pressure like it was in 2019 and 2020.”
“The mass protest called “Hirak” is over. “COVID-19 is under control, and money is coming in.”
The difference from the recent past is very clear.
From 2019 to 2020, there were large protests every week, which caused the army to force out the president, Abdelaziz Bouteflika, and other important people.
After oil prices fell in 2014, there was a big drop in energy revenues and foreign currency reserves. This led to big cuts in public spending, which could have led to more unrest.
Read More: Boeing, Northrop will join the White House-backed advanced manufacturing program.
Concerns were made worse by the fact that the energy sector was failing due to a lack of investment in oil and gas fields, a drop in exports, and a flood of talent from the state company Sonatrach, which has had an average of a new head every 20 months over the past few decades.
After Russia invaded Ukraine on February 24, oil and gas prices went up around the world, which helped to stabilise the situation, fill state coffers, and boost confidence.
Analysts say Algeria has no choice but to keep going with what could be hard reforms if it wants to protect its economy from future slumps in the energy market.
Tebboune has said he will do this and has taken steps to increase trade with some African countries, but the government’s efforts to open up one of the most closed economies in the world haven’t made much progress so far.
Read More: Australia’s highest court says that Google is not responsible for slander.
“Yes, revenues are up. But for the economy to work, it still needs reforms, “said a former member of the government.
CLOUT
The energy crisis in Europe has not only caused prices to go up, but it has also increased demand for gas supplies that won’t be affected by the war in Ukraine. This gives Algeria more power.
More than a quarter of the gas used in Spain and Italy comes from Algeria, and Sonatrach is the third-biggest exporter to Europe after Russia and Norway.
Sonatrach says that oil and gas sales will bring in $50 billion this year, compared to $34 billion last year and $20 billion in 2020. Official figures predict that exports of goods other than oil will reach $7 billion, which would be a record.
Rules that make it easier for foreigners to work in Algeria’s energy sector have helped bring in more money and start new projects.
Sonatrach announced in June that it had found something new at its biggest gas field, Hassi Rmel. The new find added 100 billion to 340 billion cubic metres of gas condensate to the reserves, and from November on, an extra 10 million cubic metres of gas a day is expected to be produced.
Read More: Scholz put 100 banks, 1,000 suspects on the spot.
In the meantime, a new deal with Italy to supply a lot more gas may remind European countries of the benefits of being friends with Algeria.
This year, Spain, which gets a lot of its gas from Algeria, switched to supporting Morocco on the issue of Western Sahara. This is a territory that Morocco claims as its own, but Algeria supports an independence movement there.
Because of this, Algeria pulled out its ambassador and stopped some trade. Even though it has made it clear that it will stick to the terms of its gas supply contract, it doesn’t look like it’s in the mood to be generous when scheduled talks about prices come up.
“Algeria has definitely benefited from the gas card. It is courted, and European countries contact the authorities every day to talk about possible sales, “said an Algerian energy official who had just retired.
REVENUE
Even though higher energy demand has given Algeria more diplomatic power, the country is likely to keep focusing on getting as much money as it can from higher prices to calm down a growingly angry population.
“I’m happy to get 13,000 dinars a month,” said Mouna Belgacem, a 24-year-old graduate who has been looking for work for three years and is one of about a million Algerians getting unemployment benefits.
Tebboune said this month, “As long as there are more taxes collected this year, I promise to raise wages and unemployment benefits.” He also said that Algeria was working hard to “restore dignity.”
Next year, both state benefits and wages are likely to go up.
Algeria has relied for decades on a state-heavy economic model that is easier to fund. It is not clear if this will hurt reforms that aim to increase jobs and wealth through the private sector.
Long-term, the government must know that economic problems could lead to unrest, even if they are strict about security.
Since protests died down during the pandemic, the leaders of the “Hirak” mass protest movement have been arrested more than once, but they haven’t been able to achieve their ultimate goals of getting rid of the ruling elite and getting the army out of politics.
Samir Belarbi is a well-known member of Hirak. He has been arrested twice and sent to prison for “violating territorial integrity” and “disseminating or holding publications that hurt national interests.”
He says that the movement won’t stop.
He said, “We must now find new ways to fight peacefully for free justice, a free press, an accountable government, and transparency.”
