An Algero-Russian Joint Commission

What prospects for a balanced economic cooperation ?

A meeting of the Algerian and Russian intergovernmental commission was held in Algiers on September 18 to 20. An Algero-Russian Joint Commission whilst meeting political convergences and acknowledging Russia’s as well as Algeria’s efforts to stabilize the price of oil, a call was launched for a widening of cooperation based on a closer and win-win sharing partnership.

The concerned sectors are particular areas of professional training, scientific and technical research, industry, transport, civil nuclear and of renewable energy.

At the International Fair of Algiers last May, in which Russia was the guest of honour, its delegation reported that three Russian companies were ready to invest in Algeria through a long term partnership in areas such as green energy, industrial and household waste treatment and management of water resources.

Concerning cooperation in renewable energy, the Russian Minister highlighted the interest of his country in the vast renewable energy programme launched by Algeria to develop a capacity of 4,500 megawatts by year 2030.

Three companies, Uralvagonzavod, PAO NPK. and ZAO Transmachholding are interested in projects with Algerian partners with the objective of the development of assembly of rolling plants, the creation of centres of services in the rail sector and the production of agricultural combine machines.

In addition, the Russian company KAMAZ PAO, the largest producer of trucks in Russia, is ready to make proposals for partnership in the field of industrial vehicles production assembly plants.

What about exchanges between Russia and Algeria, two competing economies in the field of oil and gas?
The laws of economics being immune to political slogans, these two countries are currently facing budgetary tensions characterized by a significant decline in their foreign exchange reserves and the devaluation of their respective currencies; although not wanting to be utopian as through not comparing comparable for Russia is nevertheless a great economic and military power.

Trade between Algeria and Russia, apart from military equipment and armaments, that was $ 175 million in 2002, reached $ 530 million in 2014. The balance was clearly not in favour of Algeria, especially when one realizes that $ 523 million of the $ 530 million represent products imported by Algeria with Russian suppliers. The remaining seven million Dollars, represents the small value of Algerian exports, including three million Dollars in food products destined for Russia.

We therefore are witnessing a timid progression since the volume of the two-way trade off any military equipment reached $ 885 million in 2015.

For 2016, according to official statistics cited by Algeria Press Service, we have a 65.3% increase, about $ 2 billion, of which 1.4 billion Dollars were military equipment. To rebalance trade in fields of industry with the Department of National Defense as I pointed out in an interview (1)  with a private television on September 20, 2017 is in need to be looked at and can thereby be developed.

There remains only $ 600 million outside of military equipment so it is down from 2015.

Thus Russian military imports are important, the Russians for their commercial balance would need perhaps to look into contributing towards a military industry in the context of import substitution in Algeria.

Exchanges between Russia and Algeria are not that substantial if compared to imports / exports of each Russia and Algeria. All commercial transactions between Algeria and Russia which, according to the Bank of Algeria, should be carried out in Rubble, would perhaps energize more exchange work?

But what would the public and private Algerian companies provide in return to Russia above all knowing that Algeria whose revenues are 97 / 98% directly and / or indirectly drawn from exports (50% off hydrocarbons from the derivatives of hydrocarbons), is currently going through budgetary tensions.

In short, the trade imbalance is obviously to the disadvantage of Algeria, but because of Russia’s own financial difficulties, substantial money inflows should not be expected in Algeria. It would instead be of a contribution in terms of technology transfer and managerial streaming that should be planned and put high on any future bilateral cooperation.

 

ademmebtoul@gmail.com

 

(1) – Interview with Professor Abderrahmane Mebtoul by Dzair TV on 20/09/2017  7:45 pm

 

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