Ten-month trade boycott
The long-running dispute over Spain’s exports to Algeria continues to shape regional commerce with no clear resolution in sight. The diplomatic rift between Algeria and Madrid over Western Sahara has depressed trade between the two nations and hit Spain’s balance of trade hard, impacting many Algerian companies that depend on Spanish markets.
On June 9, the Algerian government ordered an immediate freeze on automatic payments for goods imported from Spain, responding to Spain’s altered stance on Western Sahara and its endorsement of Morocco’s autonomy plan for the former colony. The result was a dramatic drop in Spain’s exports to Algeria, part of a broader trade boycott that has left the two-way economic relationship severely frayed.
From June onward, leadership in Algiers halted the blockades and attempts at international sales faced a harsh backdrop. Official figures show a steep decline, with export volumes skidding in the months that followed. By March, the most recent data available, Spain’s shipments to Algeria stood at roughly 206.4 million euros, a far cry from the levels seen before the diplomatic rupture. The broader trend tied to this period shows a relative collapse of goods moving from Spain to North Africa as the crisis deepened, while broader Spanish trade patterns remained under pressure.
The diplomatic fracture also marked a notable reduction in Spain’s overall exports to Algeria. The ten-month period recorded a sharp downturn in trade, contrasting previous years when Algeria had been a more substantial destination for Spanish goods. Yet there is a counterpoint to the story: amid a backdrop of national economic revival, some Spanish exports to Algeria did not vanish entirely and were later observed to increase modestly in certain months, reflecting the mixed fortunes of a country navigating a volatile regional market.
The Ministry of Industry, Trade and Tourism initiated direct discussions with the European Commission to design an aid package for firms most affected by the Madrid-Algiers crisis. At the same time, through ICEX, plans were set in motion to diversify the markets for companies whose sales rely heavily on Algeria, where a notable share of foreign business has historically flowed. These measures aim to cushion the blow for businesses that depend on North African demand and to reduce exposure to political shocks in the region.
Algeria, a longtime ally of the Polisario Front, hosts a Saharan diaspora across multiple refugee camps and is in competition with Morocco for regional influence. The shift in Spain’s stance toward the former colony skyrocketed into a diplomatic earthquake last June, prompting a reconfiguration of trade links and broader economic ties in the Maghreb. The government in Algiers suspended a long-standing Treaty of Friendship with Spain, a move tied to Spain’s congressional debate over Western Sahara and the new approach to the region. The following day, Algeria’s banking sector issued directives instructing local affiliates to halt commercial payments with Spanish partners, a move that magnified the trade downturn during the summer months and signaled a deeper rift between the two economies.
Historical data illustrate the impact. In 2021 Spain exported nearly 1.89 billion euros to Algeria. The year 2019 had seen higher figures, just before the pandemic era restrictions, with imports reaching around 2.906 billion euros. In 2022, the blockade was already in force and Spain’s sales to Algeria fell to about 1.021 billion euros. As a result, Spain’s standing shifted from Algeria’s second-largest foreign supplier in 2021 to a far smaller share in the latter half of the following year, underscoring a significant reordering of Algeria’s import sources.
Algerian gas purchases
While trade turmoil has hurt Spain’s exports to Algeria, imports into Spain from Algeria have not followed the same pattern. The Algerian government has continued to guarantee gas supplies to the Spanish market, a critical link for energy security and industrial activity. For many years, a significant portion of Algerian energy goods has flowed into Spain, and the blockade has not eroded that essential supply chain entirely. The narrative remains nuanced, with energy imports showing resilience even as broader trade flows shrink.
Overall, Spain’s energy imports from Algeria have shown resilience. Between June and March of the prior year, Spain’s imports rose to 6.077 billion euros, up 18.5 percent from 5.127 billion euros in the same period a year earlier. A key driver has been higher natural gas prices, which supported continued purchases despite the political tension and the broader downturn in non-energy trade.
Face and back: more sales to Morocco
The diplomatic strains with Algeria ran in parallel with a strengthening of Spain’s relations with Morocco after the reestablishment of bilateral ties in March of the previous year. While exports to Algeria faltered, shipments to Morocco rose sharply, a dynamic the government has framed as a counterbalance to the North African crisis. In Spain’s view, the situation highlights a broader shift in regional trade orientation rather than a simple decline in overall exports.
Spanish authorities report that Spain established itself as Morocco’s leading trading partner. Exports to Morocco reached a record high in 2022, totaling 11.748 billion euros, up 23.7 percent from the prior year. In the first quarter of the current year, sales to Morocco continued to grow, surpassing 3.25 billion euros. The bulk of these shipments move by air and pass through Tangier and Nador ports. Plans to open customs in Ceuta and Melilla have met resistance from Moroccan authorities, contributing to a cautious bilateral posture as the two sides navigate the evolving market landscape.
Overall, the situation demonstrates how geopolitical events outside the economic sphere can ripple through trade networks, creating new patterns and opportunities even as disputes persist in key markets.
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