Why Washington needs a friendlier approach to major gas producers

In September, a bipartisan group of United States officials called on the United States Secretary of State to impose sanctions on the People’s Democratic Republic of Algeria, saying a $7 billion arms deal with the Russia was violating the Countering American Adversaries Through Sanctions Act of 2017 (CAATSA).
The group’s action follows a similar move by Senator Marco Rubio, also in September. Why Algeria, and why now?
Algeria is a former French colony and a major oil and natural gas producer, exporting 85% of its gas to Europe. The country charts an independent course, does not meddle in local affairs and maintains close ties with Russia and China.
Algeria harshly criticizes Israel, opposed the US invasion of Iraq in 2003 and the NATO intervention in Libya in 2011, denounced the Abraham Accords, which recognized Morocco’s claim neighbor on Western Sahara, and maintains relations with the Assad government in Syria.
Algeria fought two wars of independence: the 1954-1962 war against the French colonizers and the 1991-2002 war against the Islamists, led by the Armed Islamic Group.
According to the US Congressional Research Service, “Algeria has the 11th and 16th largest proven reserves of natural gas and oil in the world, respectively, and was the 10th largest producer of natural gas in 2019. It is also estimated that she has the world. 3rd largest recoverable shale gas reserves.
Algeria is Africa’s fourth largest economy with a GDP of $167.98 billion in 2021. Oil and gas revenues increased by 70% in the first half of 2022, and energy revenues are expected to reach $50 billion. here the end of the year.
The World Bank reported that the Algerian economy “grew 3.9% year-on-year in the first nine months of 2021, after contracting 5.5% in 2020”, largely due to the increase in European gas demand.
Hydrocarbons represent 95% of export earnings and about 40% of government revenue.
State-owned enterprises are said to represent more than half of the formal economy and hold back growth, but the private sector hopes that the government will stay the course on reforms aimed at attracting foreign direct investment (FDI) in the non-energy sector, and not does not. t decline due to the increase in hydrocarbon revenues.
The government has a surge as Algeria ranks 157th out of 190 in the World Bank’s latest Ease of Doing Business rankings, and it will be tough moving forward as it recovers from the pandemic
The plan to attract FDI to develop the non-energy sector is needed to address rising unemployment and a dangerously high youth unemployment rate of almost 32%.
The plan eliminates the “51/49” requirement for Algerian majority ownership in new companies, although it remains for “strategic sectors”, namely energy, mining, defence, transport infrastructure and the manufacture of pharmaceuticals.
The bottom line is that the government does not try to “buy social peace” via social security payments while oil and gas prices are high, because prices will eventually go down and young people will be angry without employment could prevent the government from having temporary options and hopefully force a new government. in a non-violent way.
Algeria’s relations with the United States got off to a slow start in the 1960s, but were generally positive. In the 1950s, the Truman and Eisenhower administrations supported France in Algeria, but President Kennedy endorsed Algerian independence.
Algeria served as a mediator in the negotiations between the United States and Iran which resulted in the release of the 52 American hostages after 444 days of captivity. Algeria also offered support to the United States in the aftermath of 9/11 and cooperated in counterterrorism operations, even offering the United States the use of an airfield in the country – a major concession.
So why waved it around Algiers?
The American mentality of “you are either with us or with the terrorists” ignores past cooperation and positive relations. Washington is apparently unable to believe that any nation would prefer to look after its own interests first and sees any reluctance to place itself in America’s sway as siding with the enemy of the day.
For example, the Pentagon has failed to recruit Vietnam as a military ally against China, forgetting or choosing to ignore that Vietnam’s recent liberation struggles, first from France and then from America, could tilt the country against military alliances, especially with the guys he defeated.
More recently, Singapore’s foreign minister, speaking on behalf of ASEAN on the US and China, said, “We are not interested in dividing lines in Asia. Don’t force us to choose. We will refuse to choose.
Even friends close to Washington see the benefit of belonging to a forum independent of the Americans: the BRICS group (Brazil-Russia-India-China-South Africa) could soon welcome Argentina and Iran, which have applied for membership, and Egypt, Saudi Arabia Saudi Arabia and NATO member Turkey have expressed interest. (Algeria has formally applied to join the bloc.)
One observer noted that the BRICS could become “the global commodity alliance” with China as the manufacturing hub and India as the service hub.
So, who do members of the US Congress work for?
They may have a legitimate concern about the revenue Russia is getting from Algeria, although a $7 billion arms deal is nothing compared to the unlimited money Washington is handing over to Kyiv.
It could be that they are promoting American defense contractors to capture Algerian sales, although expecting Algiers to throw away all their Russian-supplied inventory is the same wishful thinking that decided the Vietnam would be an ally of the United States against neighboring China.
Algeria’s relations with Moscow date back to the 1950s when the Soviet Union provided assistance to Algeria in its war of independence, and in 1960 the Soviets were the first to recognize the Provisional Government of the Republic Algerian.
Algeria no doubt noted that the United States recently threatened to cut off Saudi Arabia, its biggest arms customer, when it disagreed with its tactics in Yemen. And in 2013, Washington slowed the delivery of helicopters to the Egyptian military government that overthrew the Muslim Brotherhood government led by Mohamed Morsi.
So they must be thinking of El Mouradia Palace, if that’s how Americans treat their friends…
American politicians may think they are defending Israel, even though Algerian advocacy for the Palestinian cause is not new to Jerusalem.
At the recent Arab League summit, hosted by Algeria and the first since Israel normalized relations with several league members, Algeria brokered a reconciliation deal between rival Palestinian factions Fatah and Hamas.
The reconciliation may not last and Algeria will not offer material support, ie weapons, to the Palestinian fighters. It may therefore be an exercise in virtue signaling to the eventual winner of the race then underway for control of the government in Jerusalem.
Hopefully cool heads will prevail and that Washington will not alienate a country with which the European Union seeks a “long-term strategic partnership” for natural gas and electricity. And France is seeking to repair relations through economic cooperation, although China is now Algeria’s biggest trading partner.

By: James Durso
Durso reports for oilprice.com.

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