Russia cannot get mutuality from Algeria

One-Sided Cooperation

// Russia cannot get mutuality from Algeria, Dec. 13, 2007

Russian companies encounter more and more difficulties in Algeria, a country which was until recently regarded as Moscow’s key partner in Africa. Sonatrach oil and gas company declared that it stops cooperation with Gazprom, while Algeria’s authorities suspended weapons supply from Russia, although it had already been agreed upon. Russia-Algeria relations cooled down while new French President Nicolas Sarkozy became more active in the African region. Russia lays its last hopes on the upcoming summit: Algerian President Abdelaziz Bouteflika scheduled to visit Moscow in January, as Kommersant learned. So, he is to explain to the Kremlin what caused his country’s unexpected U-turn.

Natural Gas

Earlier this week, The Wall Street Journal reported with reference to Sonatrach head Mohamed Meziane that “the cooperation pact between the state gas companies of Algeria and Russia, signed in August 2006, expired a couple of months ago”. The pact provided legal support for projects of hydrocarbon and liquefied gas production.

Two sources in Russia confirmed that the agreement expired in August. The first source, a Gazprom manager, said: “We sent several letters offering to carry on our cooperation, and have received no answer yet, — neither affirmative, nor negative. So, we regard the agreement as prolonged.” The source expressed indignation with the fact that Algeria has not yet provided any official notice, while ‘loud statements are periodically thrown in press”. The cooperation was just about to settle when the situation changed drastically, the source said. The parties created a working group and held its first session, where Algerians chose four out of eight projects proposed by Gazprom for implementation in Russia, and Russians said they are interested in Algeria. However, the working group did not even get enough time to write a report: Sonatrach cut off negotiations.

The Algerian company may be waiting for the decision concerning one of the discussed projects. Sonatrach wanted to have a share in the project of building a gas liquefying factory by Baltik LNG. Gazprom has not answered that inquiry so far, because it has not approved the project yet. Gazprom CEOs several times returned the project for revision, because of economic efficiency risks. The document will be once again discussed on December 19. If it is approved, Sonatrach will get a chance to become a partner in building the gas liquefying factory, said the Gazprom source off-the-record.

Besides, Russia and Algeria were trying just a while ago to present a unified position in the international energy policy. For instance, Algeria’s authorities supported in 2006 Russia’s suggestion on creating a ‘natural gas OPEC’.

The Sonatrach head’s strange statement was delivered soon after French President Nicolas Sarkozy honored Algeria with a state visit. Sarkozy confessed he had signed contracts worth over $7.3 billion in total with his Algerian counterpart. First of all, these are the gas cooperation agreements. For instance, Sonatrach and Gaz de France signed a contract for gas supplies to France till 2019.

Algeria is the third largest supplier of natural gas to Europe, after Russia and Norway. Algerian gas comes via pipelines to the markets of France, Spain, Italy, and Portugal. Liquefied natural gas can be transported in tankers to Great Britain, Turkey, Greece, and the United States. Algeria plans to increase the total gas export up to 85 billion cubic meters a year by 2010, from the current 62 billion cubic meters, by means of building two gas pipelines to Spain and Italy. These pipelines will allow expanding the EU export capacity by 50 percent in the next three-five years.


Russia and Algeria have similar disagreement in their military equipment cooperation. Back in March 2006, when Russian President Vladimir Putin visited Algeria, the two parties signed a package of contracts worth around $8 billion in total. For instance, it included 28 Su-30MKI(A) fighter jets, 28 single-pilot MiG-29SMT planes, 6 two-pilot MiG-29UB planes, 16 Yak-130 operational trainers, four S-300PMU-2 air defense missile systems, 38 Armor-S1 anti-aircraft missile systems, 185 T-90S tanks, 216 Kornet-E missile launchers, 8 Kransopol precision weapon systems. Besides, there was concluded an agreement on re-equipping 400 BMP-1 which had been purchased earlier. In June 2006, they also signed a contract for building two Project 636 diesel-electric submarines at Admiralty Dockyard in St. Petersburg. In return, Russia completely wrote off the entire foreign debt of Algeria to the former USSR worth $ 4.7 billion.

However, Algeria soon afterwards stopped financing a number of signed contracts. Thus, after the first supply of MiG fighter jets arrived in late 2006, Algeria stopped buying them. A source in Russia’s Federal Service for Military Equipment Cooperation (FSMEC) said the supply of more MiG planes was initially suspended due to Algeria’s claims to the quality of two MiG-29UB operational trainers. “The FSMEC council discussed the claims to those MiG in March, working out the recommendations for eliminating the problems. The problems were removed,” the source said. However, Algeria continued setting unfounded claims to MiG jets, the FSMEC official added.

A source in MiG said the corporation received a prepayment and payments for the first supply of jets. “All planes from the first supply were accepted by the customer’s representatives in Russia. After they were transported to Algeria, the jets were accepted by Algeria’s air force. Then, the jets were put into service. Then, however, there appeared claims to their quality,” the source said. “That is when Algeria stopped financing the contracts. Consequently, the next stage of contract implementation has been suspended, while MiG and Russia in general are suffering losses”, the MiG source added. Elena Fedorova, MiG corporation’s spokesperson, said that “all jets supplied to Algeria met the requirements of the customer. There came no official claims from Algeria to MiG corporation,” she added.

Anyway, Algeria presented claims to the jets right after their first supply, and Algerian President Abdelaziz Bouteflika sent a corresponding letter to Russian President Vladimir Putin in August, said a source in the Russian president’s staff. In November, the Algeria export stalemate was discussed in the Military Equipment Cooperation Commission headed by Putin. “We prepared a letter in response, but we have not so far managed to pass it to the Algerian president, even via the ambassador,” said the FSMEC official. “Algeria does not respond to our inquiries. The talks on new contracts worth around $7 billion in total have been suspended as well,” he added.


Apparently, the scandals, one after another, are a consequence of the inner struggle in the Algerian government. Thus, Ruslan Pukhov, director of the Strategy and Technology Analysis Center, believes “there is a confrontation of interests between military and energy officials” in Algeria’s political elite. “In both groups, there are pro-Russia, pro-France, and pro-American groupings which fight for their partners’ interests. Those at least six ‘clans’ confront each other, winning in turns,” the expert said.

For instance, the clan confrontation manifested itself in the Algeria-France scandal shortly before Sarkozy’s visit. Ahead of the visit, Mohamed Cherif Abbas, Algeria’s minister for veterans’ affairs, suddenly said that Sarkozy owes his election as French president to the Jewish lobby, because he is a Jew by a quarter. The French president’s visit was nearly frustrated. Bouteflika himself had to interfere. He telephoned his French counterpart and said the minister’s statement is his personal opinion and does not reflect the position of Algeria’s authorities. Eventually, the so-called pro-France clan won.

By the way, giving more attention to Africa, and primarily to Algeria, was a key point in Sarkozy’s campaign program. During his visit to Algeria, he did everything he could to produce the best impression on the local elite. For instance, he termed France’s colonial regime as an “utmost injustice”.

France’s “courting” Algeria is definitely a part of the united European strategy. After the last-year talks on creating a ‘gas OPEC’, the EU is strongly interested in preventing any alliances between Russia and Algeria.

Meanwhile, the clan struggle in Algeria goes on. A source in Arab diplomatic sources said the relations between Russia and Algeria can be restored during Bouteflika’s visit to Moscow scheduled for January. During the last personal meeting of the two presidents, they managed to reach agreement on writing off Algeria’s debt and on new military equipment contracts. However, Bouteflika’s health has aggravated lately, and there is no certainty in Algeria that the visit will not be cancelled, the diplomat said.
Natalia Grib, Konstantin Lantratov, Mikhail Zygar

All the Article in Russian as of Dec. 13, 2007