A Mission Impossible10 Oct 2021 09:35
Gas prices as a recipe for peace
The disagreement between Algeria and Morocco is therefore unlikely to be resolved either by international mediation, bilateral dialogue, or domestic policy-making. Still, there is hope of diffusing tensions, which depend on broader international trends for its success.
Strangely enough, one of the most promising international trends that could lead to lower bilateral tension is the growing global energy crunch. The world is currently facing a growing shortage in energy supply which is sending gas, oil and coal prices soaring. Gas in particular is in high demand as Europe faces a cold winter with currently insufficient gas reserves.
If Algeria’s government spots this opportunity and rapidly increases domestic gas production, it could soon see its finances improve, especially in terms of its sizable yet depleting foreign currency reserves. With more financial resources at hand, Algeria’s government can repeat its strategy of providing subsidies, grants and tax cuts to appease its disgruntled population.
The strategic use of increased hydrocarbon revenues can help raise Algerian living conditions, increase economic opportunities for Algerian youth and be used to diversify the economy away from its reliance on oil and gas sales.
With reduced domestic pressure on the government, Algiers could lower its artificial tension with Morocco, with the additional economic benefits that come from increased bilateral trade.
This could create a virtuous cycle where increased cooperation leads to better living conditions and less pressure on the presidential palace in Algiers. Without the need for a foreign boogeyman, there is no practical need for Algeria to continue raising bilateral tensions.
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