Posted on August, 21, 2023 at 09:40 am
A few days after hosting the second Russia-Africa summit in Saint Petersburg at the end of July, Russian President Vladimir Putin called a cabinet meeting.
At that meeting, he said that Russia and four North African countries — Algeria, Egypt, Morocco and Tunisia — were working on a free trade area that would be integrated into the Eurasian Economic Union, an economic bloc comprising Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.
Russia’s trade with Africa is low and heavily concentrated in four countries: Egypt, Algeria, Morocco and fellow BRICS member South Africa. In 2022, Russian-African trade amounted to $18 billion, including $4.7 billion in food. That amount is dwarfed by the $282 billion recorded that year between China and African nations.
But there is potential for growth. For example, Morocco is Russia's third-largest trading partner in the region and trade between the two countries is on the rise. From 2020 to 2021, trade rose by 42% to reach $1.6 billion, Spanish outlet Atalayar reported. Bilateral trade has increased by 25% since 2021, a trend that Morocco’s Foreign Ministry says continued into the first months of 2023.
Russia's main exports to Morocco are chemicals, food, metals, technology, hydrocarbons and derivatives such as ammonia and potash, which are used in fertilizer. Morocco’s main exports to Russia are vegetables and fruit, such as lemons and tomatoes as well as fish.
Morocco has also been importing discounted diesel from Russia amid the Ukraine war. Diesel imported from Russia to Morocco rose from 66,000 tons in 2021 to 735,000 in 2022, Atalayar reported.
Sanctions by the European Union, other G7 countries and Australia over the war have blocked 300 billion euros ($326 billion) of Russian Central Bank reserves and 70% of assets in Russia's banking system are under sanctions, according to the European Commission. With the sanctions starting to bite, Russia is looking in other places to grow its economy.
Intissar Fakir, a senior fellow and director of the Middle East Institute's North Africa and Sahel program, says that it makes sense for the four North African countries to want closer Russian ties too.
“Morocco imports a lot of coal from Russia and Morocco still relies significantly on coal for electricity generation. They've managed to maintain those imports because that's excluded from the sanctions regime,” she told Al-Monitor, referring to the sanctions from the West imposed on Russia over its invasion of Ukraine in February 2022.
The benefits
Sabina Henneberg, a Soref fellow at the Washington Institute, said that Tunisia and Egypt in particular would benefit from a free trade area with Russia as it will allow them to import Russian grain and fertilizers more cheaply.
“Ideally this agreement would also help correct some of the trade imbalances between Russia and the region, since Russian export levels to these countries are much higher than Algerian/Tunisian/Egyptian exports to Russia,” she told Al-Monitor.
“The agreement is also reportedly meant to encompass a range of sectors including tourism — an important economic sector in Tunisia and Egypt and one that Algeria should be trying to grow.”
Jon Alterman, director of the Middle East Program at the Center for Strategic and International Studies, believes that a free trade agreement with Russia would not be a game changer for these African countries, but would provide “some marginal benefit.”
“Presumably, Russia’s isolation means it will offer goods on attractive terms, so that helps them. They are all major food importers, and Russia produces grain and other staples,” he told Al-Monitor.
“In addition, they buy themselves some understanding with Russia, whose foreign policy actions throughout the African continent affect their national interests."
Indeed, Russia has influence across Africa, and strengthening ties on the continent was part of the plan long before Moscow invaded its neighbor last year. The Kremlin views many African countries as places with high economic potential, and this has been evident given the expanding presence of the Wagner Group on the continent, for example. As well as being a mercenary group, Wagner Group also operates a business and is accused of having stakes in gold mines and exploiting other natural resources in Africa.
Russia also enjoys a decades-long relationship with Algeria and has had a strong presence in Libya since the fall of dictator Moammar Gadhafi in 2011.
Fakir noted that nobody has managed to get the North Africa economies to become more integrated and trade more with each other.
“Purely from a geopolitical perspective, if Russia manages to do that, then that's a huge bit of influence that they can achieve in North Africa,” she added.
Dionis Cenusa, a political risk analyst and visiting fellow at the Eastern Europe Studies Centre, said that free trade agreements help create interdependencies that can be exploited in the long term for geopolitical purposes.
"Russia is willing to compete for geopolitical influence in the EU's eastern neighborhood in North Africa after losing a big share of relevance in Eastern Europe," Cenusa told Al-Monitor.
He added that free trade could be attractive for North African countries that depend on imports of agri-food products.
“Food security is becoming an increasingly pressing issue both because of the implications of the war in Ukraine and because of the consequences of climate change,” he said. “Both are exploited by Russia even in the context of new free trade initiatives.”
The risks
There is a risk of the West sanctioning these countries for entering into a formal free trade arrangement with Russia, given its invasion of Ukraine. However, trade deals take a long time to materialize. But one positive, Fakir said, is that this one is being negotiated by a partner Algiers views as “a sympathetic actor.”
“Algeria, Morocco and Tunisia are eager for any kind of economic support partnership at this point,” she added, noting that Rabat and Tunis are keen to build stronger relationships with actors beyond the European Union. A recent example is Morocco and Israel signing the Abraham Accords and the latter recognizing Western Sahara as Moroccan territory in July, a move that irked Algeria, which supports the pro-independence Polisario Front.
“In many instances, with Morocco and Tunisia, you see a lot of frustration for their partnership with the EU and that it hasn’t borne out all of the benefits that they wanted or that they feel a certain sense of being overlooked or unappreciated,” Fakir said, adding that the free trade area with Russia could give them more leverage with their main allies like the European Union.
Russian influence across North Africa is varied. “It obviously has close ties already with Egypt and Algeria, but despite levels of trade with Morocco being relatively high compared to Russian trade elsewhere on the continent, it does not have the same kind of strategic partnership there that the US does,” Henneberg said.
Algeria also sees the United States as a key ally. Algeria’s foreign minister was in Washington last week trying to spur US investment in some of the same sectors where Russia is now seeking to deepen trade, such as energy, agriculture and pharmaceuticals.
“Signing an FTA agreement with Moscow might deter American investment," said Henneberg. "Still, another barrier is the deep hostility between Algeria and Morocco [over Western Sahara], which has been preventing North African countries for decades from deepening their economic integration. I can't see how those two countries would find sufficient benefit from forming an FTA with Russia to be willing to put aside their disagreements.”
Henneberg said that Russia would gain politically from the optics of working collectively with countries that have never been able to form an economic union among themselves.
“Moscow has also been trying to remind the world and the United States of its presence and relevance in Africa, so this would be another such reminder,” she said.
Fakir said the free trade area is unlikely to succeed, but "if anybody can do it, given the failure of everybody else, maybe Russia can.”
Source: Al-Monitor