The world is, according to most, losing the climate change battle, but Algeria losing no hope is gearing up and can lead the way to combat climate change. It is a Fight against global warming for the collective effort of Africa.
COP 27: Algeria’s actions in the Fight against global warming for the collective effort of Africa.
By Dr Abderrahmane MEBTOUL
The temperature record is likely to become the norm, and not the exception and scientists continue to warn about global warming and call for emergency measures. Aware of the dangers threatening our planet, Algeria will be present at COP 27, which will take place in Egypt from 6 to 18 November 2022. The President of the Republic, Abdelmadjid TEBBOUNE, recently presented an ambitious plan for the fight against global warming in Africa. The goal unanimously adopted by the Organization of African Union (OAU) proposed the establishment of the Support Fund for Measures to Combat the Negative Impacts of Climate Change. It had been endorsed by the Peace and Security Council (PSC), urging developed countries to fulfil their commitments to limit climate deterioration.
1.-The context of the holding of COP 27 in Egypt
This crucial meeting engages the world’s security where UN reports predict an unprecedented drought between 2025 and 2030, with fires, a shortage of fresh water and, therefore, a food crisis. It is in an alarming context, with the last two years, 2021 and 2022, marked by extreme weather events such as mega-fires in the Amazon, California or Greece, drought in North Africa and Europe, continued deforestation in the Amazon, and floods in Pakistan. Fundamentally, if we fail to transition to a low-carbon world, it will threaten the integrity of the global economy.
Because the climate is a vast, interconnected system, any action in a specific area of the globe impacts the rest of the world. Since 1850, our planet has already warmed by an average of 1.1°C. According to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), global warming could reach 1.5°C to 4.4°C by 2100. IPCC experts say global warming should be contained to +1.5°C by 2100 to prevent our climate from spiralling away. This limitation will be out of reach unless immediate, rapid and massive reductions in greenhouse gas emissions are achieved through carbon neutrality by 2050. Global warming has several adverse effects that threaten global security. Global warming is having disastrous consequences on the planet. It leads to rising sea levels, changing the oceans, amplifying extreme weather events and causing water to evaporate, which changes rainfall patterns. Global warming threatens plants and animals as the growth cycles of wild and cultivated plants are altered. Global warming is also disrupting human living conditions and increasing health risks: heat waves, cyclones, floods, and droughts, facilitated the spread of diseases and disruption of the distribution of natural resources, their quantity and quality, and agricultural yields and fishing activities. Thus, government commitments would only achieve 20% of the necessary emission reductions by 2030. Achieving the goals would require an investment of up to $4 trillion annually over the next decade, with most of these investments directed to developing economies. Global warming is not a vision of the mind being a global threat, and the highest Algerian authorities have become aware, especially with, on the one hand, torrential rains and, on the other hand, fires more and more frequent with sometimes criminal acts. But it is a question of distinguishing short-term actions in the face of emergencies from medium- and long-term measures that exceed the means of a single country; the efforts must be collective.
2.- Algeria’s actions against global warming: the national climate plan 2020-2030
For Algeria, a semi-arid country, the significant impacts of climate change are fires destroying thousands of hectares of forests, sometimes with many victims, not to mention material damage – as in 2021 in Kabylia and 2022 in the east of the country. A shortage of water resources, the degradation of water quality, the intrusion of marine waters at aquifers and the deterioration of infrastructure are caused mainly by water tables flooding. Algeria has adopted an ambitious plan against global warming because it has experienced, over the last century, a temperature increase of 0.3 ° C per decade as well as a rainfall deficit of 15%, requiring another water policy not unique to Algeria, which can lead to wars in the world. Algeria has opted for seawater desalination units throughout the country, particularly on the coasts where more than 80% of the population is concentrated. In Algeria, there are losses of up to 30% due to old pipes, making investments urgent as well as in water recycling units, another policy for agriculture by encouraging dripping, for example. The Albian aquifer is the enormous groundwater table in the world, with about 50,000 billion cubic meters, straddling three countries, Algeria, Libya and Tunisia. 70% of the water table is in Algerian territory in the country’s southeast. A pipeline has been built between In Salah and Tamanrasset for its supply, and a reasonable policy without breaking the ecosystem (these aquifers are non-renewable) can boost agriculture. Algeria is committed to the fight against climate change. In 2015, it ratified the Paris Climate Agreement (COP 21). Long before, in June 1992, Algeria signed the United Nations Framework Convention on Climate Change (UNFCCC) and ratified it in June 1993, having participated in the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 25), which took place in Madrid (2-13 December 2019). The Green Economy Recovery Plan aims to encourage recycling and promote green processing industries by establishing tax incentives for industrial companies that commit to reducing the emission of gases and chemical waste. In the field of gas flaring, efforts have made it possible to reduce gas flaring by 500 million m³ during 2020-2021. Sonatrach Oil and Gas Group has signed the Zero Routine Flaring by 2030 initiative, launched in 2015 by the Secretary-General of the United Nations and the President of the World Bank Group, to end routine flaring by 2030. Recently, Algeria has set up a National Climate Plan 2020-2030 covering 155 projects to reduce greenhouse gas emissions, adapt to the negative impacts of climate change, and support climate governance. It has committed to reducing its greenhouse gas emissions by 7%, a rate that could rise to 22% by 2030 if it can receive support for significant projects to adapt to climate change. Algeria has adopted a program to convert vehicles to LPG while creating national structures to implement strategies for producing clean energy. It includes green hydrogen, and the revival of the Green Dam project with a view to its expansion to an area of 4.7 million hectares in the coming years is part of this strategy to fight against global warming.
3.- Algeria’s solidarity potential
But it is mainly thanks to its great solar potential (3000 hours) that Algeria is in an excellent position to produce electricity. Having an ambitious program for renewable energies to combine thermal for export and photovoltaic solar panels for the domestic market. In mid-July 2011, Algeria took delivery of the hybrid power plant at Hassi R’mel, with a total capacity of 150 MW, including 30 MW from the combination of gas and solar. This is an exciting experience. Combining 20% gas, cleaner than coal and oil, and 80% solar seems essential to reduce costs and master the technology. The Algerian program consists of installing a renewable power of nearly 22,000 MW by 2030/2035, of which 12,000 MW will be dedicated to covering national electricity demand and 10,000 MW for export. According to the Ministry of Energy, in 2030, the goal is to produce 40% of its electricity needs from renewable energies. The amount of public investment devoted by Algeria to the realization of its renewable energy development program by 2030 was initially set (between 2019/2020) at 60 billion dollars, requiring a national and international public-private partnership. Recently, the delegation led by the European Commissioner for Energy, visiting Algiers, committed to promoting investment in renewable energies and green hydrogen, the power of the future 2036/2040; this segment, in partnership with Algeria through interconnections, there is an opportunity to export to Europe. But other partnerships are possible, especially with China investing in these niches.
In conclusion, the irony of history, according to a recent UN 2022 report, in its worst projection, a warming of the temperature of the planet beyond 4 ° C under the title “threat to the Nile”, one of its jewels is threatened with disappearance where with the rise in sea level caused by global warming,
“The sea will rise by one meter, consequently engulfing a third of the very fertile land of the Nile Delta and historic cities; the coastal city of Alexandria could be underwater by 2050.” It also threatens all coasts of the world, including the Algerian coast. Peace in this region is essential for calmly addressing the strategic subject of global warming and, therefore, the irreversible energy transition that will change the world’s energy and economic power between 2025/2030/2040. However, with the war in Ukraine and the energy crisis, many countries have come to fall back on fossil fuels massively. Like most developing countries, Algeria is caught because air pollution is not their responsibility. the main culprits are the developed countries, China and Russia, and their commitments still need to be fulfilled under the second period of the Kyoto Protocol. It is the responsibility which lies primarily with the developed countries, significant polluters, with a catastrophic impact on developing countries, particularly in Africa where the commitments of COP 21 of the aid of 100 billion dollars have been very partially implemented. And the significant problem to be solved, a complicated equation, is to reconcile the legitimate development aspiration and the fight against global warming presupposing progressive adaptation strategies with the help of developed countries to achieve this transition. Let us hope this umpteenth meeting will propose concrete solutions to global warming.
Dr Abderrahmane MEBTOUL, University Professor, International Expert Doctor of State 1974
Director of Studies Ministry of Industry and Energy 1974/1979-1990/1995-2000/2006-2013/2015
Chairman of the Energy Transition Commission of 5+5+ Germany in June 2019
Conditions for boosting the privatisation process via the Algiers Stock Exchange are reviewed by University professor and international expert, Dr Abderrahmane MEBTOUL.
The aims of the privatisation, whether partial or total of the Algerian economy do not come to be questioned. The process is a must, however, it needs to be addressed as a matter of urgency. Proposals of strategies are made, notably through my experience as Chairman of the National Council of Privatizations between 1996/1999 complemented by numerous tours in the USA, helping to formulate the conditions for the success of the privatisation process via the Algiers Stock Exchange, to imply clarity in the objectives and means of implementation.
The Algerian Stock market in Algeria. (Photo by Monique Jaques/Corbis via Getty Images)
The urgency of a strategic vision
At a time of the coronavirus pandemic and the world going through new socio-economic changes in technological and organisational models including shock waves that according to the IMF, the World Bank, and the OECD, global growth will not be felt before the end of 2021. Furthermore, subject to the control of the epidemic, all domestic companies using the State’s handouts for their survival and all of the state-owned enterprises suffer from a structural deficit. Indebted to banks, some whose production techniques, are obsolete and do not meet new technologies and international standards, it is mentioned in this particular context to address the large budget deficit. The observation is the lack of dynamism of the public sector, the consolidation supported by the public treasury having far exceeded 100 billion dollars at constant prices between 2000/2020. The cost of the numerous restructurings between 1980/1999 and the ensuing remediation period of 2000/2020, resulted in more than 95% of the domestic companies returned to their inception status. Whereas with this, capital-money, it would have been more sensible to create a whole new and performing economic fabric. These are only announcements because, being an eminently political process, any decision on such a sensitive and complicated subject must first have the approval of the Council of Ministers certainly after consultation with the Security Council because it commits national security. Privatisation should not be confused with complementary de-monopolisation, both eminently political, moving towards the disengagement of the State from the economic sphere so that it devotes itself to its role as a strategic regulator in a market economy. Privatisation is a transfer of ownership from existing units to the private sector, and de-monopolisation is about fostering new private investment. The objective of de-monopolisation and privatisation must reinforce the systemic transformation of the transition from an administered economy to a competitive market economy. A legal text is not enough (this is only a means) and becomes a decoy if there are no coherent objectives clearly defined with pragmatism and a return to trust.
Privatisation can only be successful if it is part of a coherent and visible global socio-economic policy and if it is accompanied by a competitive universal and sustained dialogue between the social partners. It should be aimed at putting an end to perpetual legal instability. The renovation of the Ministry of Finance through digitisation of all systems of taxation, banks, land and customs duties would surely put an end to the central and local bureaucracy that as a significant constraint of an administered economy would be best be accompanied by the overhaul of the socio-political system. Also, the decentralisation around large four to five regional poles, not deconcentration would help.
Moreover, the impacts of all trade agreements between Algeria and the European Union, Africa and the Arab world, as well as all international ones would be of a win-win type only if Algeria has public or private companies that are competitive in terms of cost/quality. In any case, all of these agreements have domestically economic, social and political implications.
The four conditions for boosting the privatisation process
Are our managers aware that there is a global privatisation market where competition is perennial, and the determining factor is a demand for goodwill and not just supply? The success of this process to prevent certain predators from being interested only in the real estate of these companies and not in the production tool involving five conditions?
The first condition, its impact on the reduction of the budget deficit where according to the Finance Law of 2021 more than $21.75 billion in 2021, against the 2020 close of $18.60 billion and an overall projected treasury deficit of $28.26 billion, artificially, which is in principle filled by higher production and domestic productivity; to boost non-hydrocarbon exports and contribute to the establishment of a competitive market economy far from any monopoly, whether public or private.
The State, as a regulator and guarantor of social cohesion, especially at a time of budgetary and tensions domestic and at our borders should enforce the contract between employers and employees so that the logic of profit does not undermine the dignity of workers. Nevertheless, never forget that the most incredible moral devaluation in any society is being unemployed or assisted. The important thing is not to work in the national, international or state-private sector, the critical thing for our children is to find a sustainable job within the framework of social protection.
The second condition was a good preparation of a company X for privatisation, assuming transparent communication, as some executives and workers had heard the news in the press, which increased social tensions. Transparency is a fundamental condition for the acceptance of both the population and workers in the spirit of reforms linked to profound democratisation of society. The takeover of companies for executives and workers requires the creation of a risk bank to accompany them because they possess the technological, organisational and commercial know-how a hardcore of skills must constitute the basis of any reliable unit.
The third condition will be to avoid filialisations that were not operating in the past—sticking with bureaucratic power, being the basis for the success of both the partial opening of capital and total privatisation, the wealth in the accounts being often undefining. Lack of an updated land registry poses the problem of the non-existence of reliable title deeds without which no transfer of ownership can be carried out. As there is an urgent need to have transparent real-time accountings of public, private companies, that meet international standards, all measures will be ineffective especially for stock market valuation the actual sale price varies from time to time.
The fourth condition, time overlap of different institutions between selection, evaluations, tender notices, transfer to the stakeholders, then to the Government for the issuance of the final title of ownership would best be not arduous. It may discourage any takeover because mobile capital is invested only where economic and political obstacles are minimal. In this context, it is imperative that long bureaucratic circuits avoid a clearly defined synchronisation and that the current conflicting legal texts should be reviewed, which can lead to endless conflicts, hence the urgent need for their harmonisation with international law. Empowerment will need to be specified where it is necessary to determine who has it to request the undertaking of a privatisation operation. It is vital to prepare the transaction, to organise the selection of the purchaser, to authorise the conclusion of the transaction, to sign the relevant agreements and finally, to ensure that they are carried out correctly.
The four conditions for boosting the Algiers Stock Exchange
In lethargy since its inception, the ASE was built up like a stadium without players through administrative injunctions, like all the loss-making state-owned enterprises.
However, the revitalisation of the stock market implies three conditions.
First, the lifting of environmental constraints gives bureaucratic obstacles that cannot be a reliable purse without competition, avoiding legal instability referring to the rule of law.
Second, a stock exchange must be based on a renovated banking system. However, the Algerian financial system for decades has been the place par excellence for the distribution of the hydrocarbon rent and therefore a considerable challenge of power, and therefore the revitalisation of the stock market necessarily requires the overhaul of the financial system. Indeed, despite the number of private operators, we have a public economy with managed management, all activities whatever their nature feeding on budget flows, i.e. the very essence of financing is linked to the actual or supposed capacity of treasure. It can be considered that the banks in Algeria operate not from local market savings but by the recurrent advances from the Central Bank of Algeria that is refinanced by the public treasury in the form of reorganisation not only for the recent period but having to count the costs of restructuring between 1980/1990. This transformation is not in the scope of the company. However, it moves into the institutional field (distribution of the annuity hydrocarbons), and in this relationship, the Algerian financial system is passive. Bread 90% of these companies its returned to the starting box showing that it is not a question of capital money, real wealth can only assume the transformation of currency stock into capital stock, and there is the whole development problem.
Thirdly, there can be no stock exchange without the resolution of all deeds circulating shares or bonds. The urgency of the integration of the informal sphere cannot be underestimated. Issuing title deeds is vital as there can be no reliable stock exchange without clear and transparent accounting modelled on international standards by generalising audits and analytical accounting in order to determine the cost centres for shareholders. This raises the problem of adapting a socio-educational system, which does not exist as financial engineering. The balance-of-payments services item with foreign exchange outflows between 2010/2019 is between $9/11 billion per year, in addition to foreign exchange outflows from import goods. There are a few rare exceptions; it turns out that accounts Algerian public and private companies from the most important to the simplest in the State that would not pass the most basic audits due diligence. For example, SONATRACH needs new strategic management like the majority of Algerian companies, with clear accounts in order to determine costs by sections, where we are witnessing the opacity of its management which is limited to delivering consolidated global accounts covering the essentials without distinguishing whether the surplus accumulated is due to exogenous factors, international prices or good internal management. As a primer, we propose partial privatisation of a few profitable national champions to initiate the movement to enable the establishment of a stock market index consisting of volume and quality, acting as incubators of companies eligible for the stock exchange and attracting investors looking for financing and know-how.
The fourth condition is monetary stability and legal and monetary stability and the resolution of bad debts and debts, with state-owned banks crumbling under the weight of bad debts and the majority of state-owned enterprises in structural deficits, especially for the currency-denominated part involving transparent mechanisms in the event of exchange rate fluctuations. The simultaneous depreciation of the dinar against the Dollar, the main currency of exchange, does not respond to real values because their quotations are inversely proportional, has the essential aim of artificially filling the budget deficit, akin to an indirect tax. Indeed, on October 15, 2020, on the Stock Exchange, the Dollar is quoted at 1.2144 Euro, against 1.16 in June 2020, a depreciation of 5%, allowing a rise in the price of Brent by 5%. In reference to the June 2020 quote, the price of Brent quoted on December 15 at $50 would be $47.5 at constant prices, thus not having experienced a real increase in terms of purchasing power parity against the Euro and thus an increase in the import bill in euros in the same proportions. Thus, the current Government projecting for 2023 about 185 Dinar one Euro and 156 Dinars per Dollar and taking a 50% deviation from the parallel market we will have about 300 Dinars a minimum Euro in 2023 subject to the control of inflation otherwise the gap would be larger. They were compared to more than 200 Dinars in mid-December 2020 with a projection of 240/250 Euros at the end of 2021 in as to open borders and the inevitable increase in interest rates of the banks’ priorities to avoid their bankruptcies. In this case, it is illusory both to attract the savings of emigration via the banks that one wants to install with foreign exchange costs, as to capture the money capital via the informal sphere via Islamic finance. How do you want a trader with this monetary instability to appear on the stock exchange knowing that the value of the dinar will fall by at least 30% if not more in two to three years, depreciating its assets?.
In summary
The partial or total privatisation can be the process, with economic, social and political recompositions of power for a controlled liberalisation in order to avoid the squandering of public assets for the benefit of speculators interested mainly in real estate assets. It involves the transparency of specific objectives, the removal of bureaucratic obstacles, land, banks, the informal sphere, taxation, legal and monetary stability, essential criteria for any national investor.
International cooperation to combat trafficking and terrorism, factors in destabilizing the MENA region by University professor, international expert Dr Abderrahmane MEBTOUL is given on the occasion of U.S. Defense Secretary Mark Esper’s Maghreb tour in Tunis, Algiers and Rabat.
This visit is officially aimed at strengthening ties with these three North African countries to combat terrorist threats. This visit to Algiers follows that of the head of the US Africa Command (Africom) Army General Stephen Townsend. It is not an insignificant visit because the United States of America considers Algeria, through the actions of its armed forces and its various security services, as a critical player in the stability of the Mediterranean and African region.This is because the stakes in the MENA region foreshadow significant geopolitical and geoeconomic reconfigurations. This region has become a sensitive area with significant rivalries between Russia, China and Europe.
With recent geostrategic tensions, traffic has increased in particular with the conflicts in Iraq, Syria, Mali, Niger and Libya. Transnational crime refers to organized criminal networks and consequently to terrorism that benefits from the sale of illegal goods. These international illicit markets, anonymous and more complex than ever, generate billions of dollars each year. This threat is worrying, not only for Algeria but also for the world and especially Europe. In the Sahel, armed groups have increased their capacity for nuisance, diversified into terrorists, insurgents, criminals and militias with a convergence that unites these groups. The most troubling aspect of the connection seems to be how the illegal drug trade undermines efforts to pursue the political reforms and development needed to stem the radicalization and rise of terrorist groups in several already fragile African countries. There is a deep vulnerability of states in the region characterized by poor governance and strong population growth. Only the Sahel, which will see its population double in 25 years, and has more than 100 million inhabitants by 2020. This growth affects human security, especially food security in the region as a whole. This is compounded by inequalities that promote radicalization, due to a combination of factors related to the individual, his relationships, his community and his relationship to society. Nevertheless, there are economic issues, where the Sahel is a space with critical departmental resources. Hence the foreign interference that manipulates different actors in order to position themselves within this strategic corridor and to take control of wealth are numerous. Libya, a wealthy country with a population of no more than 7 million, is an example where different foreign actors clash in interposed groups. The Sahelian arc is rich in resources: after salt and gold, oil and gas, iron, phosphate, copper, tin and uranium are all riches feeding the lusts of powers wishing to ensure control. The drug trade, for example, has the potential to provide terrorist groups with recruits and sympathizers among impoverished, neglected and isolated farmers who can not only cultivate on behalf of traffickers but also popularize and strengthen anti-government movements. More recently, with the impact of the coronavirus epidemic, this situation of vulnerability is likely to increase. The world of tomorrow will never be the same again because of the geostrategic implications in the political, social, security and economic fields at the level of North Africa and Black Africa. In an interview given to the American Herald Tribune of 23 April 2020, the author said: “We Have Witnessed a Veritable Planetary Hecatomb and the World Will Never Be the Same Again.”
In the face of these complex geostrategic situations at the regional level, international coordination is needed, including Maghreb integration, a bridge between Europe and Africa thus contributing to shared prosperity for the Mediterranean and African region to reduce migration flows. (see two important works coordinated by Professor Abderrahmane Mebtoul and Dr Camille Sari (from the Sorbonne) were published between 2014/2015 at Paris Edition Harmattan “The Maghreb facing geostrategic issues” – volume 1-dealing of institutions and governance (480 pages) and Volume 2 of the economic strands in different aspects (500 pages) bringing together for the first time -36 international experts, military-political scientists, economists, lawyers, sociologists, historians, Algerian-Moroccan- Tunisian- Mauritanian and Libyan- European).
Faced with these new geostrategic challenges that are upsetting the planet, international terrorism takes advantage of the dysfunctions of state regulation and has at least five characteristics in common. First, on networks often established in large geographic areas where people, goods and money circulate. Second, command control and communication. Third, is their need to process large amounts of money, launder them and transfer them across countries and continents. Fourth, criminals and terrorists tend to have private armies, hence the need for training, camps and military equipment. Fifth, terrorists and criminals in the Sahel region share common characteristics: frequent clandestine operations seeking legitimacy in supporting populations with the use of durable guerrillas to control territory and populations; sixth, contempt for international norms, the rule of law, or the notion of human rights, and a desire to kill those who oppose them; seventh, these guerrillas also create specialized cells specializing in the use of the media and the Internet to disseminate their propaganda and their demands. Thus, we have different forms of transnational organized crime that is an ever-changing industry, adapts to markets and creates new forms of illicit trade that transcend cultural, social, linguistic and geographical boundaries, and knows no limits or rules.
The combination of these various elements in too complex patterns induces a climate of increasing insecurity conducive to the destabilization of the states of the region with different forms of trafficking numbering eight interdependent. First, the traffic of goods amplified for some countries that subsidize necessities such as Algeria, accentuated by distortions in exchange rates. Secondly, the “black” market for weapons and their ammunition, necessarily derived from the “white” market since each weapon is manufactured in a legal factory, is a theme that allows us to understand the wills of power of various geopolitical actors around the world. Arms trafficking is regulated by states that profit from it and the advantage of arms trafficking for terrorists is that they can both use it and make a profit. The best prevention remains a sales control, a contractual framework, i.e. define beforehand the use of weapons and the establishment of international conventions on the sale of automatic or non-automatic firearms. Thirdly, the rise of drug trafficking at the regional level has implications for all of North Africa and Europe where we can identify actors with geostrategic implications where drug traffickers create new national and regional markets to transport their products. In order to secure the transit of their goods, drug traffickers resort to the protection that terrorist groups and various dissents can provide, by their perfect knowledge of the terrain, thus contributing to their financing.
Moreover, according to some intelligence sources, if drug traffickers were a country, their GDP would rank them 20th in the world. Fourth, human trafficking is an international criminal activity in which men, women and children are subjected to sexual exploitation or exploitation through labour. Fifth,as we are currently seeing in the Mediterranean through migrant trafficking, which is an organized activity in which people are displaced around the world using criminal networks, many smugglers do not care whether migrants drown at sea, die of dehydration in a desert or suffocate in a container. Each year, this trade is valued at billions of dollars. Sixth, the trafficking of natural resources which includes the smuggling of raw materials such as diamonds and rare metals (often from conflict zones) and the sale of fraudulent drugs that are potentially lethal to consumers. Seventh, cybercrime, which is linked to the revolution in information systems, can destabilize an entire country militarily, security and economically, encompassing several areas, including increasingly exploiting the Internet to take private data, access bank accounts and sometimes fraudulently obtain strategic data for the country. Digital technology has transformed just about every aspect of our lives, including the notion of risk and crime, so that criminal activity is more effective, less risky, more cost-effective and more accessible than ever. Eighth, money laundering is a process in which money earned by a crime or an illegal act is washed away. It is a matter of hiding the origin of the money to use it after legally (investment, purchases). The multiple tax-havens, clearing companies (also Off Shore) allow hiding the origin of the money.
This different traffic linked to the importance of the informal sphere produces malfunctions of the state apparatuses, in fact, governance, the weight of bureaucracy that maintains diffuse relations with this sphere and exchange rate distortions, representing in Africa according to the latest ILO-2020 report – more than 75/80% of employment and more than 20 50% of gross domestic product (GDP) (Study of Professor Abderrahmane Mebtoul – French Institute of International Relations (IFRI) Paris December 2013- The informal sphere in Maghreb countries and its geostrategic impacts). The main determinants of informality can be summarized as follows. First, the weakness of formal employment is obvious. This is a factor that explains the evolution of the informal sector in both developed and developing countries. As a result, the supply of formal jobs in the labour market can no longer absorb all the demand as the labour force; particularly the unskilled labour force is growing at an accelerated rate. Second, when taxes are numerous and too high, businesses are encouraged to hide some of their income. Third, the weight of regulation or the complexity of the business environment discourages business registration. Where the institutional framework is not conducive to the creation of businesses in a formal way, entrepreneurs prefer to operate in the informal sector and avoid the burden of regulation. Fourth, the quality of public services provided by the government is an important determinant of the informal sector because it influences the choice of individuals. Individuals active in the informal sector cannot benefit from public services (protection from theft and crime, access to financing, protection of property rights). That is one of the drawbacks of this sector. Fifth, as a result of economic policy, the primacy of bureaucratic administrative management is required when transparent economic mechanisms refer to governance are required.
In short,Algeria’s security is at its borders; with Mali, 1376 km; with Libya 982 km; with Niger 956 km; with Tunisia 965 km as can be imagined not an easy task. It is because the reading of the threats and challenges facing the world and the region is based on the need to jointly develop a collective and effective response in a strategy on international terrorism, human trafficking and organized crime through drugs and money laundering. All safe for security has limitations that exist dialectical links between development and security. Also, the fight against terrorism implies, first of all, an internal development, linked to new governance of Africa, of regional sub-integrations where inter-African trade according to the UN only exceeds 16/17% in 2019, and to put an end to this inequality where a minority takes over a growing fraction of the national income giving birth to misery and therefore terrorism, referring to the morality of those running the show.
In the face of new global changes, what is the exploitation of phosphate and iron in Algeria? University professor, international expert Dr Abderrahmane MEBTOUL elaborates.
At the last Council of Ministers, debates turned to the recovery of iron and phosphate deposits appropriateness. This is not novelty; as a young advisor to the Minister and Industry and Energy between 1974/1977, we discussed such projects within the framework of many studies. Furthermore, since then, how have all these studies in both foreign exchange and Dinars with no conclusive results cost?
The commercialisation of both iron and raw phosphate and derivatives depends as much on the strategy of a few global firms as on internal strategic management. Other factors like the cost of operations as well as the growth of the world economy play an essential role here.
The case of phosphate– As much as for iron, or energy-intensive cement units, the essential input is natural gas having to make arbitrage between the transfer price on the international market and the transfer to the units to generate a high added value. So the cost price of a tonne of ammonia at 4 Dollars/mmBTU would be 114 Euros per tonne, and on the contrary at 7 Dollars, we will have 200 Euros per tonne with a decrease in the last ten years of 10/15% depending on the geographical area. The price of derivatives is wildly fluctuating the urea fertiliser having been quoted between July and September at about 260 Euros per tonne. The increase in the world’s population and the demand for food are a determining factor in the growth of the phosphate market. Competition in the global market is very intense and relatively integrated, with the presence of limited vital players who get a significant share of global revenues. Key speakers include Russia’s Eurochem Group AG and PJSC PhosAgro; Canadian Agrium Inc. and Potash Corp. of Saskatchewan Inc. Norwegian Yara International ASA; C.F. Industries Holdings Inc. and Mosaik Co.; India’s Coromandel International Ltd.; Moroccan giant OCP S.A. and Israel Chemicals Ltd. According to a U.S. geological survey on phosphate rock 2019, mining production (+ réserves) en 2018 thousand tonnes is distributed as U.S. réserves 27,000-production (1,000,000) – Algéria réserves 1,300- production (2,200,000); the Global Total réserves being 70,000 (70,000,000).
The price per tonne of raw phosphate fluctuates; April 2020 $72.50 per tonne, in March 71.88, in April $70.75, in May at $72.90, and in June/July 2020 $75,000 per tonne, having been rated in October 2019 at $77.50 for sheet metal, in January 2020 at $72.50 per tonne. According to the World Bank, the general and medium-term trend in phosphate prices remains downward, and crude phosphate would trade in 2020 at around US$80-85 per metric ton, DAP around US$377.5 per metric ton and TSP at nearly US$300 per metric ton. According to the global rating agency, phosphate rock prices remained on average at $100 per tonne (at no charge onboard) in 2019/2020 and prices per tonne of phosphate rock (at no charge onboard) remained at $110 in the long run. Thus, if Algeria exports three million tonnes of raw phosphate annually at an average price of $100, a very optimistic assumption about world prices, at constant prices 2020, for 30 million Tonnes, it would get three billion Dollars and less than 2.5 billion Dollars at current prices. It must be said that in this sector, the expenses are very high (depreciation and salary expenses in particular) a minimum of 40%, thus making the net profit to about 1.8 billion Dollars for a price of $100 and less than 1.4 billion dollars for a price of $70. In the event of an association with an international partner, the net profit remaining for Algeria would be slightly more than 900/700 million dollars for both scenarios. We are far from profits in the field of hydrocarbons. To increase net profit, it is, therefore, necessary to embark on highly capital-intensive processing units with massive investments and medium-term profitability with the export of noble products, in the E.U., fertiliser/urea sold at more than 350 Euros per tonne in 2014. It was rated on an annual average in 2017 at 270 Euros per tonne. In April 2018, it was at 260 Dollars and at the beginning of May 220 to 250 Dollars per metric ton. In general, prices are very volatile, assuming perfect knowledge of the international stock market in order to avoid large losses in the event of low forecasts. Also, for a sizeable exportable quantity, this requires for Algeria, hefty investments and profitability in the medium term not until 2023/2025 if the project is in operation in 2020. Moreover, for a sizeable exportable quantity, this requires a partnership with international firms.
The Case of Iron – For September 20, 2020, iron is priced at 90 Euros per tonne, stainless steel 1921 Euros per tonne, steel 4520 Euros per tonne, aluminium 1364 Euros per tonne, scrap 148 Euros per tonne, zinc 1817 Euros per tonne, copper 5289 Euros per tonne, lead 1509 Euros per tonne.
As proof, in April 2019, the price of stainless steel was at an average of 2,598 Euros per tonne, rose by 2.8% year-on-year with stabilisation in May 2020 to 2600 Euros per tonne, being in high demand on the world market, depending on its destination and its applications, classified in four categories. Aluminium was at 1,460 Euros per tonne, down 9.4% month-on-month and 20.9%. The price of lead was at $1,658 per tonne, down 4.4% on a month-on-month basis and 14.5% year-on-year. The price of zinc was at 1,903 Euros per tonne, stable over one month and down 35.1% year-on-year. Furthermore, in November 2019, the price of steel was at $5,400 per tonne, down 23.6% year-on-year, and in May 2020, 4,740 Euros due to the coronavirus outbreak. In April 2020, the price of iron stood at $85 per tonne, down 4.7% month-on-month and 9.6%. International agencies estimate the world’s iron reserves at between 2018/2019, 85,000 million tonnes (M.T.). Australia leads with 23,000 MT, followed by Russia 14,000 MT, Brazil 12,000 MT, China 7,200 MT, India 5,200 MT, United States 3,500 MT, Venezuela 2,400 MT, Ukraine 2,300 MT, Canada 2,300 MT and Sweden 2,200 MT, Algeria according to Algerian reserves data would be about 3000 Tonnes but with exploitable deposits, estimated between 1,500 and 2,000 MT. The main iron ore producing countries are Australia: 39.8% (with 879 MT)- Brazil: 19.8% (with 436 MT) – China: 8.6% (with 191 MT) – India: 7% (with 154 MT) – Russia: 4.6% (with 101 MT) – Ukraine: 3.3% (with 73 MT) – South Africa: 3,2% (with 69 MT) – Iran: 2.6% (with 57 T – Canada: 2.2% (with 49 MT) – United States: 2% (with 44 MT) – Sweden: 1.2% (with 27 MT) – Kazakhstan: 0.6% (with 13 MT) – Other countries: 5.1% (with 113 MT) (Source: Natural Resources Canada). Steel is a fundamental product to our way of life and is essential for economic growth, the 10 largest producing countries between 2017/2018 are: China: 831,728,000 Tonnes, Japan: 104,661,000 T, India: 101,455,000 T, United States: 81,612,000 T, Russia: 71,491,000 T , South Korea: 71,030 T, Germany: 43,297,000 T, Turkey: 37,524,000 T, Brazil: 34,365,000 T and Italy: 24,068,000 T. In April 2020, copper was $5,058 per tonne, down 21.4% year-on-year. Evolution has not fundamentally changed since 2018. At a favourable price of $100 per tonne crude iron, for export of 30 million tonnes, we will have gross revenue of $3 billion. However, with this amount and more than 50% of expenses (the operating costs are very high), we are left with a net of the remaining $1.5 billion. This amount is to be shared with the foreign partner that in case of 30 million T, would be less than 800 million Dollars. This is because the exploitation of Gara Djebilet’s iron will require large investments in power plants, transmission networks, rational use of water, distribution networks that are lacking because of the remoteness of the sources of supply while avoiding the deterioration of the environment because the units are very polluting. Therefore, as with phosphate, only the transformation into noble products can provide greater added value for export. Because of the oligopolistic structure of the mining industry, at the global level, the only solution, if we want to export these noble products, is a win-win partnership with the reputable firms that control the segments of the international market that will not accept the restrictive 49/51% rule with bureaucratic burdens, with decisions taking place in real-time at the international trade level.
It is a question of avoiding the mistakes of the past by serious evaluations in terms of profitability and without a solid partnership, it is futile to penetrate the global market let alone the mining sector controlled by some international firms.
In the case of gold mines, let us avoid the unfortunate experience, with a massive liability, with the Australian company, Gold Mining of Algeria (GMA) where reserves of 173 tons have not increased one iota since 2007. All this raises the problem of mastery of strategic management. Like this drift of car assembly where we have now seen that it was a set for currency transfer traffic, going to predictable bankruptcies, after having perceived considerable financial and fiscal benefits. Like this utopia of dozens of cement complexes where we are currently witnessing the underuse of production capacity, the risk of plants cooling if storage is long-lasting, would increase the costs. The situation would result in unusable products for construction, except for those with points of support in Africa through their subsidiaries; otherwise, it would be difficult for other units to export, where, contrary to some discourse not based on any serious market research, market shares are already taken with many complexes being realised at the level of the Mediterranean basin. For this case, new construction methods worldwide are being saved from concrete round, cement and energy and as in Germany, is to use concrete to build roads often returning cheaper than imported bitumen. Algeria needs a strategic vision in which industrial policy must fit, in order to adapt to the new global sectors driven by perpetual innovation. Let us avoid utopias: Algeria will continue for many years to depend on hydrocarbons, with other raw materials making just an average profit to invest in democratic institutions, education, digital and energy transition. No country in the world that has relied solely on raw materials has succeeded in its development. Since the world is a world and this proves true with the fourth global economic revolution 2020/2030/2040 the prosperity of different civilisations has always rested on good governance, work and theoretical and applied research, a country without its elite being like a soulless body.
At a time, when important issues are being raised and out of the ordinary tensions are taking place concerning gas fields, Algeria faces geostrategic gas tensions in the Mediterranean. It is, in particular, the tensions between Greece and Turkey, challenging it where its primary gas market is, in Europe, and whose hydrocarbons with derivatives provide 98% of foreign exchange revenues in 2019, where the price of gas disposal has fallen by more than 75% in 10 years and providing 33% of its SONATRACH’s revenues. Here is an analysis of options for this unprecedented east Mediterranean situation as seen from Algeria.
Between 2018/2019, according to the IEA we have the following distribution 33.1% of oil, 27.0% coal, 24.2% natural gas, 4.3% nuclear and 11.5% renewable energy (hydropower 6.5%, wind 2.2%, biomass and geothermal 1.0%, solar 1.1%, agrofuels 0.7%).
Natural gas pockets lie beneath the Earth’s surface and consist mainly of methane and other hydrocarbons. It is mainly used for electricity generation, heating and as cooking. Gas can also be used for air conditioning, lighting and as an alternative fuel for vehicles. It is considered one of the cleanest fossil fuels because it emits less carbon (about 50% less than coal) and other pollutants such as sulphur oxides and nitrogen. We have two types of natural gas on the market: natural gas and liquefied natural gas.
Natural gas is derived from fossil fuels and is made up of decomposing organic matter that has been released into the soil for millions of years and is routed through pipes. We have liquefied natural gas as far as it is a natural gas that has been changed to a liquid state so that it can be transported and stored more easily. Because natural gas deposits are often far removed from many consumers of this energy, transporting it in a gaseous state is risky and expensive.
Also and by cooling it, it is possible to transform it into liquid natural gas, There are two main markets on which the world’s natural gas is traded. The most important is the NYMEX or New York Mercantile Exchange located in the United States, and the second, the NBP or National Balancing Point of the International Petroleum Exchange located in London. There are other smaller markets such as the FTT in the Netherlands or The Zeebrugge in Belgium. Between 2018/2019, before the coronavirus outbreak, according to Cedigaz, demand increased, strengthening its place in the energy mix. In 2018, international LNG represented a provisionally estimated volume of 311 Mt, according to Cedigaz, up 8.5% from 2017. LNG now accounts for more than a third of gas trade, with growth in LNG imports concentrated in Northeast Asia (China and South Korea), where gas plays an increased role in electricity generation and heating. China contributes the most to the growth in global LNG demand, with more than 60% of the total increase in trade.
Proven world reserves on a total of 197.394 billion cubic meters of gas (data from 2018/2019) we have in descending order: Russia 47,800 billion cubic meters, Iran 33,500, Qatar 24,300, USA 8,714, Saudi Arabia 8,602, Turkmenistan 6061, Venezuela 5702, Nigeria 5,284, and China 5,194 and for Algeria between 2500 and 3000 according to the statement of the current Minister of Energy before his appointment and the communiqué of the Council of Ministers of 2014, the data of 4500 being those of BP of the years 2000. The top 10 countries producing natural gas in descending order are. Russia alone accounts for 20% of world natural gas production. It is also the largest exporter, second with the shale gas revolution becoming an exporter in Europe, the United States of America, followed by Canada (third place) and Qatar fourth, with Iran downgraded following US sanctions, followed by Norway, China, Saudi Arabia, and Algeria, which ranked ninth. These data should be interpreted with caution because thousands of deposits can be discovered, but not profitable according to financial standards depending on operating costs and the evolution of the international price itself depending on the demand and competition of substitutable energies As for some experts who speak of an OPEC gas market in the image of OPEC oil, it should be stressed that the gas market is not in this month of August 2020, a global market but a market segmented by geographical areas while the oil market is homogeneous, due to the preponderance of pipelines, being impossible to meet the same criteria, the solution being cooperation within the FPEG which consists of 11 member countries (5 in Africa (Algeria , Egypt, Equatorial Guinea, Libya, Nigeria) – 2 in the Middle East (Iran, Qatar); – 3 in South America (Bolivia, Trinidad and Tobago, Venezuela) and Russia, 9 non-member countries with observer status: Angola, Azerbaijan, the United Arab Emirates, Iraq, Kazakhstan, Malaysia, Norway, Oman and Peru, the United States, one of the world’s leading gas producers, are not part of the FPEG.. To one day reach a gas market that meets oil market standards (daily listing), the share of LNG would have to increase from 30% to more than 80%. Until then, because investments are hefty, everything will depend on the evolution between 2020/2030/2040, on-demand for LNG which will depend on the new global energy consumption model that is moving towards the digital and energy transition with an increase in the share of renewables, energy efficiency and between 2030/2040 hydrogen which risks degrading a large part of the transition energy.
What about the current tensions in the eastern Mediterranean regarding the energy sector which is not immune to OPEC’s action, but indirectly affecting the price of energy and the market share of Algeria towards Europe its principal customer, recalling that there is a gas organisation independent of that of OPEC.
A friend, the polytechnician Jean Pierre Hauet of KP Intelligence, France rightly notes that the energy scene comes alive in the Mediterranean with at least two significant fields of manoeuvring which it is interesting to try to understand the ins and outs that explain the current tensions, especially in the eastern Mediterranean. The first theatre is that of renewable energy (wind, concentrated solar, photovoltaic) which has been characterised by the launch of major initiatives based on the idea that technical progress in direct current transmission lines would allow taking advantage of the complementarity between the electricity needs of the countries of the north and the availability of space and sun of the countries of the South. At the time, we were talking about 400 million euros of investments and the satisfaction of 15% of Europe’s electricity needs. Today, the Desertec project is instead at half-mast, due in particular to the withdrawal of major industrial players, Siemens and Bosch, and the consummate disagreement between the Desertec Foundation and its industrial arm the Desertec Industrial Initiative (Dii). Dii continues its ambitions to integrate European, North African and Middle Eastern networks, while the Desertec Foundation now seems to favour bilateral initiatives in Cameroon, Senegal and Saudi Arabia. The second theatre of operations is recent: it relates to the discovery from 2009 of deep offshore gas resources in the eastern Mediterranean, which explains the current tensions. Large companies that used to operate other more accessible, profitable fields or near facilities nearby, on land, are now turning to the eastern Mediterranean, off Egypt, Israel, Lebanon, Cyprus and Turkey, all countries that do not necessarily have good neighbourly relations. Because several gas deposits have been discovered off the coast of Egypt, Israel, Lebanon or Cyprus, at the heart of the so-called Levantine basin, it is estimated by the US Geological Survey at 3,452 billion cubic meters (m3). “For the producing or future producing coastal states, this gas resource offers the opportunity to achieve energy independence and a way to bail out their economy through potential exports” according to the Mediterranean Foundation for Strategic Studies in a well-documented report. That is why Turkey is conducting research. Even if Greece and part of the international community accuse it of having entered the Greek maritime space, international law is unclear in this situation which does not delineate borders and geographical boundaries. Gas resources can be found on or offshore limits of a country or in either transboundary or not clearly defined boundaries reservoirs, and the Turkish initiative could be the beginning of a long series of tensions that could transform regional balances. Because geological formations do not know the political borders, oil and gas companies have explored the marine subsea soils of neighbouring countries. This was followed by the uncovering of the Leviathan field (2010) also off the coast of Israel, Zohr (2015) in Egyptian waters, then Aphrodite (2012), Calypso (2018) and Glaucus (2019) around Cyprus. Exploration of Lebanese and Greek waters is not advanced. Athens has already allocated parcels to ExxonMobil, Spain’s Repsol or Total. On February 19, 2018, a historic $15 billion contract between Egypt and Israel provided for the supply of natural gas from the Tamar and Leviathan offshore reservoirs to Egypt, according to a report by the Mediterranean Foundation for Strategic Studies (FMEN). To ease tensions, although the countries of the Mediterranean all face the problem of energy security, it is above all a question of strengthening cooperation especially in the energy field, which can represent a vital link between the north and the South of the Mediterranean.
What is the case for Algeria where according to SONATRACH’s balance sheet in 2019, it makes up about 33% of its revenues, to which must be deducted the costs and the share of partners dependent on natural gas in order to have the net profit? The structure between natural gas exports through the two major Medgaz pipelines via Spain capacity, of 8 billion cubic meters gas and Transmed via Italy between 35/40 billion cubic meters of gas, currently under capacity, represents about 75% of the total towards its primary market Europe. LNG about 25% that provides it with more flexibility, Algeria is strongly competed against between 2020/2025 by the American, Russian, Qatari LNG. The latter has installed large capacity two to three times that of Algeria and for the gas piped by Russia the North Stream (55 billion cubic meters of capacity and the South Stream (capacity of 63 billion cubic meters gas), not forgetting as previously highlighted the discoveries in the Mediterranean. Nigeria and Mozambique are important producers with the latter country having the largest reserves in East African countries, with nearly 5 trillion cubic meters, on two offshore blocks in the province of Cabo Delgado in the far north of the country. By 2025/2030, Mozambique is likely to become the fourth-largest gas exporter in the world behind the USA, Qatar and Australia. In order to export to Asia, it will have to bypass the entire cornice of Africa posing the problem of profitability, in addition to the operating costs is added an exorbitant transport cost, unable to compete with Russia with the Siberian China gas pipeline, called “Power of Siberia”, more than 2000 km at the Chinese border, transporting 38 billion cubic meters of Russian gas to China each year by 2024/2025, a contract, estimated at more than 400 billion dollars over 30 years, signed by Gazprom and the Chinese giant CNPC, signed by Gazprom and the Chinese giant CNPC. Not to mention Iran and Qatar close to Asia. In the end, everything will depend for Algeria to enter the global market of cost requiring new strategic management of Sonatrach whose operating account for several decades depends fundamentally on external factors beyond its internal management, the international vector price, which led the president of the republic to demand an audit of this company. As for the world price between 2007 and September 2020, it fell by more than 75%, much more than for the oil. It has gone from 15/16 dollars for the GLN to 4/5 dollars and $9/10 for natural gas (GN). It has fluctuated between 2019/2020 between $1.7 and $2.5 per MBTU, in the open market. And recently between January 2020 and September 2020, we will have to take into account the dollar/euro rating which has depreciated by more than 11%, due to the uncertainties of the US economy and especially the swelling of the budget deficit bringing it back to the constant price thus having to draw the currency balance
In short, energy is at the heart of the sovereignty of states and their security policies. The world is moving during 2020 through 2030, inevitably towards the digital and energy transition with a new model of energy consumption and knowledge imposing on our leaders a cultural renewal far from the material mentality of the past that cannot lead the country with expensive projects, uncertain profitability to the impasse. Economic dynamics will alter global power relations and affect political recompositions within and regional spaces, hence the importance of understanding geostrategic energy issues and appropriate solutions, far from unrealistic discourses.
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