In a turn of events that has sparked tension across the Mediterranean, Algeria has suspended all banking operations related to import and export operations with France following President Emmanuel Macron’s high-profile visit to Morocco in July. This diplomatic gesture, which involved France officially recognizing Morocco’s sovereignty over Western Sahara, seems to have brought more than goodwill to Rabat — it has left Algeria contemplating trade retaliation and sparked uncertainty in its business circles. French startups and local Algerian firms now find themselves entangled in an unexpected economic stalemate.
Trade Suspension Without the Paperwork
On November 4, Algeria’s Association of Banks and Financial Institutions (Abef) convened with local banks to issue a verbal directive: halt all import and export transactions with France. This abrupt move was striking not only for its substance but also for its form. No official documentation, only a spoken message that set the Algerian and French business communities on edge. The absence of an official decree left many questioning whether Algeria intended this as a diplomatic warning or was preparing to make it a more permanent economic measure.
Although Abef does not wield direct authority over international trade policy, its announcement reverberated across the Algerian business world. A leaked summary of the meeting has circulated widely, sparking rumors and fears among French companies operating in Algeria. The shadow of a total trade rupture has loomed large, unsettling investors who worry about the long-term economic impact if these restrictions harden.
Former French ambassador to Algeria, Xavier Driencourt, hinted at the strain in the bilateral relationship, stating that the French government’s decision to support Morocco’s autonomy plan over Western Sahara may have finally “pushed Algeria to the limit.” Driencourt’s comment on social media, that “we are definitely blind,” seems to reflect the diplomatic missteps that have escalated into a trade standoff.
The Economic Fallout
The trade suspension affects banking transactions related to import and export conducted after November 4, disrupting a series of business flows between France and Algeria. This includes French grain exports, where Algeria has historically been a major client. In fact, tensions had already been brewing in October when Algeria excluded French wheat from its latest tender for 500,000 tons of cereal. This rejection alone is estimated to have resulted in an 80% decrease in French grain imports by Algeria, signaling a shift in its sourcing strategy.
The economic freeze comes as France had recently introduced the Fonds Maghreb, a €100 million fund intended to support French businesses looking to invest in North Africa, including Algeria. Ironically, this fund — designed to cement French business interests in the Maghreb region — now finds itself embroiled in an escalating diplomatic row. Managed by Bpifrance, the Fonds Maghreb aimed to offer French small- and medium-sized enterprises financial assistance, market guidance, and growth loans. But with Algeria’s abrupt suspension of trade operations, this fund’s objectives may face a roadblock.
Bpifrance had intended for the fund to provide French businesses with access to Algeria’s market through financial products such as equity investments and export credits. Now, as Algeria cuts its trade ties, companies that once saw opportunity in the Fonds Maghreb may instead find themselves in an economic no-man’s land.
Local Startups in the Crossfire
For Algerian startups, the diplomatic clash with France could not have come at a more critical time. Yassir, one of Algeria’s most promising tech startups, which has expanded across North Africa and Europe, including a notable presence in France, is among those impacted. Having recently invested €5 million in the French rapid-delivery service Flink and saved over 270 jobs in the process, Yassir’s efforts now hang in the balance as cross-border operations become precarious.
Noureddine Tayebi, Yassir’s founder, might have expected France’s political moves in Morocco to cause diplomatic ripples but likely not a full-fledged trade freeze. Yassir’s expansion strategy has relied on a cooperative relationship with France, both in securing funding and in serving the Algerian diaspora in Europe. The startup, which boasts over 5 million users across multiple countries, including Morocco and Tunisia, now faces unforeseen challenges as Algeria’s new trade restrictions threaten its operations.
Yet, Algeria’s move could have long-term ramifications for local startups beyond Yassir. The recent trade freeze adds complexity to an already challenging business environment for Algerian entrepreneurs who must navigate a government prone to assertive economic policies. The freeze raises concerns over future investments and collaborations with foreign partners, especially from France, leaving startups questioning whether they can rely on stable international trade policies.
At the core of this economic rift lies the question of Western Sahara, an issue that has stirred diplomatic tension for decades. France’s recent decision to formally back Morocco’s sovereignty over the contested region seems to have struck a sensitive chord with Algeria, which has long supported the Sahrawi people’s bid for independence. This move by Macron, intended as a gesture of support for Morocco, instead appears to have set off a diplomatic chain reaction.
Algeria’s choice to retaliate through economic restrictions reveals its willingness to leverage trade as a political tool. The decision signals that Algeria is prepared to sacrifice economic cooperation with France if it means asserting its stance on Western Sahara, a position that leaves little room for compromise.
Future Prospects: Trade or Stand-Off?
For French businesses, this sudden freeze introduces both risk and frustration, as they await a resolution to the tension. French companies eager to invest in Algeria or expand their operations may face prolonged uncertainty if the suspension persists. Similarly, Algerian companies eyeing French partnerships may have to put their plans on hold indefinitely.
The diplomatic fallout between Algeria and France is a reminder of how quickly political disagreements can disrupt economic landscapes. As Algeria and France grapple with their differences over Western Sahara, the economic consequences continue to unfold, impacting entrepreneurs, investors, and workers caught in the geopolitical crossfire.
For now, the Mediterranean looks set to remain a sea of diplomatic and economic contention, with local startups and established enterprises alike watching from the sidelines, unsure of when — or if — stability might return.