By Majid Morceli
By Majid Morceli
San Francisco- An estimate from the International Monetary Fund (IMF) says that Algeria needs to sell its oil at $113/barrel in order to balance its budget. Right now, oil is trading at around $66/barrel, and some analysts are predicting, given the right conditions, it could tumble to as low as $60/barrel.
This is a disaster for Algeria. Oil and gas export earnings make up more than 97% of the country’s exports, and sooner rather than later Algeria will start tapping into their foreign-exchange reserves derived from oil and gas.
Half of the oil profits go to American, French, and other foreign companies investing in Algerian oil. The rest gets distributed between the powerful military regime and the Algerian people, as subsidies to buy their peace.
When French auto manufacturer Renault invested $50 million for 49 percent of an assembly plant that will produce cars to be sold to Algerians, the government considered it a huge success, and said that it is only the beginning for many good things to come. Let’s keep in mind that an investment of only $50 million is considered an insult to the people of Algeria.
Algeria could be well served if their oil revenues were spent on diversifying their economy to curb the 25 percent youth unemployment rate. Instead, the government chose to purchase more than $10 billion worth of weapons last year to intimidate Morocco, in addition of the billions spent on keeping the Polisario Front alive. The money that goes to the Sahrawi Separatists does not fall from the sky. It comes out of a budget that is supposed to serve the people of Algeria.
We in Morocco do not want to lecture Algeria on what they should or should not do with their money. We are simply asking the Algerians to let go of their wishful thinking that one day they will control the Moroccan Sahara (or what they call as Western Sahara). The king of Morocco could not have been more determined and clear in his recent speech when he said that that the Sahara will remain part of Morocco until the end of time.
The Algerian government will not be able to curb social unrest forever using oil revenues to bribe the population. Sooner or later, it will run out of money for this precarious project. How it is going to continue handing out subsidies to buy the peace when revenue starts to vanish?
Isn’t it wiser for Algeria to make peace with its neighbor in these hard times and use the money spent on weaponry and the Polisario on the Algerian people instead?
How long will the Algerian people continue to accept this shaky arrangement? Sooner or later they will have to face the unpleasant reality, and they will have no choice but to rise up and who knows what will be the outcome? We in Morocco certainly do not want to see Algeria on its knees again. We understand that if things go wrong in Algeria, Morocco will suffer as well. We believe that in order for us to thrive, our neighbor should thrive as well.
This is by no mean the end of high oil prices. Oil prices will eventually stabilize and rise when OPEC stop playing games, or better yet when Saudi Arabia decides to cut production instead of trying to run small American companies out of business.
Let’s hope that the drop in oil prices will serve as a wake up call for our neighbors. Hopefully they can understand that it is better to invest in improving the life of their citizens rather than hoping for the destruction of their neighbor.
The views expressed in this article are the author’s own and do not necessarily reflect Morocco World News’ editorial policy
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