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MEMO/12/329

Brussels, 15 May 2012

ENP Package – Algeria

The EU and Algeria are linked by an Association Agreement (AA) signed in 2002 and which entered into force in 2005. In December 2011 Algeria officially indicated its willingness to start exploratory negotiations regarding the elaboration of an Action Plan under the renewed ENP. Two rounds of informal discussions at working level have been held so far.

No Country Progress Report is prepared for Algeria because there is no ENP Action plan in force.

Political situation and latest developments in EU relationship with Algeria

Following developments related to the Arab Spring and internal social and political unrest, the Algerian authorities lifted the state of emergency (in force since 1992) in February 2011. A number of social measures, including a 20% increase in wages, price stabilisation for basic food products and facilitation of social housing, were also implemented. Thereafter, on 15 April 2011, President Bouteflika announced a programme of political reforms. This led to the adoption of a package of laws covering: the electoral code, participation of women in elected assemblies, associations, media, political parties, decentralisation and the incompatibility between political mandates. A revision of the Constitution is expected to take place after the 10 May 2012 legislative elections.

The new bill on associations has been criticised as being regressive in that it sets further limits on the activities of Non-Governmental Organisations (NGOs) including their registration, funding as well as co-operation with international partners. The new bill on media liberalisation decriminalising press offences and lifting the state’s monopoly on broadcasting is a positive development.

On 10 May, 462 members of the lower house of parliament (“Assemblée Populaire Nationale”) were elected. Approximately forty political parties participated. For the first time in Algeria, the EU deployed an Election Observation Mission (EU EOM) to observe the elections. The mission, headed by MEP José Ignacio Salafranca, issued a preliminary statement acknowledging positive developments in the electoral process while underlining some areas where improvements can be made. More detailed recommendations will be outlined in a final report which will be made available upon completion of the work of the EU EOM.

The national turn out amounted to 42.9% by comparison with 35.6% in 2007. There was a substantial increase in the number of women elected to parliament (from 30 in 2007 to 145 in 2012 according to preliminary results).

Economic and social issues

The IMF expects a slight decline in macroeconomic indicators in Algeria in 2012. Economic growth will be around 3%. Inflation should go up slightly to 4.3%. Unemployment will continue to decline, reaching 9.5% for 2012 (10% in 2010).

The current account balance will be largely positive with 10.9% of GDP in 2012 (13.7% in 2010). The external current account surplus of Algeria jumped to almost EUR 18 billion in 2011, a surplus twice as high as that recorded in 2010, due to the high oil prices. Budget revenues are estimated at approximately EUR 34 billion and expenditure at EUR 74 billion, a deficit of approximately EUR 40 billion (25.4% of GDP). This exceptional shortfall is largely explained by the sharp rise in social spending and lowering of a number of taxes.

Algeria’s foreign exchange reserves amounted EUR 131 billion at the end of 2011 (EUR 117 billion in 2010), which represents more than three times the yearly value of imports in goods and services.

Hydrocarbon revenues have increased by 20% in 2011 (+ EUR 8 billion). The oil revenues represented more than EUR 48 billion in 2011 (EUR 40 billion in 2010). The production of hydrocarbons was established in 2010 to nearly 214 million tones of oil equivalent.

Trade-related issues

The EU is the first trading partner of Algeria with total trade amounting to approximately EUR 44.7 billion in 2011. The EU is Algeria's major source of imports and is its largest market for exports with an average share of 50% for total trade. Algeria occupies rank number 12 and 20 in EU's imports and exports respectively, and 14 among the EU's major trade partners, covering 1.4% of EU total trade in 2011. Bilateral total trade grew up by 13.75% since 2009.

Globally, the economic situation remains fragile despite substantial energy revenues. With a trade surplus generating substantial foreign exchange reserves, Algeria has used some of the hydrocarbon windfall to pay off debt. But problems persist as the economy is nearly fully energy-dependent, with very little to export beyond oil and gas. Privatisation and economic reforms are often impeded and postponed; the domination of the public sector is leaving little room for private initiative.

The Association Agreement (entered into force in September 2005) provides for duty-free access for Algerian industrial exports and a number of agricultural preferences with the prospect of progressive liberalisation. General provisions are also included on progressive liberalisation of services, competition and intellectual property rights. An agreement has been reached on the revision of the tariff dismantling calendar on agricultural products. As for industrial products, the terms of a consensus are still being discussed.

Algeria has Free Trade Agreements with Mediterranean partners (Tunisia and States participating to the Greater Arab Free Trade Area). Algeria is not yet a member of the World Trade Organisation.

EU Cooperation

The EU has been active almost in every sector: from basic services to economic growth, rule of law, sustainable development, energy and environment. So far EU assistance to Algeria has amounted to more than EUR 700 million of grants (and EUR 2.2 billion of European Investment Bank loans).

The EU assistance to Algeria under the National Indicative Programme (NIP) for the period 2007-2010 amounted to EUR 184.1 million. It included support for small businesses, economic diversification, strengthening government and legal institutions and improving education and water treatment. Further EUR 172 million have been allocated for the period 2011-2013. This envelope covers two sectors: Sustainable Development and Culture (Environment, Socio-Economic Development, Heritage and Culture) and Economic Growth and Employment (Transport, Fisheries and Association Agreement Support), with substantial focusing on youth, employment and civil society in conformity with Algeria’s most urgent priorities.

In 2011, Algeria participated to a high level meeting on renewable energy and energy efficiency and to the EU’s Gas supply group. Since 2006, Algeria and the EU have been negotiating a Memorandum of Understanding on a strategic energy partnership.

An EU-Algeria Agreement on Scientific and Technological Cooperation was signed in March 2012.

Civil Society: role and EU support

During 2006-2010, the EU implemented a EUR 10 million programme to support Algerian NGOs from bilateral MEDA cooperation funds (ONG II). The current approach is to involve the civil society in the EU funded sectoral cooperation programmes whenever possible (AAP 2011: Cultural Heritage Programme, Youth Programme).

EU–Algeria – BACKGROUND

FACTS AND FIGURES

2005: Entry into force of the EU-Algeria Association Agreement.

2008: Signature of the Roadmap, completing the Association Agreement.

2008: Launch of the Union for the Mediterranean (UfM, reinforced Euro-Mediterranean Partnership).

2007-2010: The National Indicative Programme for Algeria is EUR 220 million financed under the European Neighbourhood and Partnership Instrument.

2011-2013: The new National Indicative Programme (NIP) 2011-13 for Algeria has a budget of EUR 172 million.

2011: The first session of the Sub-committee on political Dialogue, Security and Human Rights took place in Algiers. The 6th session of the Association Council and the 2nd session of the Association Committee were hold. The 2nd Sub-committee on Transport, Environment and Energy and the 5th session of the Economic Dialogue took place.

2011: Algeria indicated its willingness to open discussions regarding the possible conclusion of the ENP Action Plan.

March 2012: Signature of the EU-Algeria Agreement on Scientific and Technological Cooperation.

2012: The first EU Elections Observation Mission (about 120 observers) to Algeria is deployed for the 10 May Legislative elections, upon invitation of the Algerian authorities.

More info at:

http://ec.europa.eu/world/enp/documents_en.htm

http://eeas.europa.eu/algeria/index_en.htm

http://eeas.europa.eu/enp/index_en.htm


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