Pedro Sánchez this week. / EP

Trade off

Spain's backing of Morocco cost the country hundred of millions of euros in the early summer months

Mark Nayler
MARK NAYLER

It turns out that the standoff between Spain and Algeria, triggered in March by Pedro Sánchez's decision to back Moroccan claims over Western Sahara, is not just diplomatic: it's also costing an awful lot of money. According to the latest statistics from the Ministry of Industry, Commerce and Tourism, Spain lost 266 million euros in export revenue over just two months - between early June, when Algeria froze its decades-old friendship treaty with Spain, and the end of July.

Algeria's financial services sector announced at the end of July that it was lifting a ban on banking operations tied to trade with Spain, but so far there's little sign that things are back to normal (although gas supplies remain unaffected). In fact, Sánchez seems more concerned with reinforcing ties with Morocco than he does with reestablishing trade with Algeria; and if there's one thing that the last few months have demonstrated, it's that he can't do both.

When Sánchez leads a Spanish delegation to Morocco in November the key items on the agenda will be illegal immigration from North and West Africa and Moroccan claims over Western Sahara, a former Spanish colony. But despite the Socialist leader's surprise reversal of Spanish neutrality over the disputed region (a move severely criticised by his junior partner Podemos, which won't be joining the delegation), one imagines that the Moroccan side might want clarity on this matter.

In a letter sent to Morocco's King Mohammed VI in March, Sánchez said that the plan for making Western Sahara an autonomous region within Morocco was the "most serious, realistic and credible basis for settling the dispute". Yet in a speech to the UN General Assembly last month, he appeared to reverse his position yet again, saying that Spain supports a "mutually acceptable political solution" to the problem. This could be interpreted as a somewhat belated attempt to mollify the Algeria-backed Polisario Front, a Sahrawi nationalist movement that seeks self-determination for Western Sahara.

Any concessions to Algeria over Western Sahara, though, will anger Morocco and may exacerbate Spain's immigration problems. This complex, three-way dispute was sparked in April 2021, when the Polisario Front's leader Brahim Gali was treated for Covid in a Spanish hospital. Retaliating, Morocco allowed illegal migrants to flood into Spain's North African territories of Ceuta and Melilla. Sánchez's Western Sahara U-turn was chiefly designed to repair relations with Rabat and in that sense it succeeded; but it also angered Algeria, for which Spain is paying a heavy price.

The Ministry of Industry, Commerce and Tourism has warned that hundreds of millions more euros could be lost if trade with Algeria isn't rapidly normalised. Yet it's hard to see how Sánchez can achieve that without reversing a reversal he should arguably never have made in the first place. Until a satisfactory trade-off is performed, trade's off.