The strained relations between Algeria and Morocco, rooted in historical disputes, are estimated to cost the region up to 5% in annual GDP growth.
Algeria's recent decision to reimpose visa requirements on Moroccan nationals is not just another setback in bilateral relations – it is a stark reminder of how entrenched diplomatic discord is stifling the Maghreb's economic and social potential.
The persistent rift between Algeria and Morocco, rooted in historical disputes but perpetuated by current policies, is exacting a tangible toll on the region's development. This diplomatic stalemate is not merely a political issue; it is a significant barrier that is estimated to cost the Maghreb up to 5% in annual GDP growth, according to the World Bank.
The Maghreb region, rich in resources and strategically positioned, should be a powerhouse of economic activity. Yet, it remains one of the least integrated regions globally, with intra-regional trade constituting less than 5% of total trade. In contrast, intra-regional trade accounts for over 60% within the European Union. The primary impediment is the unresolved tension between Algeria and Morocco, which manifests in closed borders, severed diplomatic ties, and now, renewed visa restrictions.
A history-ridden divide: the western Sahara dispute
The roots of this discord trace back to the mid-1970s, centering on the disputed territory of Western Sahara. After Spain withdrew from the region in 1975, Morocco annexed Western Sahara, asserting historical claims over the area. However, the Polisario Front, a liberation movement seeking independence for the Sahrawi people, declared the Sahrawi Arab Democratic Republic.
Algeria's support for the Polisario Front has been a significant point of contention, as Morocco views this as interference in its sovereign affairs. This longstanding dispute over Western Sahara has been the primary obstacle to diplomatic normalization, fueling mistrust and periodic escalations between the two nations.
The closed land border between Algeria and Morocco since 1994 is a physical and symbolic barrier that hinders the free flow of goods, services, and people. This closure alone has been a significant factor in the Maghreb's failure to capitalize on its collective potential. The African Development Bank estimates that the lack of regional integration has cost the Maghreb economies billions of dollars in lost trade and investment opportunities over the past decades.
Incomplete projects and stalled integration
The diplomatic impasse between Algeria and Morocco has led to concrete economic setbacks that the region can no longer afford to ignore. A prime example is the halted operation of the Maghreb – Europe Gas Pipeline. In 2021, Algeria decided not to renew the pipeline agreement that allowed natural gas to flow through Morocco to Spain.
This decision, driven by political tensions, resulted in Morocco losing transit fees and access to natural gas supplies crucial for its energy needs. Algeria also faced challenges, as it had to rely solely on the Medgaz pipeline to supply gas directly to Spain, limiting its export capacity and requiring infrastructure investments.
© Image Sémhur / Wikimedia Commons / CC-BY-SA-4.0
The price of isolation
Moreover, the closure of the land border has crippled the potential for a trans-Maghreb highway, a project that could have transformed regional trade. The highway was envisioned to link North African economies from Mauritania to Libya, facilitating commerce and reducing transportation costs.
According to the African Development Bank, incomplete infrastructure and border closures inflate logistics costs significantly, directly impacting the competitiveness of local businesses on the global stage. The absence of diplomatic relations also stalls the possibility of a Maghreb free trade zone, an initiative that could boost intra-regional trade substantially.
Instead, Algeria and Morocco trade more with Europe than with each other, missing out on the economic synergies of geographic proximity. The World Bank highlights that effective regional integration could increase the Maghreb's GDP by up to 5%, a substantial gain for economies grappling with high unemployment and limited diversification.
The economic dividends of reconciliation are compelling. A united Maghreb could harness economies of scale, attract significant foreign direct investment, and negotiate better trade agreements. Estimates suggest that comprehensive integration could boost the region's GDP by tens of billions of dollars over the next decade. This growth could be instrumental in addressing high unemployment rates, particularly among the youth, and in improving living standards across the region.
The case for reconciliation: economic dividends of a united Maghreb
Algeria's decision to reimpose visa requirements on Moroccan nationals is therefore more than a diplomatic slight – it is a detrimental move that compounds the economic and social costs of an already strained relationship. The ongoing diplomatic deadlock between Algeria and Morocco is a self-inflicted wound that hampers the Maghreb's ability to thrive in an interconnected world.
Vijay Pathak is a graduate of Yale University where he was a PDLI Fellow and a scholar in the Brady-Johnson Program in Grand Strategy. He's a recipient of the 2024 NATO Youth Award and write on EU foreign policy and global affairs and is originally from Capellen, Luxembourg.
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