Merkel Courts the Algerians

mosque071808.jpgNobody had any illusions about Angela Merkel’s visit to Algeria this week. Although the official reason for the visit was to oversee the signing of deal to build a major landmark mosque in Algiers (rendering shown – talk about corporate foreign policy!) and call for the deepening of economic ties between Germany and the North African nation, the message was plainly telegraphed to President Abdelaziz Bouteflika: It’s critical to European security that you boost independent supplies to the EU, and avoid too close a relationship with Gazprom. Whether or not the German government perceives a threat from Russia’s long-standing embrace of Algeria’s state-owned gas company Sonatrach, aided by debt forgiveness and large arms deals, the country has legitimate concerns about becoming too reliant on Russian supply (about 70% of oil and gas to Germany come from Russia, and that figure should climb significantly with the building of the Nord Stream pipeline). Even a technical problem in the delivery infrastructure, independent of politics, could produce a considerable economic hiccup in Germany. But I do take note of the timing of Merkel’s visit. Only two weeks ago, Gazprom shocked the energy sector by making a very public offer to buy ALL of Libya’s natural gas at significant high market prices, a deal which, among others, arguably makes the Russian company a self-sustained independent global gas cartel, sewing up another potential energy competitor along the Southern flank of Europe. I think it is fair to say that Germany has a reasonable concern over Algerian-Russian energy relations. However Merkel’s strategy to court the Algerians seemed a bit off-target. If we have learned anything from Moscow, she shouldn’t have traveled there with a delegation from E.ON and RWE – but rather with the defense contractors from EADS.