New Tension Between France and Algeria Deal a Deadly Blow to Economic Relations
Several French business owners operating in Algeria have launched what amounts to a cry for help to save their businesses from collapse amid the growing tensions between the two countries in recent months. Two French parliamentarians who recently visited Algeria confirmed that rebuilding relations between the two nations is extremely difficult.
In this context, Michel Bisac, president of the French-Algerian Chamber of Commerce and Industry, told Algerian media that measures taken last week by French Interior Minister Bruno Retailleau concerning the handling of diplomatic bags belonging to the Algerian Embassy in Paris “further complicated the crisis.” He described the move as “an obstacle to restoring economic relations to what they were before July 2024,” when Algeria withdrew its ambassador from Paris in protest against French support for Morocco’s autonomy plan for Western Sahara.
Reciprocity in Measures
Retailleau issued orders to border police prohibiting Algerian diplomatic and consular staff from entering areas where diplomatic bags are collected in French airports—an unprecedented move that he described as “a gradual response to Algeria,” after Algerian authorities earlier this year refused to accept some of their undocumented nationals in France who had been ordered deported.
In retaliation, Algeria barred French diplomats from receiving airport and port entry privileges in response to the “diplomatic bag problem.” The chargé d’affaires of the French Embassy in Algiers was summoned twice—on July 24 and 26—by Algeria’s Foreign Ministry following Retailleau’s measures against Algerian diplomats.
Bisac stressed that “the Interior Minister’s actions contradict the stance of the Foreign Ministry, with which we share a dialogue-based approach to resolving current problems.” He argued that what has become known as the “diplomatic bag crisis” should be resolved internally between France’s foreign and interior ministries.
Algeria Strengthens Partnership With Italy
At the same time, Algeria is moving to strengthen economic and trade cooperation with Italy—a shift that has alarmed the French business community in Algeria, which expressed concern about the rapprochement, especially amid the visible decline in Algerian-French cooperation.
French companies lamented that “Italy is advancing while France is regressing.”
On July 23, Algerian President Abdelmadjid Tebboune visited Italy at the head of a major delegation of ministers and business leaders, where 40 trade agreements were signed in addition to understandings on counterterrorism and illegal migration.
French media noted that the growing closeness between Algiers and Rome in recent years has come at the expense of France’s traditional influence in North Africa, particularly in economic and security fields. Algeria, notably, supplies the bulk of Italy’s natural gas needs.
In this context, French National Assembly member Sabriha Sabaihi and French Senator Akli Mellouli visited Algeria last week, meeting with French business leaders to discuss the challenges they currently face. The two parliamentarians, both of Algerian origin, had initially tried to contain the crisis before it escalated.
Calls for Calm
The Algerian outlet Tout sur l’Algérie quoted Sabaihi as saying that French investors “are happy working in Algeria, have important success stories there, and do not want to see this economic partnership collapse due to political considerations.” She added that her meeting with them “focused on working to improve Franco-Algerian relations.”
The Green Party MP stressed: “In France, Algeria is often discussed only in the context of migration issues, such as expulsion orders, while the relationship between the two countries is broader, encompassing economic and security partnerships.” She clarified that her visit to Algeria was not part of an official parliamentary mission.
Green Party Senator Akli Mellouli published a report on social media about his visit, saying its purpose was “to meet French nationals living there, who are suffering from the current situation, just like the Algerian diaspora in France. We also met with Algerian MPs to exchange views and set prospects for joint work.”
He emphasized that “our role as parliamentary diplomats is to maintain dialogue continuously. Parliamentary diplomacy allows discussion on all issues, even thorny ones, in an effort to make progress.”
Regarding his meeting with business leaders, Mellouli said: “This dialogue was useful and constructive. We were able to exchange views, listen to business concerns, and most importantly, identify the necessary prospects for developing economic relations between our countries on a balanced basis.”
He added that “the relationship between France and Algeria is, according to everyone, fundamental to building a common future across the Mediterranean and to the future of both the Mediterranean and Africa.” French businesspeople, he noted, “are unanimously calling for calm in relations to build a sustainable future for us and our children on both sides of the Mediterranean.”
France remains one of Algeria’s leading investors, especially in non-hydrocarbon sectors. French investments generate about 40,000 direct and 100,000 indirect jobs across 500 enterprises. Although French FDI has declined in recent years, the overall French investment stock in Algeria remains significant.
French Investment Sectors in Algeria
French investments in Algeria are concentrated in three main sectors: financial services and insurance, manufacturing (including automotive, pharmaceuticals, food industries, and chemicals), and extractive industries.
About 220 French companies operate in Algeria (with more than 50% French ownership), a number that rises when including branches, liaison offices, and minority holdings.
French investments support job creation in Algeria and underpin the growth of several economic sectors. French FDI in Algeria amounted to €64 million in 2016, rose to €283 million in 2018, then fell to €93 million in 2020. The total French FDI stock in Algeria stands at €2.9 billion.
However, despite these strong economic ties, France has lost its privileged position in Algeria. Its market share has been shrinking in favor of competitors like Italy, Germany, Turkey, Russia, Qatar, and especially China—which has become Algeria’s top supplier, displacing France’s traditional dominance.
French Companies Exit Algeria
The escalating and unprecedented diplomatic tensions between Algeria and France have severely impacted major French companies in Algeria, costing them significant market share.
The trend began with “RATP Dev,” the Paris transport operator responsible since 2011 for operating and maintaining the Algiers metro, which left in October 2020 after announcing it would not renew its contract.
A similar situation befell the French water management group “Suez,” which had been running Algiers’ water and wastewater systems under contracts renewed three times between 2006 and 2021. Four French CEOs consecutively headed the company during its tenure.
French automaker Renault’s factory in Algeria also halted production in 2020.
Another clear sign of French retreat came when “Crédit Agricole” (the “Green Bank”), one of France’s largest lenders, exited Algeria after the central bank withdrew its license, despite its presence since 2007.
In 2023, French energy giant Total withdrew from a major petrochemical project in Oran, jointly planned with Algeria’s state-owned Sonatrach.
Just weeks ago, tire manufacturer Michelin announced it was leaving Algeria after 60 years. The company had begun operations in 1963 and stopped local production in 2013, after previously running a truck tire factory in Bachdjerrah.
The Inseparability of Politics and Economics
According to Bouker Salami, head of the Algerian Association of Tax Consultants, “it is impossible to separate politics from economics. Politics always strongly influences the economy, and vice versa. All relations between countries are interconnected. You cannot have strong political ties with weak economic relations, or the opposite.”
He added that the political crisis between Algeria and France is at its peak, inevitably affecting the economic side. Algeria, he noted, has begun diversifying its domestic production and its international partners across multiple sectors.
Salami emphasized that political and economic interests are inseparable: “If a state acts against you politically, it is impossible to maintain good economic relations.” He predicted that bilateral trade would shrink to goods for which no alternative supplier can be found, but both countries would still seek substitutes. “If political tensions continue, economic problems will persist, with changes in import/export laws and customs tariffs.”
A Serious Crisis
Abderrahmane Boutaljeh, a researcher in international relations, argued that the impact on economic relations between Algeria and France amid their diplomatic crisis is natural, since politics and economics are inseparable.
He said: “This crisis is serious; it is not just a passing summer storm.” He added that Franco-Algerian economic relations were never equal—Algeria was merely a market for French goods, something Algeria now refuses to accept.
Boutaljeh concluded that economic cooperation would improve only once diplomatic relations are restored, noting that many opportunities for partnership exist due to historical and geographical reasons. He stressed that Algeria upholds the principle of “win-win.”
