Financial leaders say a closed Moroccan-Algerian border is bad for business

08/08/2008

Since the Morocco-Algeria border closure in 1994, any potential resolution of the issue has been slowed by politics. Bankers and business leaders, however, argue that shared economic interests should soften hardened political positions.

By Mawassi Lahcen for Magharebia in Casablanca – 08/08/08

[Mawassi Lahcen] Economic interests shared by Algeria and Morocco have resulted in co-operation on major energy projects and may soften politicians' hardened positions.

Speaking July 29th on the ninth anniversary of his ascension to the throne, King Mohammed VI renewed Morocco's call for open land borders with neighbouring Algeria so that new generations might "harness the potential of both Moroccan and Algerian peoples... instead of wasting them in the labyrinths of some handed-down conflict that dates back to a bygone era."

The same day, Algerian President Abdelaziz Bouteflika voiced his "unwavering intent to restore warmth to the sisterly relations binding both nations".

Despite these conciliatory gestures, any discussions about normalising relations in the 14 years since the border was closed have usually involved larger political issues such as solving the Western Sahara problem, or protecting against trafficking.

For those in the financial community, however, the subject is much simpler; a closed border is bad for business. And the border question, they say, is key to the viability of the Maghreb Union.

"The continued closure of the border between Morocco and Algeria impedes the integration of the Maghreb market, and consequently limits the prospects of investments directed to that market," said Nozha Hrichi, an advisor to former Moroccan Prime Minister Driss Jettou who now heads the Moroccan Company of Insurance of Exports.

"We also shouldn't forget the role that the economic interests have played as an engine for the integration of the European Union, and how the resistance from politicians to the European integration has always fallen under the pressures of economic interests," she added.

The interrelation of economic interests can help soften hardened political positions, Hrichi continued, pointing to the electricity link projects between Morocco and Algeria and the European-Maghreb gas pipeline which sends Algerian hydrocarbons to Spain through Moroccan soil.

"Although the borders are closed between the two countries, and in spite of the political tensions between them, these projects managed to see light because there have been strong economic interests behind them," Hrichi noted.

MasterCard International Group VP and Africa district manager Faisal Kheidri also believes that there are some glimpses of hope: "I think that the formation of the Maghreb Businessmen's Union about one year ago, plus the efforts exerted by the Maghreb Banks Union, as well as other initiatives, can have an effect on the course of events and can succeed in softening the hardened positions."

"I'm Tunisian, my wife is Algerian, and I live in Casablanca," Kheidri said. "Therefore, to me, the continued closure of the Algerian-Moroccan border is a deep wound, and I hope that this problem will be solved soon."

For other experts, the issue involves more than just trade and business relations between Morocco and Algeria. Jawad Kerdoudi, head of the Moroccan Centre for International Studies, argues that achieving Maghreb integration is linked to regional economic reforms and the promotion of democracy and human rights in all Maghreb countries.

"We shouldn't forget that the Maghreb Union consists of five countries, and that there are dealings between Morocco, Libya and Mauritania," Kerdoudi told Magharebia. "There are common interests that are being created among the economic circles in the five countries, which we can grow to become an engine for moving ahead in building the Maghreb Union."

The final word on Maghreb integration may indeed rest with politicians, not business leaders, said Moroccan Central Bank Governor Abdellatif Jouahri: "The Maghreb Union is dying; this is the reality that we are now living. The decision to rescue it is in the hands of politicians, and is directly related to the presence of a political will."

Maghreb central banks and finance ministers have been working for three years under the auspices of the International Monetary Fund to boost the financial and commercial integration between the Maghreb countries, he said, adding that a meeting set for November in Tripoli will be dedicated to finance problems facing small and medium-sized enterprises in Maghreb countries.

"The Maghreb integration we [seek] is to simply sit together, draw up a strategy for benefiting from the opportunities provided by globalisation, and proceed with negotiations with the EU and other economic and regional forces as a unified entity and from a position of strength for the interest of all Maghreb countries," Jouahri said.

In recent years, two Moroccan banks managed to open branches in Tunisia. The Moroccan External Trade Bank (BMCE) opened a business bank in Tunis, while Attijariwafa Bank took over Banque du Sud. Moroccan banks haven't been able to do the same thing in Algeria, however, despite Algeria's opening of its banking system to foreign investment more than two years ago.

"We may have to reconsider our plans," Jouahri added. "If it is not possible to speak about a Maghreb union consisting of five countries for the time being, why, then, don't we start with two or three countries, and then expand the union to the rest of countries when they become ready? Wasn't that the path adopted by Europe in building the EU?" he asked.

[Getty Images] In recent years, two Moroccan banks managed to open branches in Tunisia. However, they haven't been able to do the same thing in Algeria.

While Attijariwafa Bank Chairman Mohammed Kettani believes the Maghreb Union to be "an inevitable thing", he stresses that banks are pivotal to the process. "When the banks of a certain country go to another country, the industrial and service companies of that country will follow them," he said. "The opening of a Moroccan bank in Tunisia was like a landing point and a crossing bridge for Moroccan companies into the Tunisian market, as well as the Tunisian companies into the Moroccan market."

Kettani thinks that businessmen and economists "have to overcome the political obstacles and take advantage of all holes in order to make progress towards the desired integration."

One businessman who has suffered financial losses from the closed borders is Mohammed Qassal, Deputy Chairman of the General Contracting Union in Morocco. Most of his work is concentrated in the eastern part of Morocco, near the border with Algeria. "I was achieving 60% of my turnover through trade with Algeria before the closure of the borders," he said. "After that, I was forced to look for other markets. I managed to narrowly escape bankruptcy."

He thinks the borders will be opened before the end of this summer. "Too many things have changed today, especially with the reception Morocco's autonomy proposal for the Sahara has had on the international level," Qassal said. "I think that things have started to change in Algeria as well for resolving the crisis and opening the borders."

In the meantime, he told Magharebia, "We are working side by side with our colleagues in the Maghreb Businessmen's Union to overcome this unnatural situation."

Qassal has an idea to drive the point home. "In our last meeting, I proposed to my colleagues in Algeria to organise two marches for Maghreb businessmen: one to come from Algeria and the other from Morocco."

It would then be businessmen, he explained, who would "penetrate the closed borders between the two countries".