Fate of UAE investments in Algeria: Political rupture impacts ports, industry and real estate

Algeria's decision to sever political and diplomatic ties with the UAE began a new phase for investments between the two countries.

While the immediate impact is not expected to be significant in terms of trade, given the UAE's limited weight as a trading partner for Algeria, greater attention is focused on the future of UAE capital and investments already present in Algeria and the options that the new phase could impose on these interests.

According to Algerian economist and former parliamentarian Abdelkader Brich, the most pressing issue in the near future concerns UAE investments in Algeria, which are concentrated in several sectors, including ports, logistics, tobacco, real estate and hospitality.

Brich told The New Arab that the decision to cut diplomatic relations does not automatically end these investments, as existing contracts, partnership agreements, and capital holdings are governed by laws and agreements regulating investment, and therefore cannot be terminated or liquidated outside the legal and contractual frameworks governing them.

He stressed that cutting relations, in itself, does not mean confiscating investments, cancelling contracts or ending the legal activities of companies in which UAE entities hold stakes. Rather, it places existing economic relations within a new political reality imposed by Algerian sovereignty.

However, the legal continuation of contracts and investments does not necessarily mean that the investment relationship will remain in the same form as before the rupture.

The movement of capital and investments is affected by the nature of political relations and the level of trust between countries, making the future of some UAE investments in Algeria likely to be reassessed in light of the new phase.

Brich pointed to the possibility of divestment and the sale of stakes, rather than liquidating the economic activity itself.

Depending on the nature of each project, ownership of some of these stakes could pass to Algerian investors, including state-owned institutions or companies, or to foreign investors.

UAE investments in Algeria are concentrated in several sectors, including ports and logistics services, where DP World operates the Port of Algiers and Djen Djen Port in Jijel provinces.

From a legal standpoint, the 30-year concession contract has not officially expired, as it is expected to continue until 2039.

But the partnership is facing a practical freeze on the ground.

In September 2019, the Algerian government ended DP World's monopoly over some powers. Moreover, it took back the shares of the Port Services Group (Serport), making the Algerian a direct partner for the Port of Algiers, in a move that reduced the UAE company's influence.

In the defence sector, Algerian-UAE cooperation in recent years has included several projects related to the assembly and manufacture of armoured vehicles, and the development of defence industrial capabilities.

These projects include Nimer Algeria, which was established as a partnership between UAE-based EDGE Group and the Algerian Ministry of National Defence's Mechanical Industries Development Group.

The cooperation includes a factory in Khenchela dedicated to producing NIMR light armoured vehicles, with an estimated production capacity of hundreds of vehicles annually, as well as investments aimed at developing production and assembly lines.

The cooperation also included a project to produce Fuchs 2 armoured vehicles in Algeria.

It also extended to the utility vehicle sector for military and paramilitary use through projects linked to Mercedes-Benz factories in Tiaret and Rouiba, producing four-wheel-drive vehicles and trucks for military and paramilitary use.

In the tobacco sector, several Algerian-UAE companies are active, including the Algerian-UAE Tobacco Company, known as Sétif Tobacco and Matches Company (CETIM), and United Tobacco Company.

The sector has recently seen legal and regulatory measures and reviews by the Algerian authorities, covering some contracts, transactions and documentary dealings linked to these companies.

In the real estate sector, UAE involvement in Algeria has been linked to several projects, most notably those of Emaar and the Dounia Park project.

However, most of these projects were not completed according to the initial plans and no longer represent existing or ongoing UAE real estate projects.

The statements of Workers' Party Secretary-General Louisa Hanoune came to the fore after she recalled in a press statement that the party had opposed, between 2014 and 2015, granting 50% of the Port of Algiers to DP World.

She said the party had campaigned to overturn the decision, given the port's strategic importance and its connection, in her assessment, to internal security and national security.

Hanoune also revived the file of the tobacco and matches company, objecting to the transfer of 65% of the company's capital to interests linked to a UAE investor.

She said the company had been highly important to the public treasury, as its taxes made it the second-largest contributor to the treasury after Sonatrach.

The official also addressed the major Dounia Park project, stressing that the Workers' Party had not supported it.

She noted that the Algerian state had paid large sums as part of international arbitration linked to the project.

Hanoune further said that the UAE's economic presence in Algeria went beyond a purely commercial and investment dimension.

She argued that some concessions and projects had become a source of influence within sectors considered important to the national economy and Algerian sovereignty.

Article translated from Arabic by Afrah Almatwari. To read the original, click here.