For nearly a year now, diplomatic tensions between France and Algeria have been steadily intensifying, casting a long shadow over the thousands of small and medium-sized businesses that trade across the Mediterranean. While political disagreements aren’t new in the long and often complex relationship between the two nations, the current climate is more charged than ever—and it’s making life increasingly difficult for companies on both sides.
A Cancelled Visit, A Symbolic Fallout
Take the example of CMA CGM, the French shipping giant. Its CEO, Rodolphe Saadé, was scheduled to visit Algeria on April 16 to meet with President Abdelmadjid Tebboune and unveil a major investment plan targeting the country’s port infrastructure. But just a day before his arrival, the trip was abruptly postponed without explanation. The timing was no coincidence—it coincided with France’s expulsion of 12 Algerian diplomats and the recall of its ambassador, which in turn was a direct response to Algeria’s own decision to eject 12 French officials just days prior.
Almost immediately, the leading Algerian employers’ federation canceled a long-planned visit to Paris for talks with the French business association, MEDEF. “Where will this escalation end?” wondered Michel Bisac, president of the France-Algeria Chamber of Commerce and Industry. It’s a question that’s top of mind for the 5,500 French businesses engaged in trade with Algeria—nearly 500 of which have a physical presence in the country.
A Long History of Tension, but a New Peak
Of course, friction between France and its former colony isn’t new. Since Algeria’s independence in 1962, the relationship has experienced many ups and downs. But the situation took a dramatic turn in July 2024 when French President Emmanuel Macron publicly backed Morocco’s sovereignty over Western Sahara—a territory also claimed by Algeria.
That declaration triggered a series of nationalistic reactions on both sides. In Algeria, renowned author Boualem Sansal—who holds both French and Algerian citizenship—was arrested for allegedly threatening national unity. Meanwhile, France has faced increasing resistance from Algeria regarding the repatriation of undocumented Algerian nationals. The general climate is now one of constant posturing and provocations, which inevitably impacts trade—worth €11.1 billion between the two nations in 2024.
Trade Imbalance: A Strategic Dependency
Although Algeria only accounts for a small fraction of France’s international trade (0.8% of exports, 0.9% of imports), the reverse is not true. France remains a major commercial partner for Algeria, accounting for nearly 14% of its exports and 8% of its imports. Interestingly, the trade balance is currently in Algeria’s favor, with France running a €1.5 billion deficit in 2024.
This gap is largely due to energy imports. Since the 2021 energy crisis and the war in Ukraine, France has ramped up purchases of Algerian hydrocarbons to lessen its reliance on Russian gas. These now represent 79% of all French imports from Algeria.
Could France cope without Algerian energy if the crisis worsens? That’s debatable—especially in the case of gas, which is harder to replace than oil. But experts agree that neither side can easily walk away from long-term contracts. On the ground, French energy companies have taken different approaches: TotalEnergies continues its operations with Algerian state-owned Sonatrach, while Engie has sold its stake in the Touat gas project without publicly stating a reason.
Agriculture and Auto Industry Already Feeling the Pinch
While energy trade seems somewhat insulated from political shocks, other sectors are already showing signs of strain. Last autumn, rumors swirled that Algeria would suspend the mandatory bank registration (domiciliation) process for imports from France—a move that could paralyze commerce. Though eventually denied by Algerian authorities, the mere speculation caused widespread concern among exporters.
For French agriculture, the impact has been real and immediate. In October, Algeria’s national grain office excluded French suppliers from its tender process. In 2018, France exported 5.4 million tons of soft wheat to Algeria; in 2025, not a single grain is expected to cross the border. The beef industry has also been sidelined. “Since last September, Algeria hasn’t placed any new orders with our livestock producers,” confirms a representative from the French beef industry association.
And then there’s the case of Renault’s factory in Oran. Once a thriving operation producing over 60,000 vehicles annually, it’s now at a standstill. The French carmaker claims it’s ready to comply with local laws requiring at least 30% of parts to be produced domestically, but it’s still waiting for government authorization. In stark contrast, Italian manufacturer Fiat has been operating smoothly at its new plant in Tafraoui since 2023—perhaps, insiders suggest, thanks to better relationships with politically connected local subcontractors.
Algeria’s Shift Away from France
The Algerian government has been clear about its intentions: it wants to reduce economic dependence on France, despite the fact that French companies remain among the top foreign investors in the country. France still supplies critical goods for Algeria’s automotive, pharmaceutical, chemical, and electrical sectors.
Meanwhile, Italy has been gaining ground. With nearly 40% of its gas coming from Algeria, Italy has invested heavily in building partnerships, led by the energy conglomerate ENI and increasingly in agriculture as well. And then there’s China, which in a few short years has become Algeria’s largest trading partner. Beijing’s quiet diplomacy and aggressive business strategies have proven highly effective in winning favor with Algerian authorities.
Final Thoughts: Uncertainty Hurts Business
For French businesses—especially smaller firms—the current environment is riddled with uncertainty. Algerian bureaucracy can abruptly delay or block shipments with no clear explanation, making daily operations unpredictable. “We’re clearly not dealing with a system governed by the rule of law,” says economist and former senior official Jean-Louis Levet, who has long studied Algerian regulatory dynamics.
The growing political rift, while still largely symbolic in some sectors, is starting to have real-world economic consequences. If it deepens further, the strain on cross-border business will likely intensify. And in this fraught landscape, it’s the smaller players who stand to lose the most.