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Russia: Energy, Weapons Bring Moscow Closer To Algiers

Putin (left) being greeted by Algerian President Abdelaziz Bouteflika on March 10 (epa) On March 10, Russian President Vladimir Putin arrived in Algeria on the invitation of his Algerian counterpart Abdelaziz Bouteflika, who visited Moscow in 2001. Putin's visit to Algeria -- the first by a post-Soviet Russian leader -- is first and foremost a manifestation of the Kremlin's recent "energy diplomacy." Algeria is an important OPEC member and the world's fourth-leading exporter of natural gas.

Consequently, the heart of Putin's visit is discussion of bilateral cooperation in supplying natural gas to the lucrative European market. Russia, which controls about 26 percent of that market, is seeking to bolster its position by coordinating its export policies with Algeria. Algeria, with about 10 percent of the European market, is the third-leading supplier of European gas, after Russia and Norway.

In particular, Russia is seeking to counter European Union efforts to diversify its energy sources following what was widely viewed as Moscow's efforts to use energy as a political lever in disputes this winter with Ukraine, Moldova, and Georgia. After the so-called gas war at the beginning of the year, the EU became increasingly alarmed about the potential unreliability of gas supplies transited through Ukraine, Moldova, and Belarus and accelerated plans to increase investment in the construction of alternative pipeline routes.

Among the EU projects being spurred are proposals for new pipelines from Egypt and Libya to southern Europe and the Balkans. Naturally, Russia wants to be involved in these projects and a key step in that direction is coordinating policy with Algeria. Putin is being accompanied on his Algiers trip by Aleksei Miller, the CEO of Russia's state-controlled natural-gas monopoly Gazprom. Miller's mission is to reach an accord with Sonatrak, Algeria's state petrochemical company.

According to the business daily "Vedomosti" on March 9, Gazprom plans to offer Sonatrak a deal under which Sonatrak would agree to supply gas to Russia's European clients in the event of interrupted supplies from Russia, while Gazprom would deliver gas to Algeria's customers in other regions. To sweeten the deal, Gazprom is expected to offer Sonatrak a role in developing some gas deposits in Russia.

In addition, Putin's delegation includes other incentives designed to put Algiers in the mood for closer energy cooperation. Algeria was a long-time Soviet weapons client and trading partner, so Putin brings with him a broad program of industrial technical assistance and an attractive arms package.

Arms Deals

In fact, the arms deals are the second most important part of Putin's trip. According to Russian media, Rosoboroneksport, Russia's state arms dealer, has prepared arms package worth $7.5 billion, the largest single such deal in Russia's post-Soviet history. The business paper "Vzglyad" on March 10 quoted Rosoboroneksport General-Director Sergei Chemezov as saying the firm hopes to sign in the near future contracts worth an additional $2 billion-$3 billion.

Russian-made T-90S tanks at a demonstration in India in 2004 (AFP)

Chemezov said that the lion's share of the package consists of modern equipment, including 36 MiG-29 and 28 Su-30 fighters (worth $1.5 billion), eight S-300 surface-to-air missile batteries (76 missiles), and an unspecified number of state-of-the-art T-90S battle tanks. The package also includes maintenance and modernization of Soviet-era weapons, although this work does not exceed 10 percent of the total value of the package.

Between 1960 and the collapse of the Soviet Union, Moscow sold some $11 billion worth of weapons to Algeria. In the 1990s, that figure dipped to just $500 million and since 2000, it has slipped further to $200 million. Now the Kremlin seems determined to regain its position as Algeria's chief arms supplier, even in the face of determined efforts by the United States and France to bolster their military cooperation with Algiers. U.S. Defense Secretary Donald Rumsfeld visited Algeria last month with proposals of weapons deals and extended cooperation in combating international terrorism.

Soviet-Era Debt

Moscow's renewed interest in Algeria is at least partly motivated by the fact that -- like Russia -- the north African country has amassed considerable hard-currency reserves thanks to soaring global oil prices. In addition to the energy and military deals, Russia is proposing several ambitious projects in Algeria, including a $1.6 billion tender to modernize and expand the country's rail network.

While in Algeria, Putin will also be discussing that country's Soviet-era debt to Russia, which according to various sources stands at somewhere between $1.5 billion and $6 billion. The dispute over the value of the debt actually led to a brief delay in Putin's trip, which was originally scheduled to begin on March 8.

The Kremlin did a lot of groundwork preparing for Putin's visit. Over the last year, Foreign Minister Sergei Lavrov, Defense Minister Sergei Ivanov, National Security Council Secretary Igor Ivanov, and other senior officials made trips to Algiers. Earlier this month, Finance Minister Aleksei Kudrin visited the country to discuss the debt issue. "In the very near future, we will be strengthening our relations and establishing very close cooperation," Kudrin said at the time. Eventually Putin agreed with the Algerian side to write off debts, reportedly amounting to $4.7 billion.

During his visit to Algeria, Putin will also seek to bolster Russia's position in the Middle East and the Arab world. In particular, Moscow is seeking Algeria's support -- and Turkey's as well -- for its policies regarding Hamas, which has recently taken over the government of the Palestinian Authority, and Iran's nuclear program.

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