MERKEL EXPLORES DEEPER ALGERIAN TIES - AND GAS

C O N F I D E N T I A L SECTION 01 OF 02 ALGIERS 000837

SIPDIS

E.O. 12958: DECL: 07/21/2018
TAGS: PREL EPET ETRD MARR GM AG
SUBJECT: MERKEL EXPLORES DEEPER ALGERIAN TIES - AND GAS
SUPPLY

REF: A. ALGIERS 724

B. 2007 ALGIERS 1004

Classified By: CDA, a.i. Thomas F. Daughton; reasons 1.4 (b, d).


1. (C) SUMMARY: German Chancellor Angela Merkel made her
first visit to Algiers July 16-17 in an effort to boost
natural gas supplies and promote stronger commercial ties
between Germany and Algeria. Following on the heels of the
Mediterranean Union Summit in Paris, Merkel's trip was also
seen here as a signal that Germany is just as interested in
Algerian natural resources and markets as France has been,
and is willing to nurture a bilateral relationship rather
than one based solely within the European (or Mediterranean)
Union. Merkel was treated to head-of-state honors by the
Algerians, and while her visit was short on both time and
deliverables, one journalist surmised that it served its
purpose of showing Merkel and President Bouteflika
symbolically linking the countries, thus paving a smoother
way for future commercial deals, particularly as Germany
looks for alternatives to Russian gas supply. END SUMMARY.

SHORT VISIT, EQUALLY SHORT LIST OF DELIVERABLES
-------------- --


2. (U) Leading a delegation of 50 German business leaders,
including Deputy Minister of Economy and Technology Bernd
Pfaffenbauch and representatives from Germany's two largest
utilities, Merkel stated publicly that her July 16-17 visit
to Algeria was a step toward "lending dynamism" to
German-Algerian relations. Although long on rhetoric about
multilateral and bilateral cooperation -- Pfaffenbauch called
on Algeria to increase natural gas exports to Europe as part
of a long-term "strategic partnership" -- Merkel's visit
yielded modest results and no new agreements on energy
cooperation. Merkel and President Abdelaziz Bouteflika
attended the signing ceremony for a German architectural firm
that received a USD 1.6 billion contract to design and build
the world's third-largest mosque in Algiers by 2014. Other
agreements included the formation of a German-Algerian joint
venture and a framework agreement between the German firm
Knaupf International and the Algerian Ministry of Training
and Professional Development to design a job-creation program
for youth.


3. (C) Merkel told the press that her discussions with
President Bouteflika concentrated mainly on economic issues,
including the sale of four German frigates valued at USD 8
billion to the Algerian navy. Merkel also claimed publicly
that she pushed Algeria to help promote democratic and social
reform in Africa and raised the crises in Zimbabwe and
Darfur. German diplomats told us that they had prepared
numerous briefs on issues for Merkel to raise with
Bouteflika, including talking points on human rights and
religious freedom. They noted with a hint of disappointment,
however, that Merkel did not appear to have read the briefs
and seemed generally disinterested in discussing political or
social issues here. German diplomats would not confirm
whether Merkel raised religious freedom issues with the
Algerian government, but they described a small meeting
Merkel had with civil society representatives that may have
touched on the topic.

RED CARPET TREATMENT
--------------


4. (C) Chancellor Merkel was given full head-of-state
treatment by the Algerians, including the assembly of the
diplomatic corps at the airport as President Bouteflika
greeted her amidst a cannon salute. Bouteflika received
Merkel the next morning in a meeting with Energy Minister
(and OPEC President) Chakib Khelil, Defense Minister-delegate
Abdelmalek Guenaizia, Foreign Minister Mourad Medelci and
Post and Telecommunications Minister Hamid Bessallah. Later
in the day, Pfaffenbauch met separately with Khelil and
Guenaizia to discuss renewable energy and military
cooperation projects, including the possible delivery of
border surveillance equipment to the Algerian army.


ALGIERS 00000837 002 OF 002


HEADING OFF RUSSIA
--------------


5. (C) While press coverage and our German counterparts
suggested that little specific progress was made during the
Chancellor's visit, an Algerian television journalist who
covered Merkel's meetings for a German news service told us
that the purpose of the visit was simply to have Merkel and
Bouteflika meet formally to establish new, seemingly deeper
ties between Algeria and Germany, thus paving the way for
specific commercial deals later. The journalist likened the
visit to a first meeting of the parents of a bride and groom,
after which a formal courtship may begin. He said that a
German firm has finished a feasibility study of piping
natural gas originating in Algeria across the Alps to
Germany. Two undersea pipelines already transport some three
billion cubic feet of gas per day to Europe (through Spain
and Italy),and future pipelines and LNG terminals are in the
works. While Germany currently imports roughly USD 2 billion
worth of petroleum products yearly from Algeria, it is not a
major buyer of Algerian natural gas.


6. (C) During an energy security roundtable in April hosted
by the UK embassy here, British and German diplomats and
visiting officials from London told us that both their
countries considered future natural gas supply to be a
national security issue. In particular, they said, their
governments were concerned about the ability of Russia to
corner and control gas supplies to their respective countries
and all of Europe. Accordingly, they said, ensuring Algerian
gas supply to Europe as an alternative to Russian supply was
a key bilateral and multilateral issue for both missions (not
surprisingly, a Spanish diplomat voiced less concern about
Russian control of European gas supplies). When asked about
the coincidental timing of Merkel's visit on the heels of
Algerian press reports that Russia's Gazprom had offered to
buy all of Libya's oil and gas exports, the German diplomat
who was present at the April meeting told us that discussions
of gas supply were obviously very high on the Chancellor's
agenda here.

COMMENT: SHOWING UP SARKO
--------------


7. (C) Chancellor Merkel's visit to Algiers appears to have
served three main purposes: to strengthen political and
commercial ties generally; to open a possible avenue for
increased Algerian gas sales to Germany; and to show the
Algerians that French President Nicolas Sarkozy is not the
only high-visibility European leader interested in Algeria.
Merkel's visit came just days after Sarkozy's high-profile
Mediterranean Union Summit in Paris -- timing that was not
viewed as coincidental by observers here. And while her
departure was less than stately (an airport employee dented
the Chancellor's Luftwaffe plane while moving stairs
alongside it, forcing Merkel to borrow Bouteflika's official
jet for the trip home),her visit was well received by the
Algerian media. It also gave President Bouteflika the
opportunity to be seen as playing the Europeans off against
each other -- always a popular game in Algeria when the
"losing" player is France.

MINIMIZED CONSIDERED

DAUGHTON