What if I told you that the gas crisis and the war in Ukraine could be a unique opportunity
for Spain?
What if I told you that Spain could become the largest distributor of natural gas in
Europe?
I have not gone crazy!
What's more, I'm not the only one who thinks so.
Check it out.
(Spain could replace Russia in becoming EU's main natural gas hub – Euractiv)
I know what you're thinking.
Especially if you're a long-time follower of VisualPolitik.
Maybe this is the first video we’ve made in six years where we talk about Spain...
in a positive light!
It seems that whenever something goes wrong in the world, it will get much worse in Spain.
However, for the first time we find ourselves in an economic crisis in Europe where those
who are really in trouble are the Germans and it’s the Southern Europeans that may
be the solution.
Why?
Because, unlike Germany, Spain was buying hardly any gas from Russia.
For decades, Spain's main gas supplier was Algeria.
Yes, true: Algeria is another one of those countries where human rights may be overlooked.
But they are not Russia and they have gas, and not only that!
Spain is the country most prepared for receiving Liquefied Natural Gas coming from the United
States or Qatar.
To give you an idea, 27% of the regasification capacity of all Europe is on Spanish soil.
In other words, it would be enough to build a gas pipeline connecting Spain with France
and the rest of Europe and Boom!
Madrid could become the epicenter of the gas market in Europe.
Sounds fantastic, doesn't it?
Well, yes... that would be logical if the world were logical.
However, the reality is quite different.
(Russia Is Spain's No. 2 Gas Supplier as Algerian Flows Drop – Bloomberg)
((((FACEPALM))))) Ok, let's be honest: this news is a trick.
It is not fake news but you could say that it is a half-truth.
In this case, the Bloomberg people have descended a bit into clickbait.
We will see more about that at the end of the video.
But what is certain is that, at a time when Spain could be the great savior of Europe,
it has taken a series of catastrophic decisions.
Decisions that are leading to the purchase of more Russian gas than before the war.
And why, you may ask, what is the point?
The answer lies in one word: Morocco.
And what does Morocco have to do with all this?
By the end of the video you will understand.
I warn you in advance: forget everything you know about economics and rational decision
making because today's story is full of facepalm revelations.
So the question we ask you today is: Why is Spain buying Russian gas?
Why doesn't Algeria want to make a fortune selling gas to the whole of Europe through
Spain?
Could Spain really become a hub to replace Russian gas?
Today we are going to answer these questions but first, let's take a look at a bit of history.
(MOROCCO: THE UNCOMFORTABLE NEIGHBOR)
To understand this story we have to go way back in time: specifically we have to go to...
4 July 1776.
What happened on that day?
On 4 July 1776, the 13 colonies that would later form the United States of America signed
their independence from the United Kingdom.
And guess what?
Morocco was the first country in the world to recognize this independence.
In fact, in 1787, when the United States had not even drafted its constitution, Morocco
was the first country to recognize them as a sovereign nation.
Put another way: Rabat is Washington's oldest ally.
They have been friends for more than 200 years.
And I know what many of you are thinking...
But wasn't Morocco a colony?
Yes and no.
At the end of the 18th century, Morocco was a monarchy.
At the end of the 19th century, France and Spain invaded it and turned it into a protectorate.
However, in 1956, Morocco became independent again.
And the Alaouite Dynasty returned to power.
In other words: Morocco is a monarchy allied with the West, an ally of the United States
and even an ally of Israel.
Is it a democracy?
Of course it is not.
But it is a good ally in a region where allies are needed.
If you want to fight Islamic terrorism in North Africa, having Morocco on your side
is a major help.
That explains why, in all the disputes with Spain, most Western countries, including the
United States, are taking a back seat.
But we will talk about that later.
So who is Morocco's greatest enemy, you may ask?
Its former colonists?
France and Spain?
Well, no, nothing of the sort!
Take a look.
(ALGERIA: THE RUSSIA OF NORTH AFRICA)
Algeria and Morocco have a lot in common.
Both are Muslim-majority countries.
Both are former French colonies.
Both countries even helped each other to achieve independence.
However...
as soon as they managed to throw off the colonial yoke, the problems began.
In 1963, when independent Algeria was only four years old, a war broke out with Morocco
over territorial disputes.
Since then, these two countries have not buried the hatchet.
Think about it: Morocco is a pro-Western monarchy.
Algeria is a republic of Arab socialism.
And what is Arab socialism, you may ask?
If you are veteran followers of VisualPolitik, you will have heard the term a thousand times.
If you are new to this channel, don't worry, I'll give you a summary.
By the way, if you are new to this channel, subscribe and click on the little bell so
you don't miss any of our updates!
Well, Arab socialism is an ideological cocktail that was very popular in many Muslim countries.
We could define it as having three key aspects: secularism, militarism and cult of the leader.
In the case of Algeria, more than a specific leader, we should speak of the so-called "LE
POUVOIR", that is to say, the power.
They are a group of military men who control all the political and economic levers of the
country.
To give you an idea, while Morocco has come to have US military bases, Algeria has received
Che Guevara and has had all kinds of agreements with the Soviet Union.
And you will say OK!
But... beyond ideologies, what are these two countries arguing about?
Well, it mainly comes down to territorial disputes.
Mainly, the dispute over ONE very specific territory: WESTERN SAHARA.
We are talking about a territory in the middle of the Sahara desert.
Only about 500,000 people live here.
However, Morocco argues that it is another region within its country.
In fact, 80% of this territory is de facto controlled by Morocco.
Algeria, however, supports the independence of the Sahara.
This conflict has been on the table since the 1960s.
If you are interested in this topic, we have a VisualPolitik video where we cover it in
detail.
But the important thing in today's story is that Morocco and Algeria get along badly.
And it’s getting worse and worse.
In fact, in 2021, three Algerian trucks were attacked in Western Sahara.
Since then, these two countries are practically on the brink of war.
More precisely, from September 2021, Algeria and Morocco have cut all their diplomatic
relations.
Keep that date in mind, September 2021, because it is going to be very important later on.
Of course, the end of diplomatic relations also means that Algeria has stopped selling
gas to Morocco.
And I know what you are thinking...
Okay, [host], this is all very well but...
What does Spain have to do with all this?
Well take it easy, we are going to look at that right now.
(WHAT DOES SPAIN HAVE TO DO WITH ALL THIS?)
For decades, Algeria has been Spain's main gas supplier.
In fact, Spain does not even have pipelines to Russia.
Look at this map.
On the one hand, we have this pipeline that you see here, the Maghreb-Europe pipeline.
It was started in the 1960s and it goes through Morocco.
It has a capacity of 12 BCMs.
Do you remember BCMs?
The BCM or Billion of Cubic Meters is one of the main ways of measuring gas.
To give you an idea, the total consumption of natural gas in Spain is 34 BCM.
Well, this pipeline transports 12 BCM.
As it passes through Morocco, Rabat would keep 7% of the gas as payment.
Since September 2021, Algeria has cut off all relations with Morocco.
And so, in 2021, Algeria cut off the transit of gas through this pipeline.
Therefore, Morocco lost all its transit rights.
But...
Nothing happened!
Algeria could still continue to supply Spain through this other pipeline: the Medgaz.
This pipeline has a capacity of 10 BCMs and directly connects Spain with Algeria.
In other words: 10 BCMs plus 12 BCMs is 22 BCMs.
That is, more than 60% of Spain's gas needs.
And I know what you are thinking: Is Algeria the Russia to Spain?
Well...
Not exactly!
Unlike Germany, Spain has taken care of the diversity of its supplies.
That is why, unlike Germany, Spain does have regasification plants.
But we will talk about that later.
And with which countries does Spain have problems?
Well, with Morocco!
We could say that Morocco is a great friend of the West...
But it is certainly not a friend of Spain!
Of course, Madrid has always supported the independence of Western Sahara, but not only
that!
Disputes over fishing zones between the two countries are the norm.
To give you an idea, even Spain and Morocco have come to have their own low-calorie version
of the Falklands conflict – that’s right!
This happened in 2002.
Morocco couldn't think of anything better than invading the Perejil Islet.
And what is the Perejil Islet?
Well, it is an uninhabited island with no strategic interest.
In this case, Spain sent the army and, in a quick operation, they drove the Moroccans
out.
And what interest did Morocco have in invading an uninhabited islet?
Well...
(((GESTURE OF INCREDULITY))) I don't think anyone knows!
I have already told you that, in this story, there is hardly any rational logic.
However, what is of great interest are these two cities.
Take a look.
What you see here are Ceuta and Melilla.
They are two Spanish cities on the Moroccan coast.
Morocco considers them as colonies that should be part of their territory.
Ceuta and Melilla are NOT colonies.
They are two cities as Spanish as Madrid or Seville.
Their inhabitants vote in elections, have the same rights as citizens in mainland Spain
and pay taxes like any other Spaniard.
However, Morocco does not think the same way.
And we are not only talking about words but also about deeds.
Do you remember that video where we told you how Belarus sent Syrian immigrants to the
border with Poland and Lithuania?
Well, the pioneers in the art of "using immigrants as a political weapon" were the Moroccans.
Check it out.
(Thousands of migrants storm fence at Morocco-Spain border.
DW)
But not only that!
Morocco also threatens to isolate Ceuta and Melilla commercially.
And this is serious talk.
However...
Not everything is black and white!
Diplomatic relations between Spain and Morocco are complicated to say the least.
However, there are two important nuances that we have to point out.
Firstly, remember that Morocco has this special relationship with the United States?
That means that Madrid can't just break ties with Rabat just like that!
Even if diplomatic ties are complicated, to say the least, commercial ties could not be
more intense.
And I know what some of you are thinking: especially those of you watching this video
from Spain, is there really that much trade with Morocco?
Let me give you an example: Inditex.
Inditex is the largest fashion company in Spain: it is the group that includes ZARA.
Well, Inditex has 30,000 jobs in Tangier, Morocco.
And this is just one more example!
In a way, Morocco is to Spain what Mexico is to the United States.
And I know what you're all wondering at this point.
Let's see, [Name of Host], we're 10 minutes into the video, this whole story is all well
and good, but...
What does all this have to do with gas?
Well, relax, now comes the really interesting part of the video.
The plot twist that nobody expected.
Wait for it.
(THE ULTIMATE PLOT TWIST)
Unlike almost any other European country, almost all the gas consumed in Spain comes
from ships.
To give you an idea, in July of this year, 2022, 72% of the gas purchased was Liquefied
Natural Gas.
Only 28% came from pipelines.
And what does this mean?
Basically that, up until the Ukrainian War, the Spanish paid much more for gas than the
Germans.
Now, Spain has a much more diversified and, therefore, more secure supply.
Take a look at this graph.
Here you can see the main gas suppliers to Spain.
Look at the Algerian line.
There is a specific point where the supply starts to drop, right?
When was that?
((((SILENCE FOR A FEW SECONDS, LIKE WAITING FOR AN ANSWER)))) Exactly!
September 2021.
The moment when Algeria cuts relations with Morocco.
At that time, they also cut off the gas going through the Maghreb-Europe pipeline.
However, no problem!
As you can see, Spain did not take long to find another major supplier: the United States.
In fact, since 2022, the United States has become the main exporter of gas to Spain.
And here is where we return to the news item we were referring to at the beginning.
Do you see anything else in this graph?
Let's put it back on screen!
That's right!
In the month of June 2022, Russia became Spain's second largest gas supplier.
Is this something concerning?
Yes, does it mean that Spain is now going to replace Algeria with Russia?
Of course not!
In fact, if you look at the graph, you will see that Spain depends more on countries like
Nigeria than on mother Russia.
So, where is the problem?
Well, the problem is the opportunity cost.
At a time when half of Europe wants to stop buying gas from Russia, Spain could be playing
a fundamental role.
It would be enough to build a gas pipeline connecting Spain with France in order to be
able to resell liquefied natural gas from the rest of the world and especially Algerian
gas, which would be much cheaper.
This supply could reach Germany itself.
And, yes, we know, this is not something straightforward and it would take several years.
But the project is on the table and, even if France does not want it, the rest of Europe
is willing.
In fact, it even has a name: the Midcat.
All that is needed is European funding and a little time.
Do you understand the plan?
It makes sense, doesn't it?
However, you can already see how imports from Algeria are falling... and you will say why?
Okay, we have already seen that Algeria and Morocco get along terribly.
But...
What does Spain have to do with this story?
Well, this is where the definitive plot twist comes in.
Check it out.
(Sánchez ratifies his support for the Moroccan proposal on the Sahara and Podemos accuses
him of following in Trump's wake.
El País)
That’s right!
In a Copernican turn of events, the Spanish government has decided to move closer to Morocco
and away from Algeria.
And yes, it has done so at the critical moment when everyone wants to get along with Algeria.
Of course, Spain is not the only country to recognize that the Sahara is Moroccan.
The United States already did it in 2020 with the presidency of Donald Trump.
Some will think...
Ah!
Surely Spain has a very right-wing government and they have followed Trump's lead...
Well, nothing of the sort!
The government of Spain at the moment is a coalition of social democrats with extreme
left-wingers.
Put another way, there is no economic justification for this move.
Nor an ideological one.
National security?
Well, the truth is that isn’t in play either.
Of course it is in Spain's interest to normalize relations with Morocco.
But by giving them Western Sahara, they have given away their greatest bargaining chip.
Spain has not only sided with Morocco in the Sahara dispute.
Take a look.
(Spain begins to supply natural gas to Morocco through the pipeline cut by Algeria.
El País)
Do you see the logic in it?
Neither do I!
At a time when all of Europe is willing to buy gas from anywhere other than Russia...
Spain is giving priority to sales to Morocco, even at the cost of having to buy more expensive
gas for itself.
As you can imagine, all this has consequences.
For example, relations with Algeria are at their worst, and it is not just a diplomatic
issue.
Spain's gas sales to Morocco are causing Algeria to curb supplies.
As you can imagine, the Algerians do not want to sell gas to Spain so that it ends up in
the hands of their archenemy.
They are reducing the flow to Spain.
But are the Algerians really ready to stop earning money derived from selling their gas?
Hardly!
Right now, there are plenty of buyers.
(Italy signs energy deals with Algeria in bid to sidestep Russia.
Aljazeera)
In other words: Spain has missed an opportunity...
Meanwhile Italy is taking full advantage of it.
So now the question is over to you: Do you think it is possible to reverse this decision?
Could Spain negotiate new conditions to buy gas from Algeria?
Is it really possible for Spain to become the European gas hub?
You can leave me your answer in the comments.
As always, don't forget that here, on VisualPolitik, we release new videos every week, so subscribe
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