Will the Spaniards Smell the Coffee?
The Ukraine drama has proven to be more than enough to quell any potential discontent over the reckless diplomacy and pathetic subservience to US interests being displayed throughout the Iberian Peninsula.
Putin recently quipped that had Josep Borrell been made to choose sides in the Spanish Civil War, upon hearing the code word for the onset of the coup d’état “clear skies above all of Spain," he would have been with the rebels, the putschists, that is, Franco & co. “Today he supports the same coup plotters in the territory of Ukraine... It happened in 2014 and he supported them”, he noted. The comparison shouldn’t be poked too hard. Nevertheless, it’s beyond doubt that the Spanish Socialist Workers’ Party (PSOE), which aside from Borrell boasts gems such as Javier Solana and current PM Pedro Sánchez, has always been that moderate-left CIA brainchild in Spain, safely nestled somewhere between the lingering post-Franco anti-Atlanticism of the 70s and the communists.
Naturally, soon after being astroturfed through the 1982 general elections, PSOE, under the arm of the German social democrats, was quick to disavow any Marxist influence in their neoliberal brand of socialism and showed themselves to be equally adept at exploiting anti-Francoist sentiment to dismantle industry and public utilities. Under the threat of US-controlled terrorism, they wasted no time in betraying their voter base by joining NATO, and have since consistently offered their cadre as token hires to the EU-NATO bureaucracy. Yet the most scandalous area of the Spanish socialists’ behavior pertains to what they’ve gotten away with at home.
Parallel to the dependency on Russian gas to be found on the EU’s eastern front, up until recently Spain, and Portugal to a lesser degree, were also dependent on low-cost, long-term contracts with Sonatrach, the state-owned Algerian gas behemoth which NATO-PSOE hawks like Javier Solana have long sought to deregulate, and which up until now had supplied Spain with roughly half of its natural gas. The elephant in the room is that the electricity bills bleeding households and industry alike are being compounded by events that have very little to do with Russia, namely the heated Madrid-Rabat-Algiers love triangle in which the current Spanish leadership has proven to be helpless when faced with the geopolitical forces converging in the Maghreb. Yet the Ukraine drama has proven to be more than enough to quell any potential discontent over the reckless diplomacy and pathetic subservience to US interests being displayed throughout the Iberian Peninsula.
Specifically, with the PSOE government continuing to pander to Morocco on the decisive issue of Western Sahara, only the submarine Medgaz pipeline, which directly connects Algeria’s Hassi R'Mel gas field to Almeria via the Mediterranean, continues to be operational, albeit operating below full capacity. Contracts for the higher capacity Maghreb-Europe pipeline, which juts through Morocco before crossing the strait into Cordoba, were not renewed in October 2021 following the complete diplomatic and commercial rupture between Rabat and Algiers, in which the latter sought to deprive its rival of both gas and the hefty transit fees it garnished. With France and Italy actively pursuing bigger contracts with Sonatrach and considering the windfall profits to be made on the spot market, we can only assume that Algeria didn’t mind turning its back on the Maghreb-Europe.
As Algerian imports to the Iberian Peninsula have continued to decline, US LNG has readily taken its place. As is the case with Russian gas, the difference between previous long-term contracts and the spot market is obscene, and with electricity prices tied to the gas market thanks to EU-style regulations, consumers have been fleeced. Indeed, when energy bills are compared to purchasing power, this spring, Spain was second only to Romania for the most expensive electricity. The pitiful side of all of this is that there has been very little connecting the dots. We all know who it’s been pinned on.
This trend reflects more of a concerted move away from long-term contracts than any genuine concern with boycotting Russia. Spain has grossly over-invested in import infrastructure and has little dependence on Russian gas. However, Russian imports have shown no sign of decline since February 24 and have in fact doubled in recent months. If anything, the abrupt increase in US LNG shipments has displaced Algerian gas. Yet as Spanish consumers pay the price, the Ukraine theater has them so entranced that any serious demands of restoring relations with Algeria have yet to crystalize, with most of the critiques coming from opposition parties or peripheral observers. Algeria certainly isn’t the key to the EU’s woes, but as its third-largest supplier, previously accounting for roughly 10% of natural gas imports, the lack of interest in resolving or even reaching a temporary solution to the hostilities in the Maghreb seems to give the whole game away.
The popular phrase “Africa begins in the Pyrenees” can be wielded in many ways; as far as energy integration is concerned, it holds true. Spain is somewhat of an energy island, having higher-capacity connections with Africa than with Europe and being well below the EU benchmark of 10% for electricity grid integration. The head-scratcher is that Spain houses more than a third of the EU’s regasification and storage capacity; more than double what would be needed to satisfy domestic consumption without Algerian imports. Unsurprisingly, a good portion of it lies unused, “hibernating” as they put it, and effectively out of reach to Europe without proportional pipelines or floating storage regasification units.
The disastrous marginal cost principle enshrined in EU legislation lets the wholesale price of electricity be set by the most expensive electricity contributing to the grid at any given period, which is almost always produced by gas-fired plants. The framework has been associated with neoliberal icons like Pinochet and Thatcher; certainly, it has to be one of the most scandalous incentive structures to be institutionalized. While the extortionate electricity bills have elicited a steady flow of critiques of this pricing mechanism, the heist can only be fully appreciated in the context of mass privatization and deregulation of public utilities, especially in the particularly debt-ridden EU states. In northeast Spain for instance, when wholesale prices first spiked in 2021, reservoirs were emptied to unnecessarily low levels—and sometimes to historic lows—in drought-prone areas just to sell cheap hydropower at the price of expensive natural gas, increasingly dominated by US LNG. Within this system, the profit margins for alternative energy providers soar as gas-fired plants jack up the price of the electricity “pool” with overseas gas, adding another layer to the renewables racket and further driving the transition from competitive long-term contracts to spot market rates.
Curiously enough, much of this infrastructure would be under state control or regulation, had it not been for PSOE’s neoliberal acquiescence during the 90s under Felipe Gonzalez. Borrell himself is credited with liberalizing telecommunications, and now the PSOE-led coalition continues to preside over the New Enclosure plunder. The Ricobaya reservoir for example, one of the largest bodies of water which is known to have been excessively emptied, was set to return to state stewardship in 1990 but was re-leased to Iberdrola in direct defiance of Spanish law that limited hydropower concessions to 99 years. With these scruples, it’s no wonder Iberdrola made record profits in 2021, making 10 times as much from renewables—and producing 33% more hydropower—when compared to the previous year.
Of course, fines have been issued and there are formal legal safeguards against this behavior, which in turn have sparked creative energy-production schemes and pool combinations. The Spanish courts are fumbling over a few corruption cases, while EU law effectively overrides any meaningful reform to the situation. In the meantime, Spain and Portugal received approval from their EU chaperones for the “Iberian Exception,” which is currently capping prices solely for gas used to produce electricity at €40/MW and will continue to do so for a few months. Macron recently endorsed a similar “price ceiling” for France. But the energy sector’s profits aren’t being trimmed in Spain; the supposed 17% discount for consumers will be covered by taxpayers in what amounts to a multi-billion euro payout.
But what is deindustrialized, chiringuito, tourist-haven Spain doing with more than a third of the EU’s natural gas regasification and storage capacity in the first place? The answer is rather unimaginative. Yes, some voices in Spain and Portugal have long sought to capitalize on this infrastructure as ‘Europe’s Gateway for gas,’ but the disproportionate investment in LNG is far from a coordinated move to supply European markets or to recover industrial output. To suggest any foresight would be to give the Spanish lapdog leadership too much credit. It appears to be a case of simple insider corruption, with Spanish grid operator Enegas, privatized under PSOE in ‘94, and other energy providers being legally protected losses, that is, able to charge their consumers whatever is necessary to break even on its construction sprees. Mega-sites, such as the Castor storage facility or El Musel regasification plant, lie unused since their construction, while the rest are functioning well below half of their capacity. Similarly, 67 gas-fired energy plants were constructed which have only been used at 10 to 15% of their capacity.
Now that the stage-managed scramble is underway, ideals of European solidarity and integration have been invoked by Scholz to finish the MidCat pipeline project, which the French abandoned in 2019 on pretexts of economic inviability and continue to deem unnecessary to this day, despite some hints to the contrary. If completed, it would be the third pipeline crossing the Pyrenees. Decades ago, it was France that proposed the Maghreb-Europe pipeline so as to purchase directly from Sonatrach via Spain; a plan which never came to fruition. Understandably, today the French are not jumping at the idea of using Spanish ports to pump in expensive LNG. As for the MidCat pipeline, in the wake of the 2014 US-backed unrest in Ukraine, the initiative was already being marketed as a means of reducing dependency on Russian gas. Obviously, for their part, the Spanish and Portuguese are eager to profit from their overcapacity in all things natural gas, from exporting electricity to renting their storage capacity to other nations.
Yet all of these pipelines are childsplay compared to the volume being tinkered with on NATO’s eastern border. The travesty is that electricity prices are anchored to the deregulated natural gas markets. As for Spain, the big question mark is Madrid’s timely about-face on Western Sahara and Algeria—Spain’s only shot at cheap energy within the existing system.
Specifically, in March 2022, Spain reneged on its historic commitment to the independence of Western Sahara when PM Pedro Sanchéz, echoing Trump’s declarations from that winter, made an unexpected declaration of support for Morocco’s “autonomy” solution for the disputed region. The move contradicted both Madrid’s traditional stance as former administrative power and UN resolutions, while supporters of the Sahrawi cause in Spain were caught completely by surprise. The decision, which led to the termination of the Algeria-Spain Treaty of Friendship, came only a month before the Israeli Pegasus spyware scandal in Spain, revealing that key members of the Spanish government, including Sanchéz himself, had been compromised. Many have since agreed that “all of the breadcrumbs lead back to Morocco.” Algiers, which fell victim to Morocco’s use of the Israeli software the year before, has cried blackmail, suggesting that Sanchéz was coerced into toeing the Moroccan line. To paint a picture of the forces at work, a PSOE-affiliated Spanish minister retweeted that "the agreement obligates Morocco to desist from Ceuta, Melilla and the Canary Islands.”
According to Algiers, the "Israel'-Morocco axis, formalized in the 2020 "Abraham Accords", is behind the Movement for the self-determination of Kabylie—yet to be streamlined by the Western media and exiled in Paris, from where they presented a draft constitution this May—and similar destabilization efforts in Algeria ranging from wildfires to reprisals. Algeria responded in August 2021 by breaking off diplomatic and commercial ties with Morocco, ordering its banks to freeze commerce with Rabat while closing its borders and airspace to its neighbor. Two months later, Algeria did not renew its contracts for the Maghreb-Europe pipeline. As mentioned, the move effectively deprived Morocco of key gas imports and the 7% royalties it received. Rabat feigned indifference, but the fact that Morocco used gas to generate 10% of its electricity, and given that it has no regasification terminals, speaks otherwise. Within a matter of hours, three Algerian truckers were bombed on the border of Western Sahara and Mauritania—Algerian sources are convinced that Moroccan forces carried out the reprisal.
Zoom out, and the broader integration of the Atlantic Coast, from Spain to West Africa, enters the picture. This September in Rabat, a memorandum of understanding was signed on the Nigeria-Morocco pipeline which is planned to skirt around the West African coast, supplying 13 coastal nations and three landlocked states on its scenic route north. The project is still decades away from bearing any fruit, but the signees intend to feed the pipeline into the Maghreb-Europe, and from there into the European grid. With the project being so far away from completion, whether or not this means that Morocco has abandoned any hopes of restoring the flow of gas from Algeria is hard to tell. With the likes of John Kerry looming over the scene, it’s almost redundant to add that climate change has been invoked here to discourage long-term projects, especially one of this sort, bent on regional integration in Africa—the epitome of divide and conquer.
The Makhzen is crystal clear about its priorities. Mohammed VI laid it all out when he declared that “the question of the Sahara is the prism through which Morocco looks to its international surroundings.” The phosphates and tellurium, the rich fishing lanes, and the territorial waters of Western Sahara, which overlap with the Canaries, must all be kept in mind. These things aside, Morocco would certainly be hard-pressed to find itself geographically cut off from Sub-Saharan Africa by the Algeria-Sahrawi alliance. Algiers on the other hand is deeply invested in the Polisario Front and no doubt appreciates the significance of a land bridge to the Atlantic.
Algeria is adamant that none of their gas is redirected back to Morocco from Spain; the latter having jumped at the opportunity to fill the void left by Algeria and reverse the flow of gas across the strait. Yet Algeria’s bottom line is rather puzzling, as gas grids do not separate imports into discrete batches. Nevertheless, when asked if Spain would face a shortage without the Maghreb-Europe, Albares, wannabe Atlanticist and foreign minister, together with other government insiders, did not express the concern appropriate to the circumstances: losing almost a quarter of one's gas supply. Consumer budgets clearly weren’t in the equation. LNG shipments to Spain doubled the following month as electricity bills reached record highs that winter.
Once again, securing competitive gas prices from Algeria does not seem to be high on the list of priorities for the Spanish leadership or the international community. Only months after the Maghreb-Europe closed, the Spanish leadership took responsibility for the Sánchez-signed endorsement of the autonomy plan, leaked by Morocco. The leak itself was riddled with errors and both sides hardly seemed to have their story straight, prompting some analysts to suggest that the Makhzen had unilaterally drafted and leaked the letter. In any case, PSOE’s capitulation to the autonomy solution, and similar stunts to delegitimize the Polisario Front, have further jeopardized the remaining Sonatrach contracts and led Algiers to threaten price hikes.
The administrative chaos and international backlash at Morocco’s disposal is the key to understanding Madrid’s learned helplessness with respect to Rabat’s behavior in the Maghreb. Morocco can turn up the pain dial on a moment's notice, opening the floodgates of migrants to Ceuta and Melilla and abstaining from further security cooperation; profiting from it all the while by shuttling West Africans across the Sahara on state-owned Royal Air Maroc flights.
Spanish Foreign Minister Margarita Robles was rather blunt when she described Morocco’s foreign policy as one of “blackmail". Indeed, as Spain impotently pours millions of dollars into Morocco’s Ministry of Interior for border-control purposes, Morocco systematically plays the immigration card. A simple chronology of prominent border incidents speaks for itself: Sanchéz’s capitulation to Morocco was “leaked” just two weeks after the biggest storming to date of the Melilla fence, which saw 2,500 people attempt to enter, and some 500 actually manage to do so. Before that, Spain’s highest recorded border breach, when some 10,000 people swam around the fences onto the beaches of Ceuta when Morocco relaxed its security, came only a few weeks after Spain accepted Sahrawi Polisario Front leader Brahim Ghali for Covid-19 treatment. This summer interestingly, the 2022 Melilla massacre was just days before the Madrid NATO summit, prompting some analysts to suggest a plot to hype up “NATO’s Southern Flank.” In point of fact, the Spaniards tried to make a scene of it at the summit, demonizing the Sahel as a hotbed of terrorism and Russian influence while making vaunted suggestions that Ceuta and Melilla, which are technically not covered by the clause, might be written into Article 5 on collective security. Yet it was largely a show that was barely heard throughout the NATO bloc.
Not surprisingly, some Spanish observers have unimaginatively incorporated Algeria into the Russian gas hostage delusion, attempting to cast things as a case of Europe, the victim, surrounded on its eastern and southern flanks by a Moscow-Algiers cartel—with more than half of its supply under its thumb. The fact that the EU leadership has done everything in its power to deregulate gas markets, sabotage long-term contracts, and incentivize providers to opt for the spot market, while European energy companies and US LNG providers pauperize their nations, is all but rendered unintelligible and somehow unrelated. Such is the perfection of the information war. So much in fact that broadly speaking, in Spain, it hasn’t even been necessary to justify the hostilities with another smear campaign against Algeria—be it for proximity to Russia, the Kabylia movement, or somebody’s human rights. This may change with the much vaunted and proverbial winter. But for the moment, the Ukraine theater is loud enough to drown out the noise in the Maghreb.