Spain to 'defend its interests' as Algeria banks curb ties over Western Sahara row

Spain vowed to "defend its interests" on Thursday after Algerian banks suggested they could curb ties following Madrid's U-turn on disputed Western Sahara, but expressed confidence that Algiers would abide by a gas-supply contract between the two countries.

"We are looking into the scope and practical consequences of this measure, both at a national and a European level," Spanish Foreign Minister Jose Manuel Albares told reporters.

Madrid's aim, he said, was to respond in a "calm and constructive yet firm way to defend Spain's interests and those of its businesses".

Earlier, Algeria's Association of Banks and Financial Establishments had urged its members to restrict business ties with Spain, just hours after Algiers said it was suspending a decades-old cooperation treaty with Madrid.

"Following the suspension of the treaty of friendship, good neighbourliness and cooperation with Spain, you are requested to freeze all automatic bank payments, whether incoming or outgoing, for goods and services with Spain from Thursday, June 9," ABEF said in a statement.

In mid-March, Spain reversed its decades-long stance of neutrality on the Western Sahara conflict, saying it would back Morocco's autonomy plan for the disputed region as it sought to end a lingering diplomatic spat.

Spain's move, widely seen as a victory for Morocco, infuriated its regional rival Algeria, which has long backed the Polisario Front, Western Sahara's independence movement, and which also supplies vast quantities of natural gas to Spain.

In suspending the treaty on Wednesday, Algeria said Spain's move had been "in violation of its legal, moral and political obligations" towards the territory, a former Spanish colony.

Although Spain shares borders and strong economic ties with Morocco, it depends on Algeria for natural gas, with state-owned energy giant Sonatrach supplying more than 40 percent of Madrid's natural gas imports in 2021 through the deep-sea Medgaz pipeline.

That figure has dropped to below 30 percent since the start of this year as Spain has increased its dependence on other sources.

"The commercial relationship that exists between Algeria's Sonatrach and the Spanish firms that buy gas... involve contractual obligations," Spanish Energy Minister Teresa Ribera said Thursday, expressing confidence that it would "continue functioning".

"Because if it didn't, that would raise a more complex problem which would have to be resolved not through diplomatic ties but through... the courts," she said.

Algeria's supply of gas to Spain "is subject to medium-turn contracts. Algeria has always complied with these contracts, and we have no doubt it will continue doing so," said Finance Minister Maria Jesus Montero earlier on Thursday.