Algeria - Defense Industry

Algeria’s military factories produce only materiel and equipment directly related to the business of soldiering, often through local licensing agreements with arms manufacturers from countries such as Russia and China. In spite of periodic reports that Algeria was negotiating with European manufacturers to produce weapons systems under license, by the early 1990s the country continued to depend heavily on outsiders to supply the People's National Army (Armee Nationale Populaire, ANP).

From independence through the 1980s, Algeria's most important supplier remained the Soviet Union. It was estimated that nearly 90 percent of the equipment in the ANP inventory in 1993 was of Soviet origin. Algerian leadershave frequently stated their desire to diversify their sources ofarms and to obtain access to up-to-date Western equipment,but the country's straitened economic circumstances have precludeda major shift to purchases from the West.

At independence the newly created ANP was using equipment from various sources. Some small arms had been delivered to the ALN during the war from China, Egypt, and other countries. The new force also benefited from some military supplies turned over by the French forces as they left the country and from Egypt's assistance to the air unit. Overall, however, the military was very poorly equipped; it lacked the heavy weapons associated with a modern military establishment.

Algeria had no significant arms industry, and therefore valuable foreign exchange must be devoted to the purchase of imported weapons systems. To some extent, defense costs are offset by the contribution of the military to the civilian economy.

Chancellor Angela Merkel has made it a hallmark of her administration to export weapons to regional powers, often in the face of doubts about the recipient country's commitment to democratic values. German arms sales to Algeria increased dramatically in the two years since 2010. Whereas weapons manufacturers in Germany sold less than 20 million euros worth of materiel to Algeria in 2010, sales jumped to almost 400 million in the two years since. Not all were pleased by the development.

The partnership between Rheinmetall and Ferrostaal had been up and running for some years in the north African state of Algeria, where the Düsseldorf-based armaments company formed Rheinmetall Algérie in March 2011 in partnership with Ferrostaal and various state bodies. The company’s goal was to set up a production site for manufacturing Fuchs armored transport vehicles. By 2010 the subsidiary of defense contractor Rheinmetall plans to produce up to 1,200 Fuchs armored personnel carriers in Algeria in the next 10 years. All of the vehicles were reportedly for use in Algeria.

By June 2014 German defense group Rheinmetall was set to sign a huge contract with Algeria aimed at manufacturing armored vehicles in the North African country. Media reports said the deal had been approved by the German government. Rheinmetall and project developer Ferrostaal industrial group were due to sign a deal with Algeria for nearly 1,000 armored personnel carriers and a factory, German business daily Handelsblatt reported 18 June 2014.

The deal was for 980 Fuchs 2 vehicles worth a total of 2.7 billion euros ($3.7 billion), Handelsblatt said, and would be signed in the coming weeks. The contract was part of a bundle of arms deals between Algeria and Germany, valued at 10 billion euros, and also included the delivery of two frigates by industrial conglomerate ThyssenKrupp and the production of military vehicles by Daimler.

"For the first time Germany is delivering not only armored personnel carriers to an authoritarian state but also a complete vehicle factory," the newspaper wrote, adding that Algeria had pledged not to sell the vehicles on to other countries.

Under German export laws, the country's arms manufacturers are prohibited from selling weapons to crisis regions and governments, which are accused of violating human rights. However, Berlin has promoted weapons sales to countries it considers strategic partners, including controversial arms shipments to Saudi Arabia, Qatar and the United Arab Emirates. Berlin didn't see a reason to stop the weapons deal. Economics Minister Sigmar Gabriel wouldn't withdraw the export license granted to Rheinmetall by his predecessor in 2011.

In a response to a request of the Left Party Bundestag Jan van Aken, the Ministry reported that the factory would be located about 400 kilometers east of the capital Algiers. The plan entailed the export of components in the North African country. The workforce would be composed of trained employees in Germany.

The business goes back to a visit by German Chancellor Angela Merkel to Algeria in 2008 and has already been approved in many parts of previous governments. In authoritarian Algeria there despite the oil wealth big social problems, corruption is rampant. Human rights groups criticized the suppression of opposition and media.

Even Egypt was interested in buying the German Radpanzer with which Islamists in Sinai should be fought. So far, however, neither the federal government nor the defense contractors had an official request from Egypt.

Not since the beginning of statistics, Germany has so many arms exports as authorized-2013. With knowledge of the German arms export regulations, the Egyptians wanted to clarify whether an inquiry would have a chance of success in confidential talks with German decision-makers first. Considering the model "GTK Boxer", a modern armored transport of German armaments company Rheinmetall and Krauss-Maffei Wegmann, or the older model "Fox 2" came.

Egyptian President Abdel Fattah al-Sisi invoked in his intention to support Israel. According to him, the Jewish state is open to considering the tense situation in the border region to the Sinai Peninsula an arms shipment for Cairo.

The Algerian Company of Manufacturing of Special Vehicles, Rheinmetall-Algeria-Spa, was created in Constantine (431 km east of Algiers) as part of the military industrial development strategy initiated by the People’s National Army (ANP). Based in Ain Smara, close to the East-West Highway, the joint venture, in charge of the manufacturing of Fuchs-2 6x6 armored vehicles, is one of the promising projects in the mechanical industry in Algeria. The manufacturing of these armored vehicles was to be launched in “early 2015,” according to information provided by military officials.

The Algerian defense ministry announced 11 August 2016 that it had signed an MOU with Italy’s Leonardo group for the production of helicopters at Ain Arnat in the Setif province. A joint Algerian-Italian company would produce three types of light and medium helicopters for personnel transport, cargo, medical evacuation, surveillance and ‘control’. In a bid to further build local capabilities, Algeria would also seek to export helicopters and create and training and qualification services, while the manufacture would help the country boost its know how of composites and electronics.