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Pursuit of political stability dominates Maghreb

11 July 2025

 

Across the Maghreb, amid a range of external and internal pressures, the pursuit of political stability is emerging as the overarching preoccupation for governments as they compete for trade, growth and investor interest.

Wracked by drought, years of disruption due to Covid-19 and the impact of the war in Ukraine on grain prices, and now facing the boot of arbitrary US tariffs, the economies of the region need certainty more than anything.

With fast-growing populations, all of the Maghreb countries face serious challenges in maintaining sufficient job creation to cater to their youth, and with local spending constraints, attracting foreign investment is key.

None of the Maghreb countries seem to understand this better than Morocco, which has been rolling out what might be described as a GCC-style vision for the country. Most recently, in September 2024, it launched the Digital Morocco 2030 strategy to use artificial intelligence to improve access to services in rural and underserved areas.

Such initiatives are central to Morocco’s broader New Development Model (NDM) strategy, first laid out in 2021 and recognised by bodies such as the Washington-based IMF as a key driver of economic transformation in the country. Key indicators for the NDM include doubling the country’s GDP per capita to $16,000 by 2035, doubling the rate of women in the workforce, raising renewables to 40% of total energy consumption and developing the digital sector to account for 5% of GDP.

Rabat is also widening the country’s social security net, having expanded family allowances in 2023, and with plans to expand old-age pensions and unemployment benefits in 2025. The government is also improving access to services for Amazigh speakers in answer to loud political calls since the 2016-17 Amazigh-led Hirak Rif movement protests.

From creating jobs to supporting vulnerable groups and minorities, the common thread in Rabat’s domestic policy is expediting measures to address emerging risks to social and political stability at source.

Externally, Morocco has meanwhile intensified its diplomatic campaign for international recognition of its semi-autonomy plan for Western Sahara. First proposed in 2007, the scheme initially received little traction, but the situation changed significantly in 2020 with then US President Donald Trump’s recognition of Moroccan sovereignty over the territory as part of a deal to normalise ties with Israel. In 2022, Spain also shifted its stance to one of support for Rabat’s autonomy plan, followed by France in early 2024 and by the UK in June 2025 – each country for their own reasons.

The fresh support is a diplomatic sea change for Morocco after 30 years of across-the-board rejection of its claims to the territory and calls for Sahrawi self-determination. It also boosts Rabat’s effort to secure more foreign direct investment (FDI) into Western Sahara and local projects, such as the Morocco-UK XLinks energy initiative.

For Madrid, the recognition also resolves a point of contention between the two neighbours, particularly ahead of the pending co-hosting of the 2030 Fifa World Cup by Morocco, Spain and Portugal.

Advances in Algiers

Across the border in Algeria, the wheels of legislative change have also been slowly turning, with new hydrocarbons and investment laws, accompanied by the lifting of some restrictions on foreign ownership, raising the possibility of boosting inbound FDI.

The government is also emphasising private sector-led growth and the rationalising of public spending, as well as initiatives to improve the business environment by reforming public banks and state-owned enterprises.

President Abdelmadjid Tebboune secured his re-election for a second term in September 2024 with the support of 84.3% of the vote, in a reassuring referendum on the political stability of the country’s post-Bouteflika political order.

Although the country’s politics remain marred by the suppression of the opposition, the broader shake-up in government is reflected in the ongoing reforms and demonstrates the country’s political awareness of the need to deliver.

In a mirror image of Morocco’s diplomatic journey, Algiers has worsening foreign relations with Paris and Madrid due to its staunch opposition to the Western recognition of Moroccan claims to the Western Sahara region.

In May 2025, Algeria expelled 15 French diplomatic agents, citing their “irregular positions” on the geopolitical issue. The incident matched similarly negative responses by Algeria to Spain in 2022.

Trouble in Tripoli

Libya remains deeply mired in the political deadlock between its two administrations – even as the years of rivalry between the administration has made it clear to all involved of the need for reunification for the stability of the country.

Talks to establish a unified interim government and hold national elections have stalled over the past year, however, with armed clashes between rival militias in Tripoli in May 2025 only reaffirming the precarious state of affairs in the country.

The UN remains central to Libya’s peace process, and in early 2025, the UN appointed Hanna Tetteh as the Special Representative for Libya, while a 20-member Libyan Advisory Committee was established to address contentions over the proposed electoral process.

In May, the committee then outlined some potential solutions, but political consensus remains elusive, leaving little near-term hope for a resolution to the situation in the country.

Turbulence in Tunisia

Tunisia, meanwhile, faces issues stemming largely from political instability inflicted upon it under President Kais Saied, who has ruled by decree since dissolving the country’s parliament in 2021. In March 2025, Saied dismissed his third prime minister in less than two years and appointed Sara Zaafarani in their place.

Saied was re-elected in an October 2024 election with over 90% of the vote, but the process was marred by both low turnout and the arrest of several opposition figures.

Tunis, under Saied’s leadership, is the exception to the rule amid the Maghreb's pursuit of greater political stability. One rare area of success for the president has been in extracting financial support out of the EU in exchange for curbing trans-Mediterranean migration routes emanating from Tunisia.

More broadly, however, Tunisia’s deepening economic challenges, low growth and deteriorating public services under the watch of Saied’s autocratic political experiment serve to underline how the region’s most viable route to economic prosperity remains through providing the kind of political stability in which investors can trust.

The region’s need for trade and growth-boosting policies will only be emphasised from 1 August, when Trump’s pledge for tariffs of 30% on Algeria and Libya, 25% on Tunisia and 20% on Morocco comes due.

While the US only reflects a small fraction of the outbound trade of each of these countries, further dents to growth are something that the region can ill-afford. Here, too, political stability may be key in enabling the respective powers that be to make diplomatic overtures compelling enough to entice Trump to back down.

MEED’s August 2025 report on the Maghreb also includes:

> ECONOMY: Maghreb economies battle trading headwinds
> LIBYA OIL: Oil company interest in Libya increases
> ALGERIA INDUSTRY: Algeria’s industrial strategy builds momentum 
> POWER & WATER: Slow year for Maghreb power and water awards
> CONSTRUCTION: World Cup 2030 galvanises Morocco construction

https://image.digitalinsightresearch.in/uploads/NewsArticle/14248342/main.jpg
John Bambridge

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    Funding and liquidity is generally a strength for the region

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    Forbearance measures from the UAE, Kuwait and Qatar central banks have allowed additional headroom

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    “They were designed to boost confidence and limit that pass through from temporary deposit volatility. It was not to do with acute banking stress.”

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    “When there is increased market uncertainty, larger banks may benefit from a flight-to-quality movement, with deposits moved away from smaller banks. Based on Q1 results, only a few smaller banks have reported a contraction in the customer deposits,” says Lescova.

    The GCC’s largest banks, including Al-Rajhi Banking & Investment Corporation, Saudi National Bank, First Abu Dhabi Bank, Qatar National Bank, Abu Dhabi Commercial Bank and Emirates NBD, remain highly profitable, although they may not perform as strongly as they would have had the conflict not occurred.

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