Algeria is cutting diplomatic relations with Morocco, Foreign Minister Ramdane Lamamra said on Tuesday at a news conference, accusing its neighbor of "hostile actions".
Morocco and Algeria have had strained relations for decades, mainly over the issue of Western Sahara, and the border between the two countries has been closed since 1994.
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"The Moroccan kingdom has never stopped its hostile actions against Algeria," he said.
Morocco's Foreign Ministry could not be immediately reached for comment. King Mohammed VI has called for improved ties with Algeria.
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The cutting of diplomatic relations is effective from Tuesday, but consulates in each country will remain open, Lamamra said.
Algeria last week said lethal wildfires were the work of groups it has labelled terrorist, one of which it said was backed by Morocco.
Lamamra cited what he called Moroccan support for one of those groups, which seeks autonomy in Algeria's Kabylie region, and said Rabat had spied on Algerian officials and failed to meet bilateral obligations including over Western Sahara.
Algeria backs the Polisario movement that seeks independence for Western Sahara, which Morocco regards as part of its own territory.