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Al-Ahram Weekly On-line 26 Oct. - 1 Nov. 2000 Issue No. 505 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 26 Oct. - 1 Nov. 2000 Issue No. 505
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Palestine International Economy Opinion Culture Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Enhancing partnership
By Aziza Sami
On the first leg of a regional tour whose aim is to explore the political situation in the Middle East, German Chancellor Gerhard Schroder will stop in Cairo on October 28 for a two day visit. Although this is the chancellor's first official visit to Cairo to discuss bilateral relations, it is his second to Egypt this year, following his attendance of the Euro-African summit in April. During his trip, Schroder is scheduled to meet with Egyptian Prime Minister Atef Ebeid to review the status of trade ties.
Chancellor Schroder
Ambassador Mubarak
"The traditionally strong relationship between Egypt and successive socialist governments has always been an asset for Egyptian-German relations, and this momentum was carried over under subsequent Christian Democratic governments. Now, with a socialist government [in Germany], the aim is to raise the level of economic interaction to [be on par with] the level of political ties," Egyptian ambassador to Berlin Mahmoud Mubarak told Al-Ahram Weekly.
Germany is Egypt's largest trade partner in the EU and its third largest internationally, where one important dimension has been German development and technical assistance, initiated in the early seventies. Although budgetary constraints imposed on the federal government by German unification have led to cuts in assistance extended to developing countries, cooperation in the social development sector continues, says head of the Egypt Desk at the Federal Ministry of Cooperation Hadi Riad. Even though the last time funds were allocated for Egypt was 1997, moneys from this allotment continue to be used in project implementation.
"The challenge though," says Riad, "is to find reliable data by which to assess the problems of poverty and social inequality and hence, in a feasible manner, allocate funds to these sectors." The development policy espoused by the German government, according to Riad, aims, "not at creating islands of excellence, or artificial environments, but to address policy at the macro-economic level."
In spite of legislation, the practice of employing children has continued. To increase awareness of the importance of applying the law and its impact on Egyptian exports, the Federation of Egyptian Industries (FEI) recently held a seminar on this issue.
Currently, German development assistance is targeting the private sector with programmes for small and medium enterprises, vocational training under the Mubarak-Kohl agreement and projects to increase the interest of businessmen in associations to promote their activities. In the area of infrastructure, there are efforts to "attract more investment to the fields of wind-generated energy and provide incentives for using 'clean energy' sources, as well as improving the performance of the water authority," said Riad.
But despite the incremental increase in trade on both sides, the balance of trade remains, as with all Egypt's EU partners, overwhelmingly in Germany's favour. Egyptian exports still encounter difficulties in gaining access to markets in Germany and in the EU even though government initiatives are being taken by both sides to facilitate the penetration of these by businesses of the Egyptian private sector, in particular.
Ambassador Mubarak put Egypt's trade deficit with Germany within the wider context, "If there is a deficit, then, this is the case with every single one of Germany's Southern trade partners [China excepted]." He added that the weakness of the deutschmark, which is currently valued at 25 per cent of the dollar, has accelerated the influx of cheap German imports into Egypt. Currently, he said, the Egyptian government is examining measures to rationalise its imports from Germany without compromising its need for heavy equipment, which constitutes a substantial portion of German imports.
Partially making up for the trade imbalance has been intense German tourist activity in Egypt. Following Italy, Germany sends more tourists to Egypt than any other country in the world. During the first nine months of this year, just under 5.6 million Germans visited Egypt. Representing a 52 per cent increase compared to the same period last year, this number is expected to continue to grow, providing that political tensions in the Middle East do not escalate.
Tourism, however, is only one sector viewed by Egyptian officials as an area in which an increased German presence is desirable. A report issued by the commercial representative's office at the Egyptian embassy in Berlin suggests that German investment in Egypt falls far short of the potentials offered by the second largest market in the Middle East. It also notes that as the second largest exporter of financial services worldwide, Germany's limited presence in the Egyptian financial sector indicates an area in which it might step up its activities.
Initiatives to increase bilateral interaction are supported at a variety of sites in the political sphere such as the group of German-Egyptian parliamentarians in the Bundestag. A German-Arab business council, established by the Egyptian embassy in 1999, which held its first meeting during President Hosni Mubarak's visit to the country that same year, is also working towards this end. The council, which includes among its members the heads of major German corporations such as Siemens and ABB, met again this February, during the visit to Cairo by German President Johannes Rau.
As a pivotal player in the EU, Germany also has an interest in expanding its ties with Mediterranean countries through the Barcelona Process. "During negotiations for this framework, Germany supported Egypt's position on contentious issues such as dumping and rights of access to European markets, and it was its vote which was decisive in settling these matters to Egypt's advantage" says Mubarak.
"German policy is very much embedded in EU policy," affirmed a German Federal Foreign ministry official, adding that his country's policy regarding the Middle East is no exception. The German position on regional economic cooperation, therefore, has remained focused on realising the objectives of the Barcelona Process through trade associations or 'parternariats.' This approach which contains a structured blue print for trade, stands in contrast to the multilateral trade policy advocated by the US in the MENA region, in which all countries, including Israel, are expected to trade with each other. "In practical terms, this [MENA bloc] has not worked out as envisaged," said the German official.
The European approach is a trilateral one, making the EU the common denominator in trade between any EU country and any country outside the bloc. An issue that has been contentious is the process for and timing of the allocation of funds for the EU's industry modernisation programme for Egypt.
The foreign ministry official conceded that political problems within the EU commission and allegations of financial irregularities last year had exacerbated the already slow process for allocating assistance. "We admit that the process has been slow [in determining how and to whom the funds will be allocated].
As soon as the partnership is signed, the industry modernisation funds [will be allocated] although there is a preference inside the EU to give them directly to the Egyptian private sector, [rather than to the government]." the foreign ministry source said.
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