7 - 13 June 2001
Issue No.537
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Al-Ahram Weekly Online 7 - 13 June 2001 Issue No.537 |
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New vision
During a symposium on Egyptian-Saudi trade relations held last week in Cairo the Saudi businessman Hussein El-Shobokshi challenged the long-held assumption that interaction between the two countries be based on the exchange of labour and capital.
Shobokshi identified information technology as one of the sectors that might come to replace traditional economic ties, saying that Egyptian IT exhibitions held in Saudi Arabia have consistently been viewed with interest by Saudi businessmen aware of the potentially lucrative joint- ventures that the field promises.
Yet to move away from the current pattern of trade relations, Shobokshi argued, requires a sea-change in the way in which the two countries view economic interaction. It will require, he said, an abandonment of the parochial, personalised relationships and political directives that have, for five decades, governed Arab economic relations.
A particular case in point is the manner in which trade and investment between two of the largest Arab economies is negotiated.
Over the past decade, according to Shobokshi, some 76 Egyptian companies have pulled out of the Saudi market, despite the fact that several of them, quite literally, built their fortunes within this market. Arab Contractors, Banque du Caire, Abul- Futouh, Marie Louis, Concrete and Octopus are just some of the Egyptian businesses that have left.
Some withdrew to focus on meeting the apparently substantial demand within Egypt, a view that, with hindsight, may appear somewhat short- sighted. In other cases the continuing presence of a company within the Saudi market was based on a network of personal relations: when these ceased, with, say, the passing away of a company's founder, then the company itself withdrew. Yet other businesses left because there were no institutionalised venues within which to work out whatever problems they might have been facing in the Saudi market.
The extent to which personal relations and political influence is needed to smooth business was clearly illustrated by the fact that by it took no less than Egypt's president and prime minister, to resolve the problems faced by tourist companies arranging 'umra packages.
Within a broader context the absence of any truly vibrant interaction between the two markets became, if anything, more entrenched as a result of the traditional divide that exists between the oil- producing states and their non-oil producing Arab neighbours. While Saudi Arabia remains intent on liberalising its trade through preferential agreements with members of the Gulf Cooperation Council it has yet to seriously examine proposals to extend similar comparable advantages to Egypt.
Egypt, for its part, has chosen to concentrate on the markets of the EU, COMESA and the US as opposed to Saudi Arabia or, for that matter, other Arab countries that possess sizeable, yet untapped, export opportunity for Egyptian goods and services.
Changing international conditions, though, are likely to induce the countries of the region to reformulate their ties. As the flow of labour and capital recedes on both sides, the oil producing states realise that oil can no longer be their sole viable source of finance for long-term development. Likewise, Egypt, because of the same international circumstances, can no longer view labour as the one great comparative advantage it can export to the region. Labour, if it is to be exported, must be skilled, and the skills increasingly in demand are related to the services and IT sectors.
The recently announced Saudi-Egyptian petrochemicals project, which will be based in Egypt, is an indication of the possible future pattern of bilateral economic ties. The venture indicates that there is a growing awareness among the private sectors in the two countries that it may well be more lucrative to join together and export to the outside world rather than to work alone and export to one another.
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