Sunday,22 October, 2017
Current issue | Issue 1260, (27 August - 2 September 2015 )
Sunday,22 October, 2017
Issue 1260, (27 August - 2 September 2015 )

Ahram Weekly

Reaching out for the Russians

President Abdel-Fattah Al-Sisi made an official visit to Russia this week to boost strategic ties and economic cooperation, reports Mona El-Fiqi

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Al-Ahram Weekly

For the third time since 2013, President Abdel-Fattah Al-Sisi visited Russia this week to hold talks with his Russian counterpart Vladimir Putin. Until Al-Ahram Weekly went to print, a statement issued by the presidency said the three-day visit from 25-27 August was an opportunity to enhance cooperation with Russia particularly in the economic field.

The Kremlin announced that the discussions would include extensive exchanges on international issues, primarily the situation in the Middle East and North Africa

Relations between Egypt and Russia improved significantly after the removal of former president Mohamed Morsi in 2013. Both countries have worked to strengthen military and trade ties, among other aspects of bilateral cooperation, and the Egyptian and Russian leaders have exchanged two rounds of visits to both Cairo and Moscow.

Al-Sisi visited Russia twice in 2014, once in February when he was still Egypt’s defence minister and then again in August after being elected president.

According to a statement by the Kremlin, Al-Sisi will hold talks with senior Russian officials and the heads of Russian companies during his visit. The talks will focus on promoting bilateral relations, especially trade and economic cooperation and Russian investments in Egypt, the statement added.

The strong political relationship between the two countries is mirrored in the figures for trade volumes between Russia and Egypt. The trade balance between the two countries has boomed from $3 billion in 2013 to $5.4 billion in 2014, of which $540 million is for Egyptian exports and the rest for Russian exports to Egypt, mainly oil, steel and wheat.

According to figures from the Ministry of Industry and Foreign Trade, Egyptian exports to Russia increased by 22.3 per cent in 2014.

 Egypt’s agricultural exports, representing 80 per cent of the total, have seen a remarkable increase, especially in potatoes, which registered a 144.8 per cent increase, frozen vegetables, up by 900 per cent, and processed vegetables and fruit, up by 823.1 per cent.

Exports of electrical appliances are up by 681.3 per cent, and Egyptian exports to Russia as a whole were up by 100 per cent during the first half of 2015, according to the Central Bank of Egypt (CBE).  

Tarek Sayed, chairman of the cereals division at the Federation of Egyptian Industries, said that exchanging visits and having strong political relations with any foreign country help to increase trade volumes. Meanwhile, reasonable prices and high-quality products could not in themselves guarantee access to foreign markets, he said.

“Russia is an obvious example of good relations meaning that the door is open for Egyptian products. Egyptian exports have not been able to access some African countries except through Dubai because of the lack of relations with them,” he added.

International political developments have also helped the increase in trade volumes between Egypt and Russia. Last year, Russia banned the import of food and agricultural products from the European Union and other western countries in retaliation for sanctions placed on it due to Russian involvement in the crisis in Ukraine.

“The ban has translated into an opportunity to open markets between Russia and Egypt,” Sayed noted. Egyptian exporters have benefitted from the sanctions against Russia to increase their exports, he added.

Russia is an important wheat exporter to international markets, with annual exports estimated at 25 million tons. Egypt, the most important importer of wheat worldwide, imported one million tons of wheat from Russia in 2014/2015, according to Sayed.

Russia was ready to export five million tons of wheat to Egypt to cover its needs for grain, according to comments made by Putin during his February visit to Cairo.  

In the present round of talks, the leaders will discuss the establishment of a free-trade zone with the Russian-led Eurasian Customs Union (ECU) which includes Russia, Belarus and Kazakhstan.

The agreement will give Egyptian products the opportunity to access a larger number of countries, with more members possibly joining in the future. It will allow the customs-free export of Egyptian agricultural and industrial goods to the ECU, boosting Egypt’s trade.

The establishment of a Russian industrial zone as part of the New Suez Canal project is also on the agenda of the bilateral talks, in addition to renewing industrial projects established by the former Soviet Union in Egypt.

Promoting Russian investment in Egypt will be an important topic of discussion. According to Hanaa Kheireddin, a professor of economics at Cairo University, bureaucracy remains an essential obstacle facing foreign investors in Egypt, which was why Russia was still only at number 43 of the foreign countries investing in Egypt.  

Investors also complain of a lack of transparency, meaning that they find it difficult to plan investments in Egypt. Kheireddin blamed the government for not doing enough to meet such criticisms.

“Exchanging visits and having agreements with countries are not enough. More facilities should be provided to investors, and the government should take serious steps to reduce bureaucracy,” she said.

The bilateral talks will also include the activation of plans approved by both leaders during previous visits.

Putin announced that Moscow would assist Cairo in establishing Egypt’s first nuclear power plant to be located in the city of Dabaa during his visit to Cairo in February, bringing back memories of Egypt’s cooperation with the former Soviet Union on building the Anshas nuclear research reactor.

Agreements were also signed for Egypt to import natural gas from Russia and to increase Russian investment and expertise in exploring for oil and natural gas in Egypt.

Economic relations between Egypt and the former Soviet Union started in the last century and saw the building of heavy and military industries in Egypt as well as the training of personnel in different areas.

In addition to economic relations, Russia, the world’s second-largest arms exporter, has also sought to reinforce military ties with Egypt.

The suspension of US aid, though partial and temporary, made Egypt turn to Russia for military aid, and the latter was pleased to cooperate with Egypt, the Arab world’s most populous nation and one of the region’s most geopolitically important countries.

The two countries signed a $3.5 billion arms deal during a previous visit by Al-Sisi to Russia.

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