Thursday,19 October, 2017
Current issue | Issue 1348, (8 - 14 June 2017)
Thursday,19 October, 2017
Issue 1348, (8 - 14 June 2017)

Ahram Weekly

Little impact from Qatar decision

Weak trade between Cairo and Doha will limit repercussions from Egypt’s decision to sever relations with Qatar

Little impact from Qatar decision
Little impact from Qatar decision

Egypt, Saudi Arabia, Bahrain and the UAE suspended most of their relations with the Gulf state of Qatar early on Monday, followed by Yemen, Libya and the Maldives. The reason was Qatar’s support of Islamist groups in the region.

Qatar is accused of supporting terrorist and sectarian groups aimed at disturbing stability in the region, including the Muslim Brotherhood, the IS (Islamic State group) and Al-Qaeda.

Egypt’s MENA state news agency said Qatari policy “threatens Arab national security and sows the seeds of strife and division within Arab societies according to a deliberate plan aimed at the unity and interests of the Arab nation.”

In a statement from its Foreign Ministry, Qatar denied interfering in the affairs of others, saying “the campaign of incitement is based on lies that have reached the level of complete fabrications.”

Qatar is also accused of supporting Iranian-backed Shia militants in the eastern regions of Saudi Arabia and Bahrain. This is in addition to opening its media outlets, especially the TV channel Al-Jazeera, to promoting the messages of these groups.

The governments of Qatar and Egypt have been at loggerheads since the ouster of former Muslim Brotherhood president Mohamed Morsi in 2013. Qatar had been a firm backer of Morsi’s regime and had offered Egypt $7.5 billion during his time in office, including deposits with the Central Bank of Egypt (CBE), grants and free gas shipments.

Qatar halted the gas shipments soon after the 30 June Revolution in 2013, and the last installment of the CBE deposits were returned in 2016 as Qatar asked the CBE to pay back the debts after the Islamist leader’s ouster.

Neither political nor economic relations have returned back to normal between the two countries since, and Egypt has not received any investment from Qatar since 2014. Overall Qatari investment in Egypt comes in at $3.9 billion, which ranks the Gulf state ninth among international investors in Egypt.

Prime Minister Sherif Ismail said yesterday it was too soon to tell whether Qatari investments in Egypt would be impacted by the decision to suspend relations. Among the best-known Qatari investments is its stake in the Egyptian Steel Company co-owned by business tycoon Ahmed Abu Hashima.

In 2013, the Qatari National Bank, the largest lender in the emirate, bought 100 per cent of Société Générale Bank Egypt for $2 billion and renamed it the QNB Al-Ahli.

The CBE issued a statement on Monday to calm fears among the Bank’s clients, saying the bank was an Egyptian joint stock company that operated independently under the jurisdiction of the CBE. “QNB Al-Ahli retains a strong financial position and continues to serve its clients,” the statement added.

An Egyptian member of the Egyptian-Qatari Business Council declined to comment on the repercussions of the cutting of relations on the future of private investment and trade deals, saying that there was a kind of “gentlemen’s agreement” among businessmen dealing with Qatar not to comment because of the sensitivity of the situation.

Egyptian billionaire Naguib Sawiris has called on Egyptian businessmen to withdraw their investments from Qatar and to halt business dealings with the Gulf state, his spokesperson told Reuters.

According to statistics published by the MENA news agency, average trade between Egypt and Qatar during the last five years hovered at around $318 million annually, which is equivalent to 0.4 per cent of Egypt’s whole international trade.

Last year Egypt’s exports to Qatar came in at $282 million and imports came in at $43 million. While Egypt exports electronics, agricultural crops, food, ready-made garments and leather products to Doha, it imports chemicals, construction materials and furniture. The fate of current export contracts between the two nations is unclear, according to the businessman.

The main concern for the government is the fate of Egyptian workers in Qatar. A statement by the Qatari Foreign Ministry said that the situation would not affect the normal course of life for citizens and residents of the state and that the Qatari government would take all necessary measures to ensure that this was the case.

Official figures put the number of Egyptians in Qatar at almost 300,000, 40 to 50 per cent of whom are vocational workers while the rest are doctors, engineers, teachers and university professors.

Sameh Kamal, an accountant who worked in Qatar for five years before returning last December to Egypt, told Al-Ahram Weekly that it was unlikely that Egyptian workers in Qatar would be deported due to their huge number.

Kamal explained that Egyptian workers represent almost 30 per cent of the foreign work force in the smallest Gulf nation. According to Reuters, foreign workers make up around 1.6 million of Qatar’s 2.5 million population.

Immigration Minister Nabila Makram said this week that the ministries of manpower, housing, social solidarity and education were readying themselves for the possibility that Qatar might choose to expel its Egyptian workforce.

“We have job opportunities for those who choose to return,” she told the press on Monday. Nevertheless, Egypt has a huge unemployment problem, with 13 per cent of the population being jobless. The return of workers from Iraq and then Libya due to political tensions has intensified the problem.

For the time being, the banks are still receiving transfers from Egyptians in Qatar. A banker in a leading private-sector listed bank told the Weekly that some banks, not including his, had halted dealings with their Qatari counterparts. He said that the CBE had not prohibited dealings with Qatari banks.

While letters of credit transactions have not been affected, some banks have reportedly refused to receive Qatari riyals. The CBE issued a statement on Monday saying it had not asked the banks to halt trading in the Qatari currency.

“Transactions in riyals are minimal as it is not a dealing currency like the dollar, the UK pound sterling, and the euro,” the banker said. Most remittances from expatriates in Qatar come in the form of euros or dollars, he added. Remittances from Qatar come in at around $1.4 billion, which ranks the country fourth among the largest source of remittances to Egypt.

The fact that the Qataris have a minimal interest in the Egyptian stock market made the latter resilient to the moves on Monday, ending the trading session 0.8 per cent higher. The EGX30, the main index in the local bourse, recorded a new all-time high on Tuesday to reach 13,631 points, its highest ever.

While Egypt suspended air flights to and from Qatar, Qatari ships will be let through the Suez Canal, Canal Chief Mohab Mamish told the CBC TV channel. He explained that Egypt was a signatory of international conventions that prohibit the passage of vessels from certain countries only when ships belong to a country that is at war with Egypt or in cases of drug or human trafficking.

Only two Qatari vessels passed through the canal in the first quarter of 2017.

 

Read more:

Sanctioning Qatar

The Gulf and Yemeni crisis

Too rich to be affected

 

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