Monday,25 March, 2019
Current issue | Issue 1359, (7 - 13 September 2017)
Monday,25 March, 2019
Issue 1359, (7 - 13 September 2017)

Ahram Weekly

Egypt at the BRICS Summit

With President Abdel-Fattah Al-Sisi attending the ninth BRICS Summit in China this week, Egypt’s foreign policy is well on the way towards achieving greater multiplicity, writes Aisha Ghoneimy

Egypt at the BRICS Summit
Egypt at the BRICS Summit

The great powers derive their dominance from their economic power, and Egyptian diplomacy has been looking to greater economic cooperation as a means of deepening the country’s relations with Eastern Europe and Asia in order to strengthen cooperation through multilateral mechanisms. Egypt has also been seeking to join various economic blocs including the BRICS whose member states include China, Russia, Brazil, India and South Africa and who are firm followers of multilateralism and among the fastest-growing economies in the world. 

President Abdel-Fattah Al-Sisi’s invitation to attend the ninth BRICS Summit meeting in China this week, whose slogan is “A Stronger Partnership for a Brighter Future”, has given rise to many indications that the comprehensive and strategic partnership between emerging and developing countries that was announced during the president’s earlier visit to China in 2014 is now well on the way towards consolidation. The summit provides an important platform for cooperation between emerging markets and developing countries through deepened partnerships. 

The BRICS countries are working on reinforcing South-South cooperation and accelerating the implementation of the United Nation’s 2030 Agenda for Sustainable Development as well as opening up a brighter future for economic and social development for all developing countries. They are committed to coordinating major international and regional issues and promoting a peaceful and more equitable international order.

China is playing a vital role in leading the economic power of multilateralism, and as a result there are many mutual benefits to the partnership between Egypt and China. China is the world’s second-largest economic power after the US and the world’s first commercial power. It is one of the most advanced countries in the world in various industrial and technological fields, and it has considerable military power in terms of its ballistic missile and naval capabilities. China’s pursuit of a new political strategy aimed at positive engagement in international issues to settle disputes peacefully, especially in the Middle East, depends on its economic power.

Egypt is China’s gateway to the Middle East and the African continent. Egypt has abundant natural and human resources that create higher-yield investment opportunities for China and represent a vast market for Chinese products. The volume of trade exchanges has steadily risen between Egypt and China, and there has been a significant flow of Chinese investments in the fields of technology and telecommunications, the development of infrastructure and innovative industries built on the exchange of experiences. 

The cooperation between Egypt and China can be categorised into bilateral relations, China-Arab cooperation, and China-Africa cooperation. It also falls within the framework of the Asia-Africa-Europe Road and Belt Initiative, in which interconnected lanes of shipping and land convoys will link China and the southern and western parts of Asia. In addition, there is the maritime Alexandria-Cape Town axis which will connect Egypt with the African and the BRICS countries. 

The launch of a direct currency exchange mechanism with China will reduce Egypt’s demand for other foreign currencies, particularly the US dollar, limiting the negative effects of the volatility in dollar prices and increasing the movement of trade between Egypt and China, as well as enhancing investment opportunities. With this in mind, the Suez Canal Authority (SCA) has now adopted the Chinese yuan as part of the basket of currencies it receives as revenues from the passage of ships through the Suez Canal and based on the recognition of the yuan by the International Monetary Fund within its basket of special drawing rights. This decision by the SCA should result in facilitating the movement of Chinese ships through the Canal and thus promoting further trade.

The cooperation between Egypt and China also pushes forward opportunities for joining the BRICS group, something which would provide Egypt with a broad market for trade and boost flows of foreign direct investment in various economic sectors. There are many advantages to joining the BRICS, particularly since the group has formulated a BRICS Economic Partnership strategy that aims at deepening economic cooperation and fostering integrated trade and investment markets. 

The BRICS countries are all members of the G20 group, together having large markets and more than 40 per cent of the world’s population. The group’s aggregate GDP is now 23 per cent of the global total, and its share of international trade has increased to around 16 per cent. 

The BRICS countries have also deepened their economies over the past decade, yielding fruitful and laudable outcomes such as the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) to promote global economic governance and the development of emerging markets and developing countries. They have pushed forward with the reform of the Bretton Woods institutions to increase the voice of the developing and emerging world in them, as well as supporting the development of the BRICS and other emerging markets and developing countries. 

Changes in the international arena necessitate the strengthening of cooperation at all levels in order to achieve comprehensive peace and sustainable economic development. On the economic front, the Egyptian government is pursuing a comprehensive economic reform programme that is contributing to the country’s economic development. Growth rates reaching some five per cent will enable Egypt to join various regional blocs, including the BRICS, and with this in mind the government is also implementing a strategy for enhancing industrial development and the competitiveness of Egyptian exports.

The writer is coordinator of international relations at the Faculty of Economics and Political Science at Cairo University.

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