Turkish Prime Minister Recep Tayyip Erdogan paid a landmark visit to Egypt on September 12 to boost bilateral and economic relations between the two countries. Erdogan was accompanied by an entourage of six cabinet ministers and over 200 businessmen, clearly signaling his political and economic ambitions in Egypt and the region as a whole. The trip was part of a tour of Arab Spring nations and is being seen by many as a way for Turkey to extend its clout regionally.
The visit saw the signing of 11 economic and strategic partnership agreements, which included cooperation in the fields of technology, communication, petroleum and natural resources, education and media.
Turkey also aims to officially tap Egypt for gas exports in addition to partnering on a joint offshore drilling project in the eastern Mediterranean.
Erdogan and Prime Minister Essam Sharaf discussed ways of increasing trade between the two countries to $10 billion (LE 59.61 billion) from its current mark of $3 billion (LE 17.88 billion) annually.
This is in addition to increasing Turkish investments in Egypt to $5 billion (LE 29.81 billion) in the coming years, up from $1.5 billion (LE 8.94 billion).
Erdogan was received with open arms by Egyptians thanks to his recent stance against Israel’s “illegitimate and inhumane policies.” His itinerary included a speech at the Arab League’s 136th summit, a visit to Al-Azhar Mosque, a second speech at the Cairo Opera House and lunch with the country’s businessmen at Cairo’s Semiramis InterContinental Hotel as well as several meetings with Egypt’s military rulers and interim government members.
EU lifts vegetable ban
Some fresh vegetable exports to Europe are set to resume after the EU voted to partially lift its import ban. The ban had originally been imposed in the wake of the deadly E. coli outbreak that saw more than 4,100 people fall ill in Europe and North America and claimed the lives of 49 people earlier this year. Egyptian fenugreek seeds were said to be the source of the E. coli outbreak, but were eventually traced to German sprouts.
The BBC reported the EU imported 49,000 tons of the seed affected by the ban from Egypt in 2010 worth €56 million (LE 455.91 million). Still-banned items include seeds, fruits and spores, certain legumes, fenugreek, soya beans and other oil seeds and oleaginous fruit. The partial ban now allows Egypt to export green beans and peas. The complete lifting of the ban will be subject to a review by the EU commission on October 31.
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OCI to invest in Rwanda
Rwanda signed a deal with Orascom Construction Industries to build a 50 megawatt (MW) methane power plan with an estimated cost of $100 million to $130 million (LE 596.4 million to LE 774.94 million). According to Reuters, only 14% of Rwanda’s population has access to electricity with a total installed capacity of 69 MW as of 2009.
Coletha Rehamya, minister of state in charge of energy, was quoted as saying that the country is aiming to raise capacity to 1,000 MW and connect at least 50% of the population to the grid over the next seven years. Rwanda is also looking at possible ways of harnessing geothermal power.
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Steel giant behind bars
On September 15, former steel magnate Ahmed Ezz and industrial development chief Amr Assal were sentenced to 10 years in prison and fined LE 660 million. Meanwhile former Minister of Trade and Industry Rachid Mohamed Rachid also received a sentence of 15 years and a LE 1.4 billion fine. The judge said Ezz and Assal’s fine represented the total public funds that they had wasted.
All three were found guilty of corruption and illegally granting steel production licenses. Ezz was also head of the dissolved National Democratic Party’s budgeting committee and considered one of government’s most powerful men. It is commonly believed that he oversaw the rigging of the 2010 parliamentary elections.
The court verdict saw the collapse of Ezz Steel’s share price by 8.9% before trading on the stock was suspended. Shares dropped 56% year-on-year as demand for the company’s products waned, with its reputation under fire. Rachid, who was sentenced in absentia, had already received two five-year sentences in June and July for corruption and the squandering of public funds. He left Egypt only days after the January 25 Revolution began.
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Nile dam review
Egypt and Ethiopia plan to set up a technical team to review the impact of the proposed Grand Renaissance Dam on the Nile that Ethiopia is hoping will propel its economic development. The $4.8 billion (LE 28.61 billion) Nile river dam raised eyebrows in Cairo over its potential impact on Egypt’s share of water stemming from the Nile.
Under a 1929 agreement, Egypt is entitled to 55.5 billion cubic meters of water out of the Nile’s total annual flow of 84 billion cubic meters in addition to veto rights over any dam projects along the Nile. After a political standoff during the Mubarak regime, the government is looking at ways of better cooperation and mutual benefits.
Last year, six of the nine Nile Basin countries inked a new agreement that strips Egypt of its colonial-era rights. Ethiopia has agreed to postpone ratification of the agreement in its parliament until Egypt elects a new government. Meanwhile political efforts have increased to ensure that the Nile Basin countries’ development ambitions do not harm Egyptian interests.
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ODH court case dropped
A settlement was reached between Orascom Development Holding (ODH) and the Egyptian Financial Supervisory Authority (EFSA) on September 7 during an appeal hearing.
The EFSA alleged that ODH misrepresented its ownership percentage in its Egyptian subsidiary Orascom Hotels and Development (OHD). A court sentenced the company’s chairman Samih Sawiris to a two-year prison sentence and fined him LE 50,000 as the company’s legal representative.
ODH paid bail for its chairman and appealed the verdict, claiming the ruling ignored OHD’s right to plead its case in full, a requirement of Egyptian law. The Swiss-listed ODH said that Egyptian subsidiary OHD has now reached a full settlement with the EFSA. Egypt remains ODH’s biggest market, however the recent uprising has brought operations to a near halt.
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Trumping minimum wage
Deputy Prime Minister for Economic Affairs and Minister of Finance Hazem El Beblawi has proposed a maximum wage for public employees at 36 times the country’s official minimum wage per month.
On August 1, the Egyptian government raised the country’s official minimum wage to LE 700 from LE 400, which makes the maximum wage LE 25,200.
The Egyptian government issued a statement saying the proposal aims to address disparities in public employee salaries and wages. The figure takes into account the average inflation rate under normal conditions and factors in an average career of 38 years. The Central Agency for Organization and Administration has been tasked with implementing the proposal as of January 2012.
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Egypt contractors demand payment
A number of Egyptian-based contractors are demanding money owed by the government. They told Al-Masry Al-Youm that officials have defaulted on numerous projects, which is limiting their ability to invest abroad and compete for construction tenders for football’s 2022 FIFA World Cup Qatar. Infrastructure projects for the World Cup are estimated to be worth $70 billion (LE 417.27 billion), making Egyptian contractors anxious to receive lucrative contracts. Qatar was awarded the bid to host the World Cup in December 2010 and will be the first Arab host country.
Mohamed Al Serougy, a board member of Mokhtar Ibrahim Contracting, was quoted saying that the government owes his company LE 2.2 billion as of June 2009, which has forced the firm to lower its targeted overseas investments to LE 1.8 billion from LE 3.2 billion.
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Djezzy valued at $7 billion
Law firm Shearman & Sterling LLP has valuated Orascom Telecom’s (OT’s) Algerian subsidiary Djezzy at $7 billion (LE 41.75 billion), according to Al Borsa newspaper. OT shares climbed 7.5% on the good news. (Analysts had predicted a much lower valuation.) The Algerian government accuses Djezzy of not paying hundreds of million of dollars in back taxes. OT claims the taxes are unjustified. The government has blocked Djezzy from transferring profits abroad and said it aims to nationalize the company. The dispute over Djezzy, OT’s biggest earner, has complicated the $6 billion (LE 35.78 billion) merger deal between Russia’s VimpelCom and OT’s parent company Weather Investments.
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Lumber happy
The American Hardwood Export Council (AHEC) issued a statement saying Egyptian imports of US hardwood lumber remain the highest in the MENA region, despite the country’s unrest.
Egypt imported $3.83 million (LE 22.85 million) of lumber during the first half of 2011, out of $24.35 million (LE 145.27 million) exported to the region.
US hardwood is used in interior design and furniture. Roderick Wiles, director of the AHEC, said: “Egypt is being touted as one of the most promising markets in construction for the MENA region with projected yearly expenditures of around $7.3 billion (LE 43.54 billion). The AHEC is an international trade association for the US hardwood industry and represents exporters among US hardwood companies and all the major US hardwood production trade associations.”
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Ex-minister receives second sentence
Former tourism minister Zoheir Garranah received his second prison sentence on September 18. Garranah was sentenced to three years in prison for unlawfully issuing tourist company licenses in violation of a law that prohibited it. He is already serving a five-year sentence that started in May 2011 for squandering of public funds.
The sentence is the latest conviction handed down (as of press time) since the popular uprising ended Mubarak’s 30-year rule. The deposed president himself is facing trial over the shooting of peaceful protesters as well as corruption charges relating to the export of natural gas to neighboring Israel. bt
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