Amid a magnificent welcoming from Egyptian President Abdel Fattah el-Sisi, Saudi Arabia’s King Salman arrived in Cairo for a summit accompanied by a large delegation of Saudi ministers and officials on Thursday.
The pomp of a Saudi-Egyptian summit comes as the two leading powers in the Arab world are each battling many domestic and national security challenges and as both sides say the so-called “special relationship” between Cairo and Riyadh is healthy.
The visit, called historic by Foreign Minister Adel al-Jubeir, marked the King’s first official trip to Cairo since ascending to the throne in January 2015. The leaders have met several times, however, including trips by President Sisi to Saudi Arabia and King Salman’s participation in the March 2015 Arab Summit at Sharm El Sheikh.
During the November visit of President Sisi to Riyadh the leaders approved the creation of a “Cairo Declaration” implementation council, an agreement signed in August that provides for cooperation on regional issues.
While challenges to national security affairs were to be key items on the agenda, prospects for expanding trade and investment were also to be a major focus of the talks.
The Saudi side included Deputy Crown Prince Mohammed bin Salman, who, in addition to serving as Defense Minister, heads the Council of Economic and Development Affairs, the central decision-making body overseeing much of the country’s economic policies and reform program.
Finance Minister Dr. Ibrahim bin Abdulaziz Al-Assaf and Minister of Commerce and Industry Dr. Fawzan bin Tawfiq Al-Rabiah were among the fourteen Saudi cabinet members who accompanied the King.
The arrival of King Salman and his delegation followed by one day a meeting of the Saudi-Egyptian Business Council where ministers lauded the strength and importance of the relationship, while chairman of the Council of Saudi Chambers Abdulrahman Al-Zamil noted the importance of the monarch’s visit.
The chairman told reporters that Saudi investors were bringing $4 billion to the table for infrastructure, energy and agriculture projects with $400 million already delivered to banks in Egypt.
The new investment comes on top of over $6 billion as of February coming from more than 3,700 companies according to the Business Council deputy. Riyadh and Cairo were expected to sign a $20 billion five-year oil funding deal to address Egypt’s energy needs.
The new money was to include $1.5 billion to go toward a new Suez Canal project that will improve the efficiency of the strategic waterway, as well as injecting much-needed capital into the economy.
Trade volume between Saudi Arabia and Egypt showed a slight uptick in 2015, at $6.35 billion up $250 million from 2014. The Saudi Ministry of Commerce announced the Saudi-Egyptian Coordination Council, held in concert with the summit, would focus on boosting bilateral trade -- creating facilities that can improve trade and investment and working to reduce challenges to Saudi investors in Egypt.
Risk versus reward
Saudi officials, given the size and scope of economic support offered to Egypt, would be expected to call for favorable conditions for the new investments. Gone are days when rigorous terms weren’t attached to Saudi deals that were made primarily to aid the ailing Egyptian economy.
Just as the focus of economic reform in Saudi Arabia includes metrics for performance in the government, so too will officials be looking at risk versus reward in the foreign trade and investment field.
As all relationships, internally and externally, are re-evaluated and refashioned, the old approach of advancing political objectives through economic initiatives is likely being reshaped to meet more pragmatic ends.
The Saudi side of investment conversations will likely be examining the quality of agreements; whether ventures will be fast-tracked, do they serve as prime opportunities, are they in areas such as previously out of bounds state assets?
The Saudi position is likely to be behind driving harder bargains than during earlier times, given tests facing fiscal policymakers in Riyadh, which include a planned set of economic reforms.SHOW MORE