Even as the flight ban imposed since the downing of the Russian airplane over Sinai remains in place, and continues to damage the Egyptian economy, Russia’s politicians have landed in Cairo for the first time since the incident.
During this first high level of talks since the ban the two sides took off from where the two presidents had left at the beginning of the crisis and tried to establish connections between institutions on both the sides, including enhancing security in the airports of Egypt.
The first to visit Cairo was a Russian Parliament delegation led by speaker of the lower chamber, Serguey Naryshkin. Media in both the countries gave a lot of attention to the visit, focusing not only on the significance of the visit itself but also on bilateral relations. Naryshkin was also expected to address the issue of flight ban. Hence reports of ban being lifted soon occupied the headlines.
On Tuesday (Jan 2.) the inter-governmental commission on trade, economic and scientific cooperation, held a session in Cairo. Many issues on the bilateral agenda were discussed. On the eve of this meeting, Egypt’s trade and industry minister, Tarek Kabil, declared the country’s intention to sign free trade agreement with Eurasian Economic Union and talked about cooperation in areas such as electricity and nuclear energy.
Apparently Russia is posturing to get as many privileges as it can squeeze out from Egypt before it lifts the banMaria Dubovikova
Egypt has also granted Russia land in Suez for its industrial zone construction and has invited Russia to join its oil fields exploration. Among other things, Egypt asked for an increase in the number of flights between Moscow and destinations in Egypt from 6 to 14 per week.
On the other hand, Russia gave permission to five Egyptian companies to deliver cheese to the Russian market, while it expects Egypt’s help in import of fruits, vegetables and other products to replace the banned Turkish and European ones. Russia said it will lease four its SSJ-100 airplanes to Egypt for use within the region.
Moscow insisted on simpler access in the Egyptian market for Russia’s pharma products. They also signed a MoU for developing investment cooperation between Russian Direct Investment Fund (RDIF) and Egypt’s National Bank and Banque Misr. Cooperation in agriculture was also discussed.
Devil in the detail
On the whole things look good between both the countries. However, as usual, the devil hides in the detail. Russia keeps saying that the flight ban will be addressed in the foreseeable future, which is indeed vague. For a country losing $281 million each month owing to the ban – $1 billion since the beginning of the crisis – lifting the ban is most vital. Apparently Russia is posturing to get as many privileges as it can squeeze out from Egypt before it lifts the ban.
Egypt’s problem has been exacerbated by the fact that the economic situation has aggravated inside Russia as well. The drop in oil prices has had its impact on the Russian currency and, as a result, on salaries. Even the cheapest trips to Egypt are expensive for the middle and lower middle classes, who happened to be the key to the Egyptian tourism market. Even though strong flow of tourists cannot be expected just after the flight ban, Russia’s domestic problems aren’t helping.
Egypt’s intention to join the Russia-led Eurasian Economic Union would not meet expectations of the Egyptian side. Egypt expects to boost its trade and enhance flow of foreign investments into the Egyptian economy but the investment capacities of EEU counties are very limited.
Russia cannot continue to invest while its economy keeps searching for the bottom. Moreover, investments in Egypt are risky at the moment as concerns have been raised over stability of the ruling regime. EEU countries, led by Russia, have limited understanding of the Egyptian market.
Russian businesses have limited comprehension of how to work in the Arab world in general and Egypt in particular. This lack of understanding influences the way Russians look at the Arab world, sometimes underestimating the possibilities of cooperation between companies on either sides. Industrial zone of Suez could be very attractive to Russia, if only Russia had enough money and capacity. Seen in this perspective, the Russian industrial zone project appears vague at least at this stage.
Egypt’s food exports, even if desired by Russia, is dangerous as import growth automatically leads to a price rise in domestic market, which it can hardly survive. Other problem for Egypt is transportation cost, which makes Egyptian products expensive. Hence, Egypt incurs losses instead of gains. However, the perspective of bilateral cooperation in electricity and nuclear spheres seem positive and so is joint exploration of oil fields and joint projects in agriculture.
The key problem between the two countries, apart from their economic crises, is that they have little understanding of each other. The invitation to Egyptian businessmen, during Tuesday’s meeting, to consider investing in a tramway project in Moscow shows Russia’s lack of understanding of what is going inside Egypt. It shows that Moscow doesn’t take its counterparts in Egypt as seriously as it should.
On the other hand, Egypt’s high expectations from cooperation with Russia also shows that Egypt has little understanding of the current situation in Russia and that it takes Russia too seriously. It is committing a mistake by putting too much stake in it and promising so many things to Russia while dreaming about the return of an average of 3,000,000 Russian tourists to its resorts.
Maria Dubovikova is a President of IMESClub and CEO of MEPFoundation. Alumni of MGIMO (Moscow State Institute of International Relations [University] of Ministry of Foreign Affairs of Russia), now she is a PhD Candidate there. Her research fields are in Russian foreign policy in the Middle East, Euro-Arab dialogue, policy in France and the U.S. towards the Mediterranean, France-Russia bilateral relations, humanitarian cooperation and open diplomacy. She can be followed on Twitter: @politblogme