This article was co-written with Hisham Fahmy, CEO, AmCham Egypt Inc., Washington D.C.
Next Monday, President Trump will host Egyptian President Abdel Fattah el-Sisi at the White House Oval office.
The long overdue visit by Egyptian President Abdel Fattah el-Sisi is historic indeed, and proves that the US’ new Middle East policy towards is rapidly shaping up. Since President El Sisi took office in 2013, his immediate priority was to reinstate security and stabilize the Egyptian economy. Soon after, his government embarked on a series of bold reform measures that led to securing a robust agreement with the IMF, providing Egypt with 12 billion US dollars in aid to be dispersed over a three-year period.
For the past three years, the Egyptian government remained committed to addressing the roots of instability and extremism. This included initiatives for education, youth employment, social security, as well as the promotion of FDI. A series of labor intensive infrastructure and energy projects have also been underway to help reduce unemployment and promote social welfare.
In November 2016, the Central Bank of Egypt allowed the currency to float for the first time. The Egyptian pound depreciated against the US dollar, and as a result of the restored trust in the currency, billions of US dollars made their way to local banks. In turn, this bolstered the Central Bank’s international reserves, quickly reaching 26.363 billion dollars in January 2017, marking the highest level since August 2011.
Egypt’s new investment law, currently being discussed in parliament, is set to attract new investors that would leverage Egypt’s fundamental advantages, such as its strategic location, access to neighboring markets of Europe and Africa through its existing trade agreements as well as its overall low cost of doing business, to operate profitably. Companies including Procter & Gamble, Unilever, PepsiCo, and Coca-Cola have continued to use Egypt as their export hub to dozens of neighboring countries. Other recent oil and gas discoveries in the Eastern Mediterranean by Italian Eni and BP, as well as in the Western desert by Houston-based Apache, have re-positioned Egypt as an energy hub, and a bright spot in these companies’ portfolios.
Under President Sisi - Egypt is Moving in the Right Direction
The US- Egypt bilateral relationship has always been robust. The US continues to be one of Egypt’s key trading partners with nearly 5 billion dollars’ worth of goods and services exchange in 2016. American FDI into Egypt totaled 2.3 billion dollars, representing 32 percent of its total FDI in Africa. More than 1,100 US companies operate in Egypt. The country has also embarked on a number of mega projects, the highlight of which is the expansion of the Suez Canal waterway; facilitating traffic in two directions, minimizing waiting time for transiting ships, and increasing the numerical capacity of the waterway, in anticipation of the expected growth in world trade. The Suez Canal Area Development Project is another mega project that is set to attract investment around the Suez area and develop neighboring cities around the canal, establishing industrial zones, a technology valley, a logistics center, ship-building yard and fish farms, in addition to other potential projects. From an economic point of view, Egypt is on an upward trajectory towards revival.
Egypt Plays a Crucial Role in Mediating Middle East Peace
Egypt has always played a key role in mediating peace in the Middle East. President Trump announced that the Israel-Palestinian diplomatic initiative must be a “regional effort”, to include an array of Arab countries, and Egypt certainly tops the list. Since El -Sisi took office, Egypt’s role has been increasingly constructive.
What Egypt Needs from the United States
Following several years characterized by significant misunderstanding in the US - Egypt bilateral relationship, Egypt must once again resume its role as a reliable and steady US partner in a tumultuous region, supporting Egypt in the fight against terror. It is very important that both sides work together on deepening the bilateral relationship on political, security and economic levels. Such window of opportunity now exists on both sides of the Atlantic.