EGYPT inaugurated a new expanded Suez canal last week, a pompous affair that many saw as confetti on strongman Abdel Fatah al-Sisi’s position as president, and lift the country’s flagging economy that has been sapped by years of civil unrest and extremist violence.
The $7.9 billion New Suez Canal project was completed in just one year instead of three on Sisi’s orders; the canal extension and other construction projects have boosted the economy that grew above 4% in the nine months to March for the first time since 2010.
State-run television broadcasting the event ran the distinctive theme song of HBO’s hugely successful show Game of Thrones as a soundtrack to footage of the celebrations.
This might be seen as a savvy government broadcaster tapping into the zeitgeist of the day – the show has an massive international fan base, and file-sharing news website TorrentFreak estimated Game of Thrones to be the most-pirated TV series every year since 2012; it was downloaded 7 million times in 2015, up 45% from 2014.
Egypt’s renewed confidence
But it also hints to a renewed self-confidence, as Egypt re-asserts itself on the broader geopolitical stage.
A week ago, US Secretary of State John Kerry visited Cairo for the first US-Egypt “strategic dialogue” since 2009.
The forum has been held on and off since the Bill Clinton administration, and is intended to widen the relationship between the two countries beyond security into more robust trade, investment and educational ties – though during Hosni Mubarak’s presidency, the conversation was limited to cementing Egypt’s position as a counterterrorism bulwark in the region.
The mere fact that the US was willing to have a sit-down talk with Egypt at all has been seen as a major diplomatic achievement for Sisi’s government, especially after Washington capitulated on its partial weapons suspension against the country.
Sisi arrives for the opening on the new Suez canal on August 6, 2015. (Photo/Shawn Baldwin/ Bloomberg).
The suspension was imposed in October 2013 in response to mass killings of Muslim Brotherhood demonstrators, but was then lifted this March – in spite of Egypt’s constricting civic space and worsening human rights situation.
According to a report from the US State Department, the political crackdown following the ouster of Mohammed Morsi in July 2013 “expanded in 2014 into a systematic policy to crush nearly all dissent and reestablish an authoritarian system.”
There has been violence against demonstrators; widespread arrests; abuse of detainees; and pervasive impunity for officials suspected of involvement in such violations.
It suggests that Cairo has rediscovered it leverage over the US, and Egypt’s position as an ally against extremism is particularly important when viewed in the context of its troubled neighbourhood.
The Islamic State (also known as ISIS, ISIL or Daesh) has established a foothold in neighbouring Libya following the chaos that has engulfed the country after the fall of Muammar Gaddafi’s regime in 2011, while Syria has been parcelled up among an array of rebels and armed groups.
Egypt itself has been battling an Islamic insurgency in northern Sinai for years, but attacks against the army and police increased after Morsi’s ouster; the Islamic State affiliate based in Sinai has claimed a series of large-scale assaults there.
Nile Basin business
Still, the Egyptian rebound is robust, if latest trade data is anything to go by. Egyptian exports to the Nile Basin countries – Sudan, South Sudan, Ethiopia, Uganda, Kenya and Tanzania – rose 27% in the past year, from $69.6 million in April 2014 to $88.6m in April 2015.
Egypt has long been opposed to any upstream damming or diversions of the Nile by the Nile Basin countries, as the country of 85 million – the most populous in the Arab world – depends on the Nile almost exclusively for all its water needs.
Agreements from the 1920s give Sudan and Egypt the right to veto any perceived threat to their Nile.
Ethiopia, on the other hand, determined to exploit its massive latent hydropower potential, began construction on the Grand Renaissance Dam in 2011. Expected to deliver 6000 megawatts, it will be Africa’s largest hydropower dam upon completion.
Relations between Egypt and Ethiopia reached a nadir in June 2013 when then-president Morsi said that “all options”, including military intervention, were on the table if Ethiopia continued to develop dams on the Nile River.
But recently, there has been a thawing in relations. In February, for the first time in five years, Egypt participated on a Nile Basin Summit in Khartoum, where Egyptian irrigation minister Hossam Moghazy said that Egypt was “willing to solve any old problems or differences in views” over the sharing of the Nile river water.
Data from the Central Agency for Public Mobilisation and Statistics (CAPMAS) shows that the volume of Egyptian exports to Ethiopia doubled from $5.2 million in April 2014 to $10.9 million twelve months later, and Egyptian exports to Sudan increased significantly from $32.3m to $45.7m.
Egyptian imports from the Nile Basin countries rose to $32,600 in April 2015 compared with $28,900 in April 2014.
Middle East trade declines
On the other hand, Egypt’s exports to Arab countries declined from $789.8 million to $715.5million, while imports from Arab countries rose to $883.9m in April 2015, compared with $717.3m during the same month of the previous year.
The decline of trade with the Middle East is probably a blip caused by the insecurity in Syria and Iraq, but it also offers a faint hint of the future.
Egypt’s unique geographical position and diverse historical, cultural and ethnical background means that it is at the crossroads of two different identities: Arab and African.
The volume of trade between Egypt and sub-Sahara Africa is low, not exceeding 3% of Egypt’s total trade volume over the past ten years. But the future of Egypt may increasingly be African.
Given the prolonged crisis in the OECD countries, Egypt’s traditional trade partners, and new economic challenges following the revolution including growing fiscal deficits and stagnating domestic production, Cairo would be wise to broaden its economic and diplomatic scope, and take advantage of fast-growing African economies, as well as their abundant natural resources and human capital.
One of the perennial problems that Egypt faces is food security. Only 3.7% of its land is suitable for agriculture – the narrow strip on the banks of the Nile. Food security in Egypt is related to income rather than availability – the average household spends 40.6% of its income on food, and every one out of three Egyptians lives on a poor and undiversified diet.
It is the world’s largest importer of wheat, and so is vulnerable to food price fluctuations; indeed, the initial demands in Cairo’s Tahrir square as the Arab spring was unfolding in January 2011 were related to the price of bread.
Given the availability of arable land in Africa (up to 60% of the world’s unused arable land) and the import demand for food, there is an opportunity for Africa to meet Egypt’s food security needs.
And this June, African leaders signed a 26-nation free trade pact that creates a common market that would span half the continent from Cairo to Cape Town.
The Tripartite Free Trade Area (TFTA) deal caps five years of talks to set up a framework for preferential tariffs to ease the movement of goods in $1 trillion market, home to 625 million people.
Perhaps then, it was symbolic that the pact was signed in the Red Sea resort of Sharm el-Sheikh.