What are the prospects for economic cooperation between Egypt and Turkey after the restoration of relations?

History reflects the extent of the depth of relations between Egypt and Turkey in various aspects, in addition to the fact that the two countries currently represent regional powers that have consideration in many files in the region, and there are files that witness the intersection of the relations of the two countries directly, such as the Libyan file, and the eastern Mediterranean gas file.

Relations between the two countries at the political and diplomatic level have gone through a real crisis since July 2013, although trade relations in particular were not negatively affected by these events, and Egyptian businessmen refused to cancel the free trade agreement with Turkey, while the Egyptian government canceled The transport agreement between the two countries is known as the RORO.

However, the past two years have witnessed a positive development in the framework of political and diplomatic relations, the most prominent of which was the handshake between Turkish President Recep Tayyip Erdogan and Egyptian President Abdel Fattah El-Sisi in November 2022, at the opening of the FIFA World Cup Qatar 2022.

Recently, the foreign ministers of Egypt and Turkey exchanged official visits, and it is expected that diplomatic relations between the two countries will return to the level of the return of ambassadors soon, and the return of diplomatic and political relations will be accompanied by remarkable commercial and economic activity.

In 2019, the value of trade exchange between the two countries was around $5.4 billion, according to data from the Turkish Statistical Institute, but by the end of 2022 the value of trade exchange amounted to $7.1 billion.

Over the period from 2019 to 2022, the trade balance was in favor of Turkey, as Turkey's trade surplus with Egypt reached $1.6 billion in 2019, but it jumped to $2.3 billion and $2 billion in 2021 and 2022, respectively.

Egypt comes in the list of the top 20 countries importing Turkish goods in 2022, and Egypt ranked 16th in this list, while Egypt does not come in the list of the top 20 countries from which Turkey imports, and if the value of trade exchange between the two countries exceeds $7 billion in a year 2022, this represents only slightly more than 5% of Egypt's total foreign trade, which is close to $130 billion in the fiscal year 2021/2022.

As for Turkey, the value of its merchandise trade with Egypt represents only 1.13% of its total merchandise trade with the countries of the world, which amounted to $617 billion by the end of 2022.

Although the relative weights are important to the nature of trade and economic relations between the two countries, there are direct and indirect interests behind those relations, some of which are economic and some are political. Therefore, both Egypt and Turkey are keen to maintain this relationship, and even increase it.

The media quoted the Chargé d'Affaires of the Turkish Ambassador to Cairo, Salih Mutlu, that his country hopes that the value of trade exchange with Egypt will reach $20 billion in the coming years, and the head of the Turkish Businessmen Association, Nihat Akinci, estimated the number of Turkish companies operating in economic activity in Egypt at 200. With investments amounting to two billion dollars, these companies provide thousands of job opportunities.

As for the data of the Central Bank of Egypt on direct Turkish investments in Egypt, the monthly statistical bulletin shows that Turkish direct investments in Egypt amounted to $179.9 million in 2021/2022, compared to $137.1 million in 2020/2021, which reflects An increase of $42.8 million between the two years, an increase of approximately 32%.

Quantum leap

According to what was published by a Turkish media specialized in economic affairs, one of the largest Turkish companies specialized in rebar, will soon enter into a partnership with a local party in Egypt, to produce rebar.

It is worth noting that Turkish reinforcing steel is one of the important commodities that Egypt imports from Turkey, and the fact that the Turkish company will jointly produce this vital commodity in Egypt, this may greatly help in calming iron prices in Egypt, as its prices have reached high levels in the past period.

And Egypt had liquidated the iron and steel complex in 2021, and stopped the company’s activity, after more than 67 years of starting its activity, and undoubtedly this leaves a gap in the demand for reinforcing steel in Egypt, and the new Turkish partnership enables it to acquire a good market space. Egyptian.

The activity of Turkish companies operating in Egypt since 2005 has been concentrated in the field of textiles, ready-made clothes, and household appliances. It has been observed that these companies mainly target European and African markets, by benefiting from Egypt's membership in the Egyptian-European Partnership Agreement, as well as the membership of the COMESA Agreement.

deferred step

As part of efforts to strengthen economic and political relations, Turkey offered Egypt the use of local currencies in settling commercial and financial transactions, a step that Egypt and Turkey took with other countries, which would alleviate the foreign exchange problem in Egypt.

At the same time, it strengthens the position of the local currencies of the two countries, as both the Turkish lira and the Egyptian pound suffer from a decline in their value over the past period, although the problem is more severe in the Egyptian currency, and entering into this step would increase the value of trade exchange and financial transactions between the two countries. the two countries.

However, according to the media, quoting Egyptian sources, Egypt considers postponing this step for at least two years, due to technical considerations related to monetary policies, as well as enabling central banks in the two countries to own mechanisms for dealing in local currencies.

Economically strengthening political relations

Economy and politics are two sides of the same coin, especially after the complexity of international relations, and the intertwining of interests to a large extent. There are no economic relations without political interests, and there are no political relations without economic interests. Between Egypt and Turkey, there are outstanding issues on the political level that must be overcome.

Will the positive developments in trade and economic relations be a prelude to breakthroughs in the outstanding political files between the two countries, and on top of these files, the issue of eastern Mediterranean gas, which is a very important issue for Turkey, as it is a country that imports a large share of its energy needs, amounting to 90%?

And if the two countries reach a solution to the eastern Mediterranean gas file, will we see Turkey as an eighth member of the Eastern Mediterranean Gas Forum?

Politics teaches us that nothing is excluded, but there is nothing without a price. Are the escalating trade and investment relations enough to be a price for penetrating the eastern Mediterranean gas file, and the complications it entails between Egypt and Turkey?

In addition to the Turkish presence in Libya, and the economic and political interests that this reflects for Turkey, while Egypt is calling for an end to the Turkish presence on Libyan lands, and the Libyan file is multipolar, regional and international, so will Egypt and Turkey be able to end the state of conflict in Libya, and enter into a stage rebuild?

Especially since the two countries have great experience in the field of construction and building, which is a stage that Libya desperately needs, to rebuild and rehabilitate the infrastructure.

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