European firms ink deals worth billions with Egypt as ties grow

CAIRO (Reuters): European companies are signing dozens of deals potentially worth over 40 billion euros ($42.85 billion) with Egyptian partners, the European Commission’s chief told an investment conference in Cairo on Saturday, part of a drive to bolster Egypt’s fragile economy.

The announcement by Commission President Ursula von der Leyen of more than 20 new deals or memorandum of understanding follows a 7.4 billion euro ($7.93 billion) EU funding package and an upgraded relationship unveiled in March, as Egypt tried to contain spillover from conflicts in Gaza and Sudan, and European states pushed to prevent migrant flows across the Mediterranean.

European officials say they want to help Egypt become more resilient by boosting investment and the private sector after repeated shocks including fallout from the war in Ukraine and COVID-19 exposed underlying economic weaknesses.

“Your stability and your prosperity are essential for an entire region,” von der Leyen said in a speech at the start of the two-day Egypt-EU investment conference.

Egyptian President Abdel-Fattah el-Sissi said the conference came at a “critical time” in light of successive international and regional crises that he said required coordination between Europe and Egypt.

Speakers at the event focused on Egypt’s strategic location between Europe, the Middle East and Africa, and its potential for exporting clean energy and providing inexpensive skilled labor for European companies looking to “nearshore,” or basing operations close to home markets.

About half of the deals being signed were in the energy sector, said Ditte Juul Joergensen, director-general of the European Commission’s energy department.

European companies looking to invest were also in sectors including water management, construction, chemicals, shipping and aviation, von der Leyen said.

Windfall

Egypt has received a windfall of foreign financing and pledges this year from the United Arab Emirates (UAE), the International Monetary Fund (IMF) and the World Bank as well as the EU.

That eased a long-running foreign currency crisis and prompted commitments to reforms including a more flexible exchange rate, controls on off-budget spending and the scaling back of the powerful role of the state and the military in the economy.

Such pledges have done little to invigorate the private sector in the past. In a sign of continuing challenges, Egypt is experiencing routine power cuts, and fertilizer and chemical plants have been halting production because of gas shortages.

Businesspeople and diplomats say there is little transparency about how economic strategy is determined. A new government is yet to be appointed nearly four weeks after the resignation of the current cabinet was announced.

Egyptian officials say they are doing their best to manage external pressures and provide for a growing population of 106 million.

Von der Leyen traveled to Cairo as she sought approval from the European Parliament for a second five-year term as commission president.

European Union leaders agreed to nominate the German on Thursday but the secret ballot vote at the parliament is widely seen as a trickier proposition.