VENTURES AFRICA – Europe is forging new ties with Egypt, offering 700 million Euros ($913 million) to power an agreed Egyptian economic recovery plan, as President Mohammed Mursi makes his first official visit to Europe.
The visit comes as Europe hopes to cement positive relations with emerging democratic leaders in what Europe refers to as its “southern neighbourhood”; following important reforms and immense progress being made in the North African region.
President Mohamed Mursi, of the Muslim Brotherhood, was victorious in Egypt’s highly-publicised June presidential elections – accepted to be Egypt’s first free elections since the downfall of Hosni Mubarak’s dictatorial regime last year.
As violence and turmoil escalated in Egypt leading to the overthrow of Mubarak in February of last year, investors, trading partners and tourists withdrew from the uprising country, causing destruction in the previously stable economy. Now the pressure is on for both Europe and Egypt to demonstrate good will and a desire to work together, as Egypt starts its long road to economic and social recovery. European Council president Herman van Rumpuy announced Europe’s intention to support Egypt in its recovery, stating: “Egypt is a key country in a region that is so close to and important for Europe…[its] success would have positive repercussions on the region as a whole”.
The European Union (EU) is Egypt’s largest trading partner, with figures showing a systematic and stable increase in trade since 2004 when the parties signed a free trade agreement. Bilateral trade figures reached an all-time peak in 2011, reaching 23.3 billion euros ($34 billion). Trade consists mainly of goods such as energy, machinery, chemicals, and textiles.
As such the EU has a double interest in supporting the country’s rehabilitation, as the EU not only wishes to see social and democratic stability grow in its North African neighbour, but Egypt also plays a role as a valued and important trading partner for the European region. At the meeting held in Brussels this week, then, it was only fitting that the EU should announce its contribution of 700 million Euros ($913 million) in economic aid to kick-start Egypt’s recovery.
European Commission president Jose Manuel Barroso explained that the sum consists of two separate pledges of aid. 500 million Euros ($652 million) of the figure is to go towards macro-economic support for the country, dependent on Egypt reaching an agreement on financial assistance with the International Monetary Fund (IMF). The second portion of the aid, 200 million euros ($261 million), will see an economic recovery plan for Egypt jointly designed and implemented by the parties.
This latest financial assistance is not an unprecedented move from the EU with respect to Egypt. The EU is also financing a number of social endeavours in the country, with particular focus on the provision of education and training projects and facilities for the Egyptian youth over the period spanning 2011 to 2013. It is estimated that this socially oriented financing amounts to 449 million euros in itself ($586 million).
Announcing this latest pledge to support economic growth, Barroso highlighted the myriad of social and economic issues that Egypt is having to face at once, underlining the EU’s commitment to providing a comprehensive nature of support and assistance. He noted: “The Egyptian population has high expectations of democratic transition leading to social and economic benefits in the short term. These expectations are difficult to manage”.
It is to be hoped that President Mursi, with his new-found friends in Europe and beyond, will be able to adequately manage these expectations, growing Egypt out of its current dip.