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- The Russian invasion of Ukraine has damaged partnerships and trade agreements around the globe.
- For Egypt, this has meant the country must seek new trade routes and reinforce existing partnerships with Europe and the US.
- Tourism in Egypt has also been hard hit by the war, and the government says more investment is required.
Russia's invasion of Ukraine has presented Egypt with complex diplomatic challenges. Egypt's long-standing strategic alignment with the West is of increasing importance, and Russia's actions in Ukraine have led Egypt to condemn the aggression and violence wrought by the war. The effects on Egypt's economy, particularly for trade and tourism, where Russia has previously been a key partner and contributor, particularly through supplying wheat, have led the Egyptian government to seek opportunities to develop new international partnerships and intensify existing ones.
"Egypt sits at the crossroads of so much — Africa and the Middle East, Europe and the Arab world," said Nathaniel Greenberg, professor of Arabic at George Mason University in Virginia, USA. "The conflict in Ukraine is once again recasting Egypt's place as a linchpin" in international politics.
Although Cairo has had to walk a difficult diplomatic tightrope, it has demonstrated its clear position towards Russia's war on Ukraine. On 23 February 2023, Egypt once again sent a powerful signal to the world as it voted with the overwhelming majority of countries at the UN to demand that Russia withdraw its forces from Ukraine. Egypt was one of 141 nations to approve the resolution in favor of Moscow's immediate withdrawal from the whole of Ukraine and an end to the fighting that secures a comprehensive, just, and lasting peace on Ukraine's terms — with only seven countries voting against. This latest vote followed Egypt's support of the equally decisive UN General Assembly resolution of 2 March 2022 deploring Russia's invasion of Ukraine and calling for the withdrawal of its forces.
Russia's actions in invading Ukraine have interrupted the worldwide wheat supply chain, affecting the Egyptian people. The Egyptian government has started to look to new markets — from the US, Canada, France, and Brazil to Australia, Kazakhstan, and Romania — to take up the slack in providing more wheat for the country.
The full-scale invasion of Ukraine by Russia has damaged a number of the military, security, and energy agreements Russia previously struck with Egypt, which affects Egypt's ability to rebuild its economy for the future.
The strong international sanctions regime imposed on Russia, which targets individuals, banks, businesses, hydrocarbons, monetary exchanges, bank transfers, exports, and imports, makes it even less attractive as a reliable future trading partner. As a result, President Sisi has been seeking new economic partnerships.
Another sector that has been hard hit is tourism, a key pillar of the Egyptian economy. Here, too, Egypt has had to seek to offset the loss of Russian and Ukrainian tourists, who together accounted for one-third of tourist arrivals in Egypt in 2020, by bringing in newcomers. European countries, including the UK, Germany, France, Italy, and Spain, are seen as alternative, higher-spending prospects.
"Tourism should be Egypt's biggest economic driver," Greenberg said. "To rekindle travel from Americans and Europeans, Egypt needs to refocus on what has always made it a desirable destination: a strong education sector, an open-minded and progressive cultural scene, safety, and history."
The government meanwhile hopes it can revive the sector in short order. "We are going to ensure that tourism in Egypt continues to grow by 25% to 30% per annum over the coming five years until we reach 30 million tourists by 2028, maximum by 2030, God willing," Ahmed Issa, the Egyptian minister of tourism and antiquities, said to the American Chamber of Commerce in January 2023. "We need just 300,000 rooms, $30 billion of investments in rooms, and probably similar amounts of investments in customer experiences. It is a great industry to invest in."
It is worth noting, too, that despite some closer links between Egypt and Russia in recent years, trade between the EU and Egypt is far greater than the volume of trade between Russia and Egypt — €30.6 billion versus €4.7 billion in 2021. Bilateral trade between the US and Egypt, at $9.1 billion in 2021, is also almost double the volume of Egypt's trade with Russia.
In addition, the EU and UK are much more lucrative markets for Egyptian exports than Russia. Egypt's exports to the EU doubled from €4 billion to €8 billion in 2022. Egyptian exports to Russia by contrast were worth just $402 million in 2021. In a nutshell, Europe is Egypt's leading economic partner.
US Secretary of State Antony Blinken was in Cairo on 30 January to discuss bilateral ties between the US and Egypt. "A key priority… is building on the longstanding economic cooperation that we've had to the mutual benefit of Americans and Egyptians," he said, going on to discuss US support for a $600 million telecommunications project and emphasizing the $1.4 billion the US has invested in the Egyptian agricultural sector in recent decades.
Egypt regularly has been able to turn to Western financial institutions, especially the International Monetary Fund (IMF), when it has needed help in a crisis. This support was again forthcoming after Russia's invasion of Ukraine unleashed chaos in global food and energy markets and sent investors fleeing from emerging markets. In December, the IMF approved a 46-month support package of $3 billion for Egypt. A year on from the full-scale invasion of Ukraine, Western economic partnerships with Egypt are only likely to grow in importance.
This article was created by Insider Studios with FCDO.