European firms sign 20 deals with Egypt as EU looks to bolster ties

European firms are signing deals potentially worth over EUR40bn($42.85bn) with Egyptian partners, the EU Commission chief told an investment conference in Cairo on Saturday, part of a drive to bolster Egypt‘s fragile economy.

The announcement by EU Commission President Ursula von der Leyen of more than 20 new deals or MOUs follows a EUR7.4bn 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.

A resilient and stable Egypt

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 pandemic 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.

At this Conference, European companies and Egyptian partners will sign deals worth over €40 billion.

That’s the power of our partnership.

Creating a framework of trust and certainty.

Exactly the message that the business sector needs to hear. https://t.co/41jSzhWL2R

— Ursula von der Leyen (@vonderleyen) June 29, 2024

Sisi said the conference came at “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 labour 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.

Egypt bolstered by foreign investments

Egypt has received a windfall of foreign financing and pledges this year from the UAE, the International Monetary Fund 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.

Read: World Bank announces $700m in financing for Egypt

Challenges

In a sign of continuing challenges, Egypt is experiencing routine power cuts as summer begins, 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 travelled to Cairo as she seeks 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.

Read: Egypt secures EUR7.4bn aid package from the EU