The Netherlands is a relatively small country, but very active in terms of trade and business in Egypt. For instance, two major Dutch companies were involved in dredging the new Suez Canal. Also, the Netherlands is represented by large companies, such as Shell, Heineken and Farm Frites, in the Egyptian market.
Further, Dutch expertise in the field of developing ports and industrial zones has the potential to play a role in the planned development of the Suez Canal Axis.
Daily News Egypt recently sat down with the Ambassador of the Netherlands in Egypt, Gerard Steeghs. Besides discussing bilateral and trade relations between both countries, the status of the Egyptian democratic transition process was also on the table during the interview.
The Dutch Ambassador expressed his support for the democratic roadmap in Egypt, but acknowledged the struggles Egypt is going through in moving forward in this process.
What is the focus of the Dutch embassy in Egypt?
In Egypt, the work of the embassy is strongly focused on the interest in the Netherlands in the transition process. That is, on the one hand, providing information and maintaining a dialogue on that transition process. On the other hand, executing a programme from the Netherlands in Egypt that is aiming to support that transition process.
Talking about the democratic transition in Egypt, what would you say is the status of that transition, how far along is Egypt?
I knew this question would come. Thinking about this, I realised that the most important thing to make clear, in both the Netherlands, as in Egypt, is that in 2011 the level of the ambitions of where Egypt was heading to, in terms of democracy, transparency, good governance and social justice, was very high. Afterwards, the political ruling group, whoever that may have been, were confronted with a set of tools that were not sufficient to reach these goals, which made it difficult to achieve fast progress.
Further, there is a civil service apparatus in place that dates from a time when public opinion was not regarded as important, when it was more important to perform for the rulers. There is an army without a democratic tradition. There are security forces that are exempted from transparency and accountability. In these circumstances, the political rule has to achieve a transition towards more democratic, transparent rule, in which more Egyptians have a say. This is terribly difficult, and that shows in the current process in Egypt. The ultra high ambition level of 2011 has been tempered. I have talked with several pro-democracy politicians and activists about precisely the question of where Egypt stands now, how much ambition is left, how fast they expect things to improve, and then people respond that they have not lost hope. But that the feeling of 2011, that with one big step forward Egypt could enter a new era; that feeling is gone.
It’s back to the feeling that this is going to be a long haul, this will be a patient process in achieving improvements. It will not go fast, there will be ugly sides on the road. For a country such as the Netherlands, and the European Union, it is very important to uphold the dialogue and the ambition, and to provide tools to reach a more democratic, transparent country. We have to keep that alive. We have to keep that on the agenda, we have to keep on asking about concrete actions that could lead to the improvements we talked about.
Have you witnessed such actions?
These actions are there; an important point was the constitution that includes articles that had never been in an Egyptian constitution before. The constitution provided a role for parliament through which it can be more of a counter-player against the government. So, definitely things have happened in Egypt that show the country is in a transition.
Of course, there are difficulties in that process. People are not used to working with these changes, are indulgent with them. These forces frustrate the process of change. And that shows. Not everybody in this country deems working towards more transparency, accountability and democracy to be a positive change. I see the struggle between factions in Egypt, one that celebrates the 25 January Revolution and another that sees it as a disruption, something that should be quickly forgotten. A while ago, it was self-evident that 25 January was a good thing, but now you hear a lot more nuance in that. You also reported about the 18-year-old boy who was detained for wearing a t-shirt opposing torture. That is quite extreme. I hope this is not government policy, but a result of struggles within the state apparatus with people who do not want to go along with the changes. This stresses the importance to keep insisting from the outside that the causes that led to the uprising remain on the agenda.
Why is it important for the Netherlands that Egypt works towards more transparency, accountability and democracy? What is the Netherlands’ interest in Egypt?
In the Dutch constitution we have included that we defend the international system of law and order. That is an important part of the motivation for our international actions. We represent not only self-interest, we also represent certain ‘civilisation values’, as we see it, and those values include an international law and order system that, in accordance with the Declaration of Human Rights, imposes certain standards on the world community. We commit to that as the Netherlands, and we see, as a small nation, that this is also in our own interest. I think this comes out of an awareness that, as a small nation, a rules-based international order is in our benefit. We can never enforce the rules ourselves, we are too small for that. So when there are rules that prove their value in an international system, that is in our interest. A large country can enforce its interest regardless of the rules, but we, as the Netherlands, cannot do that. Therefore, we are very motivated to have equal rights and rules in the international order.
Egypt often counters international criticism of its human rights record by claiming such comments are an intrusion in its domestic issues. How do you respond to that as an embassy?
This is very complex, indeed. It is important to us that, in principal, we do agree, the Netherlands, the EU and Egypt, that human rights are a good thing and that it is good to try to adhere to the Universal Declaration of Human Rights. The next step would be to ask what this means in practice. On this we can try to have a dialogue. The implementation may be difficult because of poverty, the wave of terrorism, and, if so, how can men try, in these circumstances, to guarantee individual freedoms? We can talk about these topics. I prefer to do that from the point that, in principle, we agree on the dignity of a human being, on the importance that a people feel protected by their government. I believe the Egyptian government commits to this. But again, the devil is in the implementation, and the limitations in the implementation is what should be included in the dialogue.
Then on economic issues, two Dutch companies contributed to the extension of the Suez Canal, and Dutch Shell has become a large energy player in Egypt after the acquisition of British Gas. What is the role of the embassy in this?
The major companies can help themselves. We have, of course, good connections with Shell, we know of Shell, what their plans are, and if there are obstacles we try to help. But these big players usually have their contacts to serve their interests. However, in some cases we, as a governmental body, sometimes find it easier to make connections with government bodies in Egypt than companies do.
That said, two Dutch companies were involved in the consortium of four that dug the New Suez Canal. It has been a record-breaking effort, of which the Dutch companies, Van Oord and Boskalis, are very proud. These kinds of projects put us in the spotlight in Egypt. I have had interviews with local newspapers, at their requests. They noticed that the Dutch have achieved an accomplishment with their private sector here. This provides us the opportunity to highlight the interest the Netherlands has in the water sector. We have had a relationship with Egypt in the water sector for over 30 years. This relation changed from a development-relation into an equal, commercial one. For us, it is therefore very important to position Dutch companies for projects in the Egyptian water sector.
What kinds of projects would those be?
There are problems in Egypt with irrigation, and how efficiently you can use water for irrigation. We have, together with the Egyptian ministry, a programme called ‘More crops per drop’, helping Egypt with development projects in the coastal zones, which have many specific problems with salinisation and security against floods. We, as the Netherlands, have a lot of expertise to offer in these fields. Also, a focus point is water and sanitation. A lot of local communities in Egypt still lack proper sanitation, and we have expertise in that field that hopefully can make Egypt safer and healthier, as sanitation is essential for public health.
Beside water, what expertise do the Netherlands and its private sector have to offer Egypt?
Another important sector is agriculture. After the US, the Netherlands is the largest exporter of agricultural products in the world. That is phenomenal for a land with only 17 million inhabitants. It illustrates how advanced and specialised our agriculture sector is. We, therefore, can support Egypt in improving production. One of the fields we focus on, and organised seminars about last year, is agro-logistics. How do you ensure that what is produced is then stored and transported in the right way? In Egypt, 30%-40% of agricultural products are lost due to improper storage and transport. We have several technologies to ensure much more of the production will eventually end up in the market.
The Netherlands is involved in Egypt in three sectors that are precisely our utmost top sectors: water; agriculture; and logistics, transport and port development. In Rotterdam, we have one of the largest and most advanced ports in the world, with an area around it, Rijnmond, in which a multi-functional industrial zone has been built with residential offices, ports, production sites and also a system of administrative levels that organises issues such as traffic, transport, and environment in a efficient way.
Then, looking at the plans of Egypt in the Suez Canal zone, many lessons can be learned from our Rijnmond area. Therefore, we have an advisory team that is meeting with the Suez Canal Authority and looking into how Egypt can benefit from the experiences the Netherlands has gained in this field.
As an embassy, we are blessed that the receptivity in Egypt is high for precisely those sectors we are good at.
Are there already Dutch companies involved in the development of the Suez Canal Axis?
At this time, the plans are still at such an early stage that, in general, not many companies are involved yet. We did have sessions with the Suez Canal Authority in which Dutch parties participated.
It hasn’t been long since the blueprint for the axis was completed. So it has just begun to become concrete what the needs of Egypt will be, in this regard. We are working on a visit of the head of the Suez Canal Authority to the Netherlands to start talks with Dutch companies that could play a role in the development of the area.
Which companies would those be?
There is the commercial side of the Rotterdam port, there will be the dredging companies, shipyards, but also energy companies that can have an advisory role in building an energy grid for the zone. Also, larger consultancy firms can work in the development of urban areas, in combination with ports.
In future stages, companies that invest in storage and logistics could be interested. But that still remains to be seen, depending on what plans are to be realised.
What challenges face Dutch companies in doing business in Egypt?
Partly, that is the ‘red tape’. For instance, how easy are licences and contracts being arranged? I know that there are companies in special economic zones that struggle with the question of how much of your products should be exported, or what can be sold in the local market.
At this moment, for many investors the main question is whether or not Egypt will be stable enough in the future. Can I do business in Egypt without fearing for my safety? In our perception, this makes it so important that Egypt works on achieving long term stability, including a manner of governance that gives Egyptians the feeling that they have a say, that they can voice themselves without consequences.
So, in the long term, sustainable stability is crucial for investors?
There is an important difference between large companies that can haul on a long standing presence in the Egyptian market, such as Shell, Farm Frites, Heineken, and Philips, that recently invested in production in Egypt. These companies are expending large amounts in Egypt, they know the market and how to be successful. The market in Egypt is typically one that requires having local expertise and experience to get things done. When you have that expertise, doing business is good.
For parties that are new in Egypt, this is what they struggle with. How do I achieve this expertise, how do I overcome the barriers to enter the market? That’s the issue at the moment; can Egypt make sure that informal barriers are levelled so new investors also have opportunities in Egypt?
Talking about long-term stability, how can Egypt accomplish that?
In June 2013 the roadmap repeated the demands of the 2011 revolution, including national reconciliation and presidential and parliamentary elections, and writing a new constitution. I think that the roadmap still provides a good outline of steps to be taken, but it wouldn’t hurt to have a look at the roadmap again to remember all its points. What were the things we aimed for? If you start following those things, you create long-term stability; you give the Egyptian people a feeling of inclusivity.
One of the things we have in our programmes in Egypt is a focus on creating a society in which people of different beliefs and backgrounds can live peacefully together and are accepted. That pluralism is very important for a country that is democratic; that without fighting people can accept differences between each other, and have the guarantee that they can live their lives in their preferred ways. That’s a notion to build thoroughly and patiently on. Education is an important factor in this.
What are the amounts of investments and trade between Egypt and the Netherlands?
Cumulative investments from the Netherlands in Egypt amount to $2.6bn. That is significant. We have particularly witnessed an increase in imports from Egypt. In 2014, imports from Egypt amounted to €262m. In the first half of 2015, that number has already reached €212m. Extrapolating that for the end of the year means a 27% increase in imports from Egypt to the Netherlands. That is good news, especially in light of total Egyptian exports decreasing by 18%.
What products does the Netherlands imports from Egypt?
Crude oil is an important one, besides fruit and vegetables, iron and steel, textile, and aluminium.
What about tourism from the Netherlands to Egypt?
We don’t have hard data on tourism. Our impression is that Red Sea tourism is recovering. More and more Dutch citizens are travelling there, as our travel advice states that the resorts there are safe.
Yet, we are seeing that cultural tourism lags behind. Tourists apparently see Luxor, Aswan and Cairo visits to the temples and pyramids as being more dangerous. However, as I also understood from the Egyptian tourism minister, that is the kind of tourism that specifically supports the local economy. People in Sharm El-Sheikh told me that the local economy has shrunk, because of all-inclusive deals in which tourists stay inside their hotels and do not go out to restaurants as much. Many restaurants and local shops in Hurghada and Sharm El-Sheikh have disappeared for this reason, harming employment opportunities.
Do you see improvements in the investment climate due to the new investment law?
Yes, there is definitely improvement. The Ministry of Investment seems keen to help companies. They are listening when we point to problems and they are willing to take concrete actions. But some aspects are difficult to combat, such as the lack of hard currency.
Having said that, I’ve spoken with multiple investment law experts and they told me that legislation has never been the actual problem. The key is implementation. Many ministries are involved and they all have to give up authority in the one-stop-shop system. There is resistance there. On paper, a law can look good, but it’s necessary for the bureaucracy to actually be committed to the implementation of it.