The chancellor of Germany, Angela Merkel, is paying a two-day visit to Egypt on Thursday, to discuss several political and economic issues between Egypt and the most powerful industrial country in the European Union.
Throughout the visit, it is scheduled for Merkal to meet Egyptian President Abdel Fattah Al-Sisi, the Grand Imam of al-Azhar, Ahmed Al-Tayeb, and the Coptic patriarch, Pope Tawadros II. Meetings between German and Egyptian businesspeople will also take place during the visit, according to a press statement issued by the German embassy in Egypt.
However, the relationship between Egypt and Germany witnessed ups and downs since the 25 January revolution, especially after the ouster of former president Mohamed Morsi in 2013.
Under Al-Sisi, Egypt relied on German energy company Siemens to establish three power plants with a turnkey system in Beni Suef, Borollos, and the New Administrative Capital with a capacity of 14,400 MW, worth €8bn for both gas and wind plants.
It’s worth to mention that Al-Sisi paid a visit to Germany in June 2015, with the scheduled visit of Merkel to Egypt being her third to the country but her first one since 2009.
Egypt expects many things from the visit, such as attracting further investments from the industrial stronghold of Europe. The German chancellor is planning to discuss regional and national problems concerning refugees, the crisis in Libya, and the situation of German institutions in Egypt.
Daily News Egypt asked experts about how Egypt could benefit from the visit, and how it might affect the bilateral relationship.
The head of risk management at the Egyptian Exchange, Medhat Nafei, stated that Egypt has many fields that need reimbursement from Germany to attract more investments.
He explained that the value of German investments in Egypt is fair if compared to any other non-petroleum related investment by any other country.
The value of German investments in Egypt reached $619.3m, with a total number of 1029 companies. This ranks Germany as the 20th largest investor in Egypt.
Nafei stated that the United Kingdom for example has a lot of petroleum-related investments that have a high value, which makes it the biggest investor in Egypt.
He said that “Egypt has the opportunity to attract great investments in renewable energy—mainly in the solar energy sector—which could raise German investments and create many job opportunities.”
“Egypt and Germany have also cooperated in the field of training Egyptian workers for many years until now,” he noted.
Egypt also could provide Germany the opportunity to establish a German economic area in the Suez Canal Economic Zone, which might increase German exports to all nearby countries.
He emphasised that Merkel would hold meetings that would boost investments in both countries, adding that leaders such as Merkel do not waste time in ineffective meetings.
“Unfortunately, Egypt has a huge trade deficit with Germany,” he mentioned. “Egypt has the opportunity to export many products and raw material to Germany, which could reduce the trade deficit between both countries.“
As for political support, Nafei claimed that Egypt does not need political support anymore since the recent security issues have come to an end.
The European castle
The business and investment website Investopedia.com published an article about Germany on 15 April 2015, saying that over the last 15 years Germany has been widely viewed as the economic catalyst and stabiliser for its fellow European Union states.
The article stated that even after the 2008 financial crisis, the German economy was able to bounce back more quickly than neighbouring euro zone states.
“Despite a number of post-crisis reforms, EU countries continue to suffer due to lack of global competitiveness. Greece, in particular, is in dire straits and continues to leverage the support of the European Central Bank and fellow euro zone states to avoid financial collapse”, the article read.
Investopedia wrote that until the date of publishing, Germany had borrowed Greece €56bn.
About the possibility of getting economic aid, Nafei believes that Egypt is not like Greece, adding that Germany protects it due to its membership in the European Union—fundamentally different to Egypt.
He believes that Germany has also provided aid to Egypt in the field of establishing power plants by allowing easier ways of payment.
Egyptian-German economic relations
The website of the German ministry of foreign affairs, auswaertiges-amt.de, says that Germany and Egypt enjoy close economic relations, especially in the area of trade.
It stated that in 2015, bilateral trade grew by approximately 20% compared to the previous year, now worth EUR 5.2bn.
However, it added that Egypt’s economic and investment climate has developed positively since mid-2013 but is still not favourable, especially for small and medium-sized enterprises (SMEs) due to the existence of a wide range of bureaucratic hurdles.
“The Egyptian government’s economic policy currently focuses on extensive infrastructure projects, such as developing the Suez Canal area, road and housing construction, increasing electricity production, and land reclamation. Positive impetus is also evident in the property sector, manufacturing, and the food industry,” the ministry’s website noted.
Managing director at Multiples Group, Omar El-Shinity, believes that this visit will be beneficial for both countries regarding both, economics and politics.
He believes that one of the top priorities for Germany is to make sure that the important deal between the government and Siemens would follow through.
He said that after the International Monetary Fund’s loan of $12bn, it made Egypt review the deal and tried to stop it, due to its high value.
El- Shinity stated that the Siemens deal is very important to Germany.
As for attracting investments, he believes that German investments are very modest due to their low value. However, he added, what’s beneficial for Egypt is the positive picture of the relationship with the European Union that would become even better after this visit, which could allow the country to attract more European investments in the future.
He explained that German investors are not willing to risk entering a market that is currently recovering, adding that German companies are specialising in industrial endeavours, therefore the visit might not increase the German investments in Egypt.
From another perspective, El-Shinity believes that Germany views Egypt as a main consumer of German products, especially in the current period that is already witnessing slow growth for a lot of European countries.
Germany would simply focus on exporting many industrial products to Egypt instead of investing in it.
He believes that the deal with Siemens is designed to open a new path towards the EU, rather than just a deal to increase Egypt’s capacity of energy.