With bilateral relations between Cairo and Moscow seeing a closeness that brings to mind their Nasserist-era courtship, the visit of Russian President Vladimir Putin saw a number of important economic cooperation deals. Topping the list is an agreement in the energy sector, where Egypt is currently facing a crisis that led to recurrent nationwide blackouts last summer. The two sides have agreed to cooperate in the construction of a nuclear power plant in Dabaa, on the northwestern coast overlooking the Mediterranean. An Egyptian delegation is scheduled to travel to Russia on Saturday to negotiate the technical and financial terms of the agreement with representatives of Rosatom, the Russian state nuclear energy corporation. Putin and Al-Sisi also agreed to create a free trade area between Egypt and the Eurasian Customs Union (ECU), which includes Russia, Kazakhstan and Belarus. The agreement would allow customs-free export of Egyptian agricultural and industrial goods to the ECU, which would boost Egypt's trade. Talks about such an agreement date from before the 25 January Revolution but it had never materialized due to the political changes of the past four years. Only after President Al-Sisi's visit to Russia in the summer of 2014, and the latter's strained relations with the EU, were serious steps to ratify the deal taken. Also high on the agenda of the visit was the agreement between the Russian Direct Investment Fund (RDIF) and the Egyptian Ministry of Investment to enhance investment cooperation between the two countries. RDIF is a $10 billion fund established by the Russian government to make equity investments, primarily in the Russian economy. The RDIF will support the establishment of an Egyptian investment fund, according to a yet another agreement signed on Tuesday. According to the agreement, the RDIF will provide wide-ranging advice to the Ministry of Investment, including expertise on setting up the fund, the co-investment model, management structure and investment strategy. The RDIF will also provide support in attracting international investors to the fund through its own experience in establishing partnerships with other leading sovereign funds. Kirill Dmitriev, CEO of the RDIF, told Al Ahram Weekly that Egypt was a country with major investment potential in a number of sectors and one of Russia's key economic partners in the Middle East. “The intended fund will attract international investment from countries other than the Gulf Cooperation Council (GCC) to invest in Egypt, as Saudi Arabia, the UAE and Kuwait already have substantial financial investments in Egypt,” he said. “I am confident that this new fund will become an invaluable tool to attract foreign investment to the country,” said Dmitriev, who was a part of the Russian delegation. The RDIF was established in 2011 by the Russian government to carry out investment primarily in Russia, alongside reputable international financial and strategic investors. Egypt intends to create its own sovereign investment fund in cooperation with the RDIF, following in the footsteps of other countries that have shown an intention to launch investment funds based on Russian experience and to employ the co-investment model that RDIF operates under. “We are ready to offer Egypt our full support,” Dmitriev said. Despite the war on terrorism currently underway in the region, Egypt is well placed to attract foreign investment through the new fund. “Through the new Egyptian investment fund, the government will put money in different projects, which will encourage foreign investors to seek partnerships with the government and to invest their money in Egypt,” Dmitriev said. Bilateral trade between Egypt and Russia has increased over recent years, going up by almost half in 2014 over a year earlier and amounting to more than $4.5 billion. Dmitriev said that agriculture would likely see the largest investment in the immediate future. “Egypt is a country with major investment potential in a number of sectors and the fund will help create investment opportunities in these sectors, including agricultural infrastructure as Egypt is the world's biggest buyer of wheat,” he said. Russia provides about 40 per cent of the grain consumed in the country, while it imports much of its fruit and vegetables from Egypt. Dmitriev expects the upcoming economic conference to be held in Sharm El-Sheikh to be a success. “We see major stability in Egypt under president Abdel-Fattah Al-Sissi, which will attract investment,” he said. The RDIF continues to explore power generation projects in the region, and it has brought companies interested in power generation and agriculture to Egypt. “Our intention to support Egypt in establishing its own investment fund does not mean we have stopped searching for attractive investment opportunities in Egypt,” he clarified to the Weekly. From the beginning the RDIF has been considering different investment opportunities in the country, he said, and many Russian companies, especially in the energy, chemicals or automotive sectors, have shown interest in the Egyptian market. “We are working on several projects and will announce them on completion. We are bringing a large delegation of major Russian companies with us that are very interested in doing business here.” “They will discuss a number of specific projects in the energy, agriculture and logistics sectors, enhancing food security and promoting sustainable growth in the region,” he said. The recent decline in the value of the Russian currency, the rouble, has also triggered the idea of using the national currencies to settle bilateral trade debts. The tourist season will begin in Egypt soon, and the Red Sea resorts are a popular vacation destination for many Russians. More than three million Russian tourists visited Egyptian resorts in 2014, up by 50 per cent over a year earlier. Settling accounts in national currencies will contribute to creating more favourable conditions for the millions of Russians who spend their holidays in Egypt, as the decline of the value of the rouble has led to reduced purchasing power for many Russians. “This measure will open up new prospects for trade and investment cooperation between our two countries, reducing dependence on current trends in world markets,” President Putin said in an interview with the daily Al-Ahram in advance of the visit. Dmitriev confirmed that the idea was being discussed by representatives of the two governments. “I consider it to be extremely helpful for the development of bilateral trade between our nations,” he said. Russia has already switched to a similar settling mechanism with China, one of Russia's main trading partners. “The mechanism has already proved its efficiency, so I think it's only a matter of time before Russia and Egypt use the national currencies to settle bilateral trade. Egypt is our key trading partner in the region and the largest importer of Russian wheat. “I'm confident that the implementation of the new settlement mechanism will help to intensify bilateral trade,” Dmitriev said.
