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Strengthening Russian ties
Published in Al-Ahram Weekly on 14 - 09 - 2017

Following a two-year absence after a Russian passenger plane was downed in Sinai Russian tourists are expected to return to Egypt within a month, according to Russian officials.
“[Russian airlines] are already gearing up,” Russian Transport Minister Maxim Sokolov said on the sidelines of the Eastern Economic Forum, according to Sputnik News agency. Sokolov had earlier said Moscow sees no need to conduct additional security checks at Cairo International Airport.
The return of Russian tourists is expected to give a much needed boost to Egypt's ailing tourism sector. In 2014 Egypt received 3.1 million tourists from the Russian Federation, 32 per cent of the total number of tourists arriving in Egypt that same year.
The return of Russian tourists comes as negotiations over the construction in Egypt of a nuclear power station by the Russian state nuclear corporation Rosatom is close to being finalised.
Prime Minister Sherif Ismail announced last week the cabinet has approved the contract for the nuclear plant and it is now being reviewed by the State Council. Under the initial agreement to build the nuclear power plant signed between the two countries in 2015 Egypt would have received $25 billion in loans from Russia, covering 85 per cent of the project.
Russian President Vladimir Putin has accepted President Abdel-Fattah Al-Sisi's invitation, delivered on the sidelines of last week's BRICS summit, to attend a ceremony to mark the laying of the foundation stone of the nuclear power plant in Dabaa on Egypt's North Coast.
“Such complex deals usually take around three years to finalise,” said Ministry of Electricity Spokesman Ayman Hamza.
Putin's acceptance of Al-Sisi's invitation to attend the ceremony shows the negotiation process has been successful, Alaa Ezz, secretary-general of the Egyptian-Russian Business Council (ERBC), told Al-Ahram Weekly.
“None of the bids Egypt received to build the nuclear power plant included fuel enrichment apart from the Russian offer. Now Egypt will have a complete supply chain, ensuring the stable running of the project.”
In addition to building the nuclear power station Russia is also expanding industrial cooperation with Egypt. A memorandum of understanding was signed last year to build the Russian Industrial Zone (RIZ) in Port Said.
According to the Russian Ministry of Trade and Industry, the industrial zone in the Gulf of Suez will take 13 years to complete, at an expected investment of $7 billion. The project is expected to provide more than 70,000 jobs. It will be constructed in three phases and is expected to produce $3.6 billion worth of goods by 2026.
Ezz told the Weekly delays in finalising the RIZ agreement were because the zone's main location — southeast Port Said — is better suited to light and medium industry rather than Russia's typically heavy industry.
“Now they are studying the construction of light and medium industrial plants in southeast Port Said while heavy industries will be located on the other side of the canal in the Gulf of Suez,” says Ezz.
“The Russian state is responsible for the establishment of the Russian Industrial Zone in Egypt and by extension it is responsible for its promotion among the Russian investors.”
The 11th meeting of the joint Egyptian-Russian Committee for Trade, Economic, Scientific and Technical Cooperation which convenes next month in Moscow will host a special forum promoting investment in the new Russian Industrial Zone, says Ezz.
Several Russian companies have already visited the industrial zone and decided to invest and are now conducting feasibility studies to determine the size of the plants they will build. According to Ezz, 70 per cent of the area allocated for the RIZ has already been reserved by Russian companies.
RIZ will offer special tax regimes for Russian companies and their partners. A major selling point is the access it provides to fast-growing African markets. Egypt has free trade agreements with more than 70 countries in Africa, the Middle East and Europe. Products manufactured in Egypt with a minimum local content of 40 per cent will be exempt from import duties.
When the Tripartite Free Trade Area agreement between the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC), comes into effect Egypt will become the gateway to 2.6 billion consumers. The African initiative was signed in Egypt in 2015.
Egypt and Russia are now working on finalising the industrial zone's regulations and an agreement is expected to be signed before the end of the year.
RIZ will further strengthen ties between Egypt and Russia. According to the Ministry of Industry, bilateral trade between Egypt and Russia reached $4.16 billion last year.
The Central Bank of Egypt announced on Monday that the inflow of foreign direct investment to Egypt in fiscal year 2016/2017 reached $13.3 billion, up from $12.5 billion in the previous year.

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