Few economic links are more important to Egypt than those with Europe. The European Commission's ambassador to Egypt spoke to Niveen Wahish Ian Boag, the European Commission's (EC) ambassador to Egypt, will celebrate one year in his post next week. With Egypt beset by economic storms during his tenure, it has been a busy 12 months for Boag. Just last week, he and Egyptian minister of state for international cooperation, Fayza Abul-Naga, oversaw the initialling of a memorandum of understanding between Egypt and the EC which sets the guidelines for the second part of the European Union- financed Trade Enhancement Programme. The programme, which will help the Egyptian government simplify essential import, export and customs procedures, is part of a broader assistance programme planned for the years 2002-2004. The EC offices have recently moved from Zamalek to much larger quarters in Mohandesin. Does this signify a larger EU involvement in Egypt? Staff at the commission's office in Cairo went from 27 to 65 in one leap. More of the EC's development cooperation with Egypt will now be managed in Cairo. In May 2000, the EC decided that its development and aid programmes could be better implemented if all work that could be done locally was. This process is called "deconcentration". The EC's mission in Egypt is one of the first to be "deconcentrated". Our responsibility for implementing projects has increased substantially. We are now more involved in identifying and appraising projects. We are now linked by computer to the EC's accountancy system in Luxembourg. This means that the mission can authorise payments for projects independently. It is much easier to manage a project if you're next to it. If you manage it from Brussels, it's not a living project for you; it is merely a piece of paper. Our purpose is to move alongside our Egyptian partners and the people who actually implement projects. Applying for projects is still done the same way, though. You can't just walk in off the street and request financing. Projects have to fall within the framework of the National Indicative Programme (NIP) 2002-2004, the memorandum for which was signed late last month with Foreign Minister Ahmed Maher. What does the National Indicative Programme (NIP) involve? The NIP sets out the priority areas for cooperation and indicates the value of grants Egypt will receive from the EU during a specified period. It is based on a country-strategy paper which we prepared in discussion with the Egyptian authorities. Which areas will it focus on? The 2002-2004 programme focuses on promoting effective implementation of the EU-Egypt association agreement by helping Egyptian enterprises and institutions meet the challenges of increasingly competitive internal and external markets. It also supports economic reform and sustainable and balanced socio-economic development. Will most of the funds provide technical and consultative help? With the Mediterranean countries we have largely given up the "classic" development projects (like roads and dams). We still have a number of those projects running, but they come to a conclusion at the end of this year. Following that, there are two ways of doing things. We either provide technical assistance to the Egyptian authorities when they want to upgrade their ability to deal with certain issues, or we provide budgetary help direct to the Egyptian government. In the latter case, we agree with the government on a series of reforms which it has already chosen (we do not impose measures on it) and once those reforms are implemented, the money is disbursed, and relatively quickly. A large part of NIP help tends to be budgetary support. Beyond this help, we are currently negotiating the second part of the Trade Enhancement Programme, which will make trade easier, by advising on how to improve exports and provide a more attractive environment for investors, and so on. The first part of the programme will be technical assistance with the ministry of foreign trade. The second, and larger, part, will be budgetary support for certain reforms to be carried out in the customs and related authorities. Obviously the money helps; but true progress comes from reform. All the funds that we, our member states, and other people put into this country will amount to naught, unless accompanied by the implementation of policies which the Egyptian government has already chosen. That is the key. If all that is done, the energies of the Egyptian people will be released: to manufacture, to sell, to market, to export and to increase the quality of life. We are not here to impose our own ideas on the Egyptian government. Our aim is to encourage the authorities to do what they themselves have already said they will do. We want to push against an open door; we are not here to tell other people how to run their country. What is the budget for NIP 2002-2004 worth? 351 million euros. And how much of that comes from the pledges made at the Consultative Group Meeting in Sharm El-Sheikh last February? The whole lot. It is the pledge made at Sharm El-Sheikh. How would that figure have differed had there not been a donors' conference in Sharm El-Sheikh? It would have been the same. Egypt has not made full use of the funds made available to it by the EU in past years. What can be done about that? The flow of projects is a question that has to be addressed by the government of a beneficiary country. The Egyptian authorities recognise that Egypt took less advantage of the possibilities offered by MEDA 1 than it could have. The same was true in the early days of MEDA 2. The Industrial Modernisation Programme (IMP), for example, took a long time to get going. It only started operating early this year, yet it was signed in December 1998. We hope to work with the Egyptian authorities to ensure that there is a quicker flow of projects and that Egypt can take up the funds available more smoothly and more quickly. Is the sum offered for 2002-2004 more than in previous programmes? The previous programme lasted five years. The amount offered year by year was not greatly different. Before we judge MEDA 2 against MEDA 1, though, we have to see what is made available in the years 2005 and 2006. (A total of 698.7 million euros was committed under the MEDA programme during the period 1995-2000). Again, the more projects Egypt can improvise and implement, the more projects we will finance. Unlike financial protocols, which used to be negotiated every five years, with a specific amount of money set aside for each Mediterranean country, now there is a block of money for the whole region. It is not quite first come first served (no country is ever completely deprived), but obviously the quicker you can come up with projects, the more likely you are to get a high percentage of the money available. So, there is a certain degree of urgency. How much has Egypt used of the amounts pledged before? Of the amounts pledged before, Egypt has used about 40 per cent. Overall, Egypt has not been a bad user. Getting projects going takes time. You need them ratified by parliament, you have to set up the whole structure, the management etc. The association agreement has not yet been presented to the Egyptian parliament. What do you think of that? The ratification of the partnership agreement is a matter for the Egyptian government. So far, the European parliament and one member state have completed the ratification procedures. Nobody can say that Egypt is behind, but we would very much like to see it ratify the agreement as soon as possible. My understanding is that everyone hopes the agreement will be ratified at the beginning of next year, as this year's parliamentary session is coming to an end fairly soon. That would be fine, because it is unlikely that all the EU member states will have ratified the agreement before then. But if it is not ratified in the next parliamentary session, then we will have a problem because by then most, if not all, member states will have ratified the agreement. How do you think the Industrial Modernisation Programme has performed so far? It is too early to say. At the moment it is still being set up. But it is moving in the right direction. I am confident that by the end of this year it will be in a position to offer services to industry. But the whole thing is a lengthy procedure. The Industrial Modernisation Centre, which must be set up first, does not deliver services itself, but creates the units that do. It's a huge project: the largest the EC has financed outside the EU. So it is no surprise that it will take time before it can deliver services effectively. How do you think political events have affected the Barcelona process? It is interesting that despite the very difficult situation in the region, the ministerial meeting in Valencia took place, and was successful. The Spanish presidency was very committed to the exercise and put a lot of work into it. Almost all of the participant countries were present, despite the region's travails. And immediately beforehand, successful meetings for the ministers of industry and trade were also held. There is a lot of work going on dealing with a whole range of technical matters. I think that there is a lot more happening in the Barcelona process than people realise. People's attention tends to be on the political situation, of course, but a lot of work is being done on the economic side, not to mention the social and cultural sides. Given events, which inevitably have had an effect, Valencia was a great success. Last February, the EC, adopted a report proposing the creation of a Euro- Mediterranean Bank. Where does the bank figure on the EC agenda? No decision has been taken on that. The decision was to have an increased facility from the European Investment Bank (EIB) which would run for a year from the time that it was set up. After that, people would reexamine the bank idea. In that sense, the initiative has been neither dropped nor approved. I know some people wanted to see a positive decision taken in Valencia, but that was not possible, so an increased facility has been set up and the whole thing will be looked at again in a year's time. In the meantime, more funds will be made available through the EIB: up to two billion Euros a year. Remember that it is difficult setting up a new institution: you must be sure there is enough work for it to do. We have to see if more funds can be generated, whether those funds can be properly used and whether the institution can take things a stage further. The infection of Egyptian potato exports by Brown Rot has become a perennial problem between Egypt and the EU. What is the situation this year? This has been a fairly good year for potato exports. But there have been a number of interceptions and Egypt has now ceased exporting. We will have to wait until all the interceptions have been examined to confirm whether or not they were cases of Brown Rot. That is unfortunate: for a long time the season was proceeding well and interceptions came towards the end of the season. Last year, the EC made a considerable effort to respond to the pleas of the Egyptian government to maintain the present system. We wish to continue to do so. But I think that member countries will only continue to accept the present system if they are assured that the system of checks and controls is sufficient to prevent defective potatoes leaving Egypt. Otherwise Egyptian potatoes will be banned from Europe which is not a situation we wish for. Egypt has to play its part here. The rules of the game are clear. Provided that Egypt can satisfy Europe that its inspections are accurate and rigorous, there will be no problem. But so long as doubts exist, there will be a tendency to take draconian measures. Turkey, Israel and Algeria were cited by the Euro- Mediterranean Ministerial Conference on Trade as the three most important Mediterranean partner countries for the EU in 2001. How can Egypt reach a similar position? I agree with Prime Minister Atef Ebeid, who once said that it was important to create the right atmosphere for business. Egypt can create a climate that attracts companies to come and invest, whether they are foreign or local, who can produce goods that can compete on price and quality. It's as simple as that. Market research is important. The idea is to find out what people want, then go and make it. It's a question of being better and cheaper. This is why the EU is supporting the Egyptian government in its policies for modernising the economy. This is how Egypt will benefit from the free trade agreement with the EU. Trade between countries south of the EU is very limited (worth only about 10 per cent of their trade with the EU). But 60 -70 per cent of their trade is with the EU. For that trade to grow, business has a long list of things it wants changed. Complicated customs procedures add to the cost of Egypt's exports. It's a question of getting Egypt to be competitive. The Euro-Med free trade area is supposed to encourage commercial exchange not only vertically between countries south of the Mediterranean and the EU, but also among the southern countries themselves. But the southern countries are industrially similar; does trade among them make sense? It is true that countries south of the Mediterranean have a similar industrial structure if we look at the present situation. But we hope this will change with development and that industrial bases in all the countries will broaden. After all, when the EU was set up, the original six members (France, Germany, Italy, Holland, Belgium, Luxembourg) had similar industrial structures (steel, coal mining, farming). They managed to diversify because, as I said earlier, you market, you learn, you find out what there is a market for and then you produce it. One can imagine that if all conditions are satisfied in the 27 countries which constitute the Euro-Mediterranean free trade area, companies will come here to invest, because they will find it worthwhile to do so and they will produce a wide range of goods that will be traded with the EU as well as among southern countries. There are fears that with the enlargement of the EU to the East, southern Mediterranean countries will fall from favour. Are those fears justified? A lot of people worry about the enlargement of the EU and how it will affect the southern Mediterranean. But it is unreasonable to suggest that the EU is only able to maintain an interest in one geographical area at a time. The EU is a global player, financially and economically, because our different members have historical relationships all over the world. A week ago, a meeting was held in Spain with heads of states from Latin America, the Caribbean and the EU. These guys are a lot more distant from Europe than those countries south of the Mediterranean. Mediterranean countries are our neighbours, separated from us by a very small sea. We will not neglect the Mediterranean in favour of Eastern European countries. Clearly we will, for a time, be involved in promoting economic cohesion, bringing their living standards up to the average standards of the EU. But as their living standards rise and they have money to spend, they will spend it in the Mediterranean countries.
