Arab-Egypt Trade: Up

Egypt is now building up its trade with Arab countries and becoming the object of increased interest from Arab investors, according to a report by the prestigious Wharton Middle East Economic Service.

The growing ties are an economic reflection of the political rapprochement that has been taking place within the past year or so between Egypt and other countries of the Arab World.

On the investment side, the report notes, the Arab African International Bank—an offshore bank in Cairo owned by the Kuwait Ministry of Finance, the Central Bank of Egypt, the Rafidain Bank of Iraq, the Central Bank of Algeria, the Jordanian Ministry of Finance, the Qatari Ministry of Finance, and the Saudi Al-Jezira Bank—decided in 1983 to raise its capital by sixty percent. This is the first increase in capital by the bank since the 1978 Baghdad Summit Conference imposed an economic boycott on Egypt in the wake of the Camp David agreements.

Another Arab bank in Cairo—the Arab International Bank, owned by Egypt, Oman, Qatar, the United Arab Emirates and Libya—is also considering an increase in capital and is planning to finance a world trade center on the Nile corniche, in Cairo.

On the trade side, Egypt has been actively seeking to expand it with Arab countries. Last December, for example, it sent a 26-member trade team on a tour of Iraq, Kuwait, Oman, Saudi Arabia and the United Arab Emirates. Agreement was reached on opening trade centers at Sharjah and Jeddah, and a $1.2 million contract was signed with private Saudi companies for Egyptian textiles and leather goods.

Within the past year, Egypt has renewed its commercial agreement with Lebanon, signed an extensive new trade protocol with Jordan, and reached agreement on trade and financial issues with Iraq.

The Iraq-Egyptian economic accord provided for opening trade centers in each other's capitals, raising the value of Egyptian textile exports to Iraq by $35 million, increasing Iraqi sulphur and phosphate exports to Egypt by the same amount, and exempting each other's goods from customs duties, among other things. Agreement was also reached on reopening the Cairo branch of Rafidain Bank, and creating a joint committee to look after the interests of the 1.3 million Egyptians working in Iraq. Remittances from these workers are critically important to the Egyptian economy, Wharton said.

The Egyptian-Jordanian trade protocol covers trade, employment, banking cooperation, the easing of reciprocal import restrictions, and expansion of the Amman and Cairo trade centers. There was also discussion on opening up a credit line to back bilateral trade.

Egypt's trade with the Arab world, unlike government-to-government and multilateral Arab aid—which dropped drastically after 1978, and was replaced by increased U.S. government assistance—had never really fallen off substantially. Imports by Egypt from members of the Arab League totaled $140.9 million in 1982, only 29 percent under the amount imported in 1978 (but also only three percent of its total imports). Of these imports, 93 percent were from three countries: Saudi Arabia ($52.1 million), Sudan ($43.1 million) and Lebanon ($35.6 million).

Egyptian exports to Arab League countries in 1982 were worth $200 million, down just four percent from 1978 and representing only six percent of Egypt's total exports. More than 86 percent of the exports were taken by Saudia Arabia ($85.9 million), Sudan ($66.8 million) and Lebanon ($20.9 million).

SIDEBAR

Correction

In our issue of January 23, 1984, we incorrectly stated that Mobil was among five U.S. oil companies still operating in Libya. We are informed by Mobil that in December, 1982, Mobil Oil Libya Ltd., a wholly owned subsidiary of Mobil Oil Corporation, notified the Government of Libya of its withdrawal from Libya, and that now no entity in Libya has any connection with Mobil Oil Corporation.

We regret having misinformed our readers.