EU signs €1 billion financing deal with Egypt as part of migration deal

4 months ago 18

The European Commission on Saturday (29 June) signed €1 billion in macro-financial assistance with Egypt, part of a previously agreed funding package to help Cairo pursue substantial economic reforms.

The EU-Egypt Investment Conference in Cairo was attended by European Commission President Ursula von der Leyen, Trade Commissioner Valdis Dombrovskis and Neighbourhood Commissioner Olivér Várhelyi.

Both sides signed an agreement for short-term financial assistance of up to €1 billion to support Egypt’s economic reform program, which will provide up to €5 billion in favourable loans to Cairo.

“One hundred days ago, we opened a new era in the relations between Egypt and the European Union, with our strategic and comprehensive partnership. Today, we deliver,” Von der Leyen said before the conference, adding, “And this is just the beginning.”

This is the first tranche of a €7.4 billion EU funding package pledge in financial support for Egypt’s economic reforms and an upgraded relationship in exchange for energy sales and stemming migrant flows to Europe.

The EU has concluded similar deals with Tunisia, Mauritania and Turkey.

Von der Leyen told the conference the investment would “accompany and incentivise Egypt’s reform agenda,” which would “foster a stronger business environment and attract more investment and create more good jobs.”

Egypt’s President Abdel Fattah al-Sisi said that the EU-Egypt partnership would focus on various fields, including trade, energy and infrastructure.

“The conference will allow countries and European economic entities to check investment opportunities available in Egypt,” Sisi said in Cairo.

As part of the overall deal, both sides signed a flurry of agreements that would cover a range of policy areas.

This included a Green Sustainable Industry program fed by a €30 million EU grant, designed to aid Egyptian industry in investing in pollution reduction, decarbonisation, energy and resource efficiency. It also included three financing agreements worth a total of €36 million.

Another €60 million EU support package was also agreed on to improve grain storage in Egypt under the Food and Resilience Facility.

As part of the new investment push, European companies signed more than 20 new deals or memoranda of understanding (MOUs) worth some €40 billion.

“The €40 billion of investment agreements, if you look at the national figures of Egypt, that is four years of foreign direct investment,” Várhelyi said, adding this could “bring the golden age of EU-Egypt relationship”.

The companies in question would be looking to invest are in sectors such as hydrogen, water management construction, chemicals, shipping and aviation.

Cairo has been betting on its natural gas reserves to gain access to foreign currency, while the EU has sought alternatives to Russian gas since its war on Ukraine has cut trade ties between the two sides.

“Egypt could not only become able to supply its own electricity, but Egypt could become a serious supplier of Europe, a reliable supplier of Europe with green electricity,” Várhelyi said.

[Edited by Alice Taylor]