Egypt and Qatar eyeing stronger cooperation with sweeping economic pact

Egypt and Qatar are working towards a comprehensive economic partnership agreement to advance cooperation and serve as a measure of progress in their bilateral relations.

The partnership, recently proposed by Doha, will expedite a $7.5 billion investment package previously pledged by Qatar in April 2024 during a visit to the Qatari capital by Egyptian President Abdel Fattah al-Sisi, according to Egyptian officials.

A virtual meeting on the proposed partnership was held in late December, bringing together representatives from a wide range of state agencies from the two countries.

"The investments pledged by Qatar will be directed to sectors that add value to the Egyptian economy," Sherif Abdel Aziz, a senior Egyptian Ministry of Trade official and the head of Egyptian Trade Representation, said following the meeting.

He expected the partnership to enhance cooperation between Egypt and Qatar in—among many others—the fields of research, development and technology transfer.

"This will boost Egypt's industrial sector and increase its competitiveness," Abdel Aziz said.

The $7.5 billion in pledges will significantly bolster Qatar's investments in Egypt, which currently total $5.4 billion.

They will also allocate $29.7 billion for Qataris to invest in implementing a major tourist project on the Egyptian northern Mediterranean coast.

Abdel Aziz expected the potential comprehensive economic partnership between the two countries to significantly increase Qatari investments in Egypt and boost trade.

In 2024, trade between the two countries reached $128.4 million, which does not appear to meet their goal of stronger economic relations, but a year later, the situation has changed rapidly.

Changing landscape

The accelerating pace of economic cooperation between Egypt and Qatar is likely one facet of improving overall relations between the two countries, as evidenced by their growing political and diplomatic coordination.

Cairo and Doha are coordinating on numerous regional and international files, development analysts in Cairo describe as a far cry from the tensions that marred their relations prior to the January 2021 Al-Ula Summit in Saudi Arabia.

Ahmed Youssef, a professor of political science at Cairo University, described growing diplomatic coordination between Egypt and Qatar as a "cornerstone" in addressing regional crises.

Speaking to The New Arab, Professor Youssef noted that Egyptian-Qatari political and diplomatic cooperation is currently expanding to encompass a broader regional scope.

"The two countries share a common commitment to resolving regional conflicts through negotiation and to preserving state institutions across the region," he added.

Together with the US and Turkey, Egypt and Qatar consistently cooperated to push Hamas and Israel to reach a ceasefire in the Gaza Strip in mid-October last year.

The two countries also work tirelessly now to protect the ceasefire from faltering and push for going beyond its current first phase in the face of Israeli attempts to use illusory excuses to derail it.

This cooperation, analysts in Cairo argue, is symbolic of the changes permeating the regional political landscape, one in which old hostilities give way to new challenges.

The same changes, the same analysts added, are opening the way for the emergence of new political and strategic alliances, through which regional states try to protect their own interests and maximise benefits from their regional and international relations.

Timely coming together

The proposed comprehensive economic partnership comes at a critical time for the Egyptian economy, economists in Cairo said.

Qatari investments, including a possible $7.5 billion package and $29.7 billion to be invested in the northern Mediterranean coast, are a godsend as the Egyptian economy continues to struggle to recover from the effects of regional turmoil and repeated international developments.

"Regional wars and recurring international crises have adversely impacted the Egyptian economy, exerting significant pressure on the national currency, inflating import costs, and driving inflation rates sharply higher," independent economist Khaled al-Shafie told TNA.

He expressed optimism about the potential of direct foreign investments from fellow Arab countries to help Egypt overcome these challenges.

"Egypt offers a comprehensive package of incentives that make it an attractive and worthwhile destination for investors," al-Shafie added.

COVID-19 and the Russian-Ukrainian war have cost the Egyptian economy dearly, with lockdowns and disruptions to the international supply chain forcing the populous Arab country to pay more for its imports and negatively affecting major money-making sectors.

Israel's genocidal war on Gaza also caused Egypt a sizeable loss of revenues from the Suez Canal, a crucial source of national income, with attacks by the Iran-backed Houthis in Yemen on international shipping in the Red Sea scaring international maritime lines away from the Suez Canal and into the Cape of Good Hope.

The canal is resuming normal operations after the Houthis suspended their attacks, but a return to "normal" traffic may take time, according to specialists.

Meanwhile, Qatar is also emerging as a driver of Egypt's energy sector, helping diversify its natural gas imports at a time when natural gas is becoming a political lever in the scramble among some regional states for influence.

A recent deal to import 24 liquefied natural gas shipments through the summer clearly indicates cooperation.

The deal, signed earlier this month, will also increase energy cooperation between the two countries on infrastructure, shipping and storage.

Beyond diversifying Egypt's natural gas imports to prevent any single supplier from exerting pressure on Egypt's political decision-making, the import of Qatari gas highlights numerous potential areas for cooperation between Cairo and Doha, economists said.

"There are numerous opportunities for expanded cooperation between Egypt and Qatar," al-Shafie said.

He highlighted Egypt's potential to serve as a strategic gateway for Qatari products and services into African markets across a wide array of sectors.

"The current trade volume between Egypt and Qatar remains quite low relative to the ambitious economic cooperation goals shared by both nations," he added. "This underscores the significance of the comprehensive economic partnership currently under discussion between the two countries."