globalEDGE Blog - By Tag: egypt

During an economic crisis, Egypt is cutting back on its domestic energy consumption to provide more natural gas to Europe. This past summer, the Egyptian government began to reduce household electricity consumption by cutting the lighting in some streets, squares, shops, and government buildings. In order to do this, the amount of natural gas needed to generate electricity must be reduced by 15%, and the surplus will be shipped to European buyers who pay top dollar for liquified natural gas.

A mega-city featuring flying cars, high-speed rail instead of roads, robot maids, a giant artificial moon, and a resort with multimillion-dollar palaces is the vision of the Saudi Arabian crown prince and prime minister, Muhammed Bin Salman (MBS). The project, called Neom, hopes to gain $500 billion in investment with the ambitious goal of constructing a 106-mile-long carbon-neutral city with walls over 1,600 feet stretching from the Red Sea into the desert. Neom was announced back in 2017 and was originally planned to be completed by 2025, but due to the pandemic, only the first phase of the project is projected to be completed by this time. If this sounds unrealistic, MBS himself has admitted that he would be satisfied if only half of his ambitious Neom plan is completed. Half of all planned construction is an optimistic estimate as Neom has stalled due to numerous challenges. The kingdom’s sovereign-wealth fund and finance ministry have already spent $1 billion on initial infrastructure, planning, and consulting.  The country has contracted U.S.-based consulting firms from Boston Consulting Group, McKinsey & Co., and Oliver Wyman to aid with planning the project.

The Suez Canal is an artificial sea-level waterway that connects the Mediterranean Sea to the Red Sea.  Built in Egypt between 1865 and 1869, it serves as a way of expediting transportation between the Atlantic Ocean and the Indian and Western Pacific Oceans.  The closest alternative would be to travel around the Cape of Good Hope in South Africa, which would require an additional 7,000 km, which estimates out to about 8-10 additional travel days.  The Suez Canal is responsible for 13% of the world’s maritime trade, with an emphasis on the transportation of oil and natural gas.  It is reported that around one million barrels are transported through the canal daily.

The Nile River is a major influence on the economies it encompasses, and in the past it has been controversial how the energy, space, and water is allocated amongst the countries it passes through. Ethiopia is constructing a massive dam costing billions of dollars on the Blue Nile, which will distort the previous allocation of water agreed by the countries surrounding the river. Most of the disagreement in the initial stages of project development stemmed from this allocation dispute, but the presidents of Egypt and Sudan, as well as the Ethiopian Prime Minister, all recently signed a contract pledging to better share the water and resources of the Nile. On Monday, Egypt agreed to a preliminary deal with Ethiopia on the construction of the dam.

Foreign direct investment has a large effect on the economy of countries. It can increase production, employment, exports, imports, and economic growth. Over the past five years, emerging markets have seen an increase in foreign capital from investors in search of higher yields. Three popular emerging market countries among foreign investors that have experienced political instabilities in the past month are Brazil, Turkey, and Egypt. The political instability could prove to be detrimental to emerging market financial growth in the short run, but investors should be more worried about the slowing economies of these countries.

“Trade creates wealth”: an age-old saying oft used to break international boundaries for the free exchange of goods, services, currency, and capital. But this age-old saying does not hold true when it comes to the underground economy of old-age empires’ wealth.  Trafficking antiquities not only creates sinkholes in the public goods marketplace, but it also depreciates cultural heritage sights.  Furthermore, these black market deals are exponentially increasing the rate of cultural homogenization by privatizing potential world-heritage commodities.  Why be entrepreneurial with a public good like history?  It is far more meaningful for archeologists, history enthusiasts, and the inquisitive society.  Due to its unauthorized, undisclosed, unregulated, and highly informal, the black market for antiques can only be scratched at surface level but three distinctive vacuums emerge: currency, knowledge, culture.

In light of ensuing protests in Egypt, attention has been turned to the potential effects the crisis will play on the already stunted global economy. President Morsi of Egypt announced that his decisions would not be subject to judicial oversight until a new constitution has been enacted. This seemingly dictatorial declaration is what sparked the unrest that has already greatly affected the national economy. The protests are continuing, as seen on Sunday when supporters of Morsi surrounded the judicial court, forcing them to suspend sessions until protests have ceased. Due to the continuation of this crisis, the global economy might soon experience some dangerous effects that the Egyptian economy is already facing.

Exciting news! The United States Trade and Development Agency, in coordination with the U.S.-Egypt Business Council and the U.S. Chamber of Commerce, as well as the Egyptian Embassy and the U.S. Departments of State and Commerce, will be hosting a two-day forum on June 27-28 to encourage enhanced trade and sustainable economic development in Egypt. This conference, being held this year in Washington D.C., will provide an unprecedented opportunity to foster increased cooperation and trade between the United States and Egypt by encouraging business-to-business networking and highlighting commercial opportunities and financing resources.

Everyone has been hearing about it lately.  Look at any news site and it will be the top story if not many of the top five stories.  Ever since Mohamed Al Bouazizi set himself on fire in December to protest Tunisia’s economic situation, revolution has been spreading across the Middle East.  These conflicts are demonstrating how some of the world’s smallest countries can have great effects on the rest of the planet.

The protests in Egypt have taken over the media for the past few weeks. People have been treated with viewings of thousands in Tahrir Square calling for the resignation of President Hosni Mubarak. With Mr. Mubarak announcing that he is stepping down today, I’m not going to spend too much time talking about the implications of that particular uprising. Instead, I’d rather talk about the reasons behind the uprisings and some of the consequences that it may have in the Middle East.