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Can Economic Interdependency Fix Political Rift Between Egypt and Turkey?

The political reconciliation process between Egypt and Turkey is still stumbling on a muddy road of swollen egos. The prejudices severely hurt by seven years of media wars and diplomatic standoff do not seem ready to heal, any time soon. That is, at least, true on the side of the Egyptian state which has been purposefully ignoring the positive gestures and statements of the Turkish leadership, regarding rapprochement.

In complete contrast, commercial trading between Turkey and Egypt is steadily expanding. This year marked an unprecedented increase of 32.6% in the volume of trade between the two countries, compared to last year, according to the estimates of the Egyptian Chamber of Commerce. The exchanged products range from manufactured clothes and furniture to strategic products like natural gas and mineral oils. Since the last quarter of 2021, Turkey started to receive, for the first time, cargos of liquified natural gas (LNG) from Egypt’s Idku and Damietta offshore plants in the eastern Mediterranean.

The geographic proximity between the two countries made the transfer of liquified gas a breath, in terms of speed and shipping costs. That should encourage the two countries to seriously consider colliding forces to combat the global energy crisis. Turkey is situated at the southern gates of Europe, and very close to the North African countries that produce massive amounts of oil and gas, such as Libya and Algeria. Also, Turkey represents the closest entry point for the liquified natural gas coming out of Egypt's natural gas liquefaction plants to be exported to Europe. If the two countries agree to work together in that regard, they will not only solve the global energy crises but will dramatically lift their struggling economies.

According to the latest statistics by the Egyptian government, during the first quarter of 2022, Egyptian exports to Turkey grew by 178.9% (960.6 million dollars) from 537.1 million dollars at the beginning of 2021 to 1.4 billion dollars, at the beginning of this year. In comparison, the volume of Turkey’s exports to Egypt increased from 3.31 billion dollars in 2020 to 3.94 billion dollars in the first quarter of 2022. Over the past 25 years, Egypt’s exports to Turkey have been steadily increasing by 9.63% each year, compared to a 10.2% annual increase in Turkey’s exports to Egypt.

The trade balance between the two Mediterranean neighbors is favoring Turkey. Yet, the comparative advantage of natural gas production in Egypt makes Turkey equally tied. Moreover, the accumulating economic burdens of the global pandemic and the war in Eastern Europe created a situation where the two countries, whether they like it or not, have grown economically dependent on each other.

Last week, a delegation of Turkish businessmen visited Egypt to meet with their Egyptian counterparts and discuss the means of increasing their investments. Roughly, there are more than 350 Turkish companies and factories operating on the Egyptian land in various sectors; ranging from tailoring and manufacturing household machines to tourism, information technology, agriculture, and providing services.

The scene of depreciating currencies and spiking inflation rates, in Egypt and Turkey, is not entirely gloomy. There is a bright side, represented by the expansion of the two countries' abilities to increase their exports to Europe, Asia, and Africa. For this to happen, they have to effectively use the advantages of their geo-strategic locations at the center of the three continents. And, for this to happen, the economic will and sincere intentions of Turkish and Egyptian businessmen are not enough. The political will of the two states’ leadership has to be involved.

In that sense, should we be optimistic that the growing interdependency between Turkey and Egypt can, eventually, put an end to the political standoff between the two powerful neighbors of the eastern Mediterranean? Let’s hope for the best.

Also, read on Sada Elbalad


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