Egypt and Russian-Ukrainian War: Challenges and Opportunities
Dr. Nilly Kamal Elamir (Egyptian Lecturer in International Relations)
According to the United Nations, the Russian-Ukrainian war, is one of the biggest challenges ever faced by the international system and the structure of global peace because of its nature, severity and consequences. With 10 million people had to leave their homes, this war has the fastest forced population movement since the end of World War II, it caused also giant leap in global food prices. It also led to supply chains disruptions which have increased shipping charges and created container shortages. On the developing countries side, impacts of the war were even worse, where agricultural and industrial sectors heavily affected, and raised these countries' debt ratios. (United Nations SDGs Group, The UN Secretary General calls for ending the war in Ukraine, at: https://unsdg.un.org/ar/latest/announcements/alamyn-alam-yhth-ly-anha-alhrb-fy-awkranya)
In order to be able to understand map of effects of the Russian-Ukrainian war on Egypt, we need to look at multiple factors, including the interests of Egypt in the warring countries, Russia and Ukraine and the interests of Egypt in the affected countries, mainly, Europe as part of the global economy. We will need also to look at Egypt's capacity to absorb and adapt situations of crises. And of course, where does Egypt stand on the Russia-Ukraine war?
Egypt's Strategic Calculations in the Russian-Ukrainian war:
The Russian-Ukrainian war is considered the largest European war since the end of World War II in 1945, and therefore it threatened the interests of countries of the European continent and the world, especially with regard to energy supplies (some countries in the Arab region benefited from the rise in oil prices, and Egypt is considered one of the potential countries eligible to benefit from this rise by increasing its gas exports). (Four ways the Ukraine war has impacted the Middle East, CNN, at: https://edition.cnn.com/2022/08/24/middleeast/ukraine-war-six-months-mideast-mime-intl/index.html)
However, peace approach used to be an integral part of pillars of Egypt's foreign policy, as Egypt continues to make efforts to stop the bloodshed in the conflicts raging here and there.(Egypt's Ambassador to Washington: Peace approach is an integral part of the Egyptian foreign policy pillars at: https://www.shorouknews.com/mobile/news/view.aspx) Generally speaking, the current Egyptian diplomacy seeks to restore Egypt's balance and restore influence as well, and to be an influential regional actor. Doing so, the main principles of the Egypt foreign policy remain to respect countries' sovereignty and independence,(Egypt Diplomacy: 8 years of independent decisions at: https://m.youm7.com/story/2022/6/7) and keenness to strengthen Egypt's strategic partnership with both the great powers and emerging powers as an important means to maximizing national interests globally.
From this point of view, we have seen that the official Egyptian position on the war is firstly, (Elsisi speaks about Russia – Ukraine crisis and reveals Egypt position, in Arabic, at:: https://arabic.rt.com/middle_east) to prevent this crisis from having any extension in Egypt and, secondly, to work on developing solutions for it, in light of the growing security, political and economic effects of the war. Egypt, in other words, is trying to play a positive role in stopping the fighting and encouraging reaching a diplomatic solution between Russia and Ukraine. Despite the strategic relationships with Russia, Egypt voted, in March 2022, at the emergency General Assembly of the United Nations to condemn the aggression against Ukraine and call on Russia to withdraw its forces immediately and search for a quick political solution to end the crisis through dialogue and peaceful means.
In fact, this Egypt's commitment to 'refuse' both intervention and the use of power (the war), have helped Egypt manage its network of international relations positively, and to accelerate the cooperative ties with all countries, including parties to the conflict. This balanced policy led Russia, for example, to be keen to maintain ties of relations and friendship with Egypt. Russia participated at the ministerial level in the United Nations Climate Summit (COP 27) hosted by Egypt and, known as Sharm Elsheikh Conference. (Shokri receives Russian Climate envoy during the Climate summit. The Official website of the Egyptian Foreign Ministry, in Arabic, at: https://m.facebook.com/story.php?story_fbid=pfbid02j) During the conference, the Russian climate envoy had meeting with the conference president, the Egyptian Foreign Minister, to confirm Russia's commitment to supporting the conference's goals. Likewise, the Russian President sent letter to the Egyptian President, handed by the Russian Foreign Minister, in July (2022 Message from Putin to the President Elsisi on the Strategic ties and Ukraine, in Arabic, at: https://m.youm7.com/story/2022/7/24) to stress importance of strategic partnership and cooperation agreement between the two countries which reflects mutual interests and benefits.
Challenges the war forced to Egypt:
Regardless how Egypt is working to limit the effects of the war on it, the reality is that the scale of the crisis is much greater than containing it. The war has burdens and difficulties that added to the already existing difficulty and burden by the pandemic. Moreover, due to the centrality of the two warring countries in supply chains in international trade, situation is getting worse as the war has "Domino effects", with an increase in oil prices, initially led to an increase in transportation prices, and from there it will reduce export rates, which will lead to a decrease in the availability of food, and the disruption of trade on large scales around the world, in addition to uncertainty and the absence of information and concern about what is coming. (How the war in Ukraine is reshaping world trade and investment, at: https://blogs.worldbank.org/developmenttalk/how-war-ukraine-reshaping-world-trade-and-investment)
This environment makes the decision-making process even more difficult. And if we look at Egypt, we will find her situation is critical, with regard to the impact of the war because of the huge dependency in trade and tourism on the two countries. The two countries have a pivotal role as suppliers of strategic commodities, like wheat and other cereals, and main suppliers of foreign currency as well, by receiving millions of Russian and Ukrainian tourists, annually.
In May 2022, the Egyptian government expected that the negative repercussions of the Russian-Ukrainian war on the Egyptian economy would continue until the end of the year or even farer. The government also announced that it had incurred about 465 billion pounds as direct and indirect effects of the war for three months only (February to May 2022). The direct effects related to the provision of strategic commodities, fuel, the changes in interest rate, and downside risk for tourism. Egypt imports of grains from two countries represent 42% of Egypt's grain imports, (465 billion Egyptian pound, the impact of Russia-Ukraine war on Egypt economy (in Arabic), at: https://www.skynewsarabia.com/business/1522888) with a total trade exchange of 4.4 billion dollars.
The war has its impact on Egypt-Russia economic ties as Russia provides Egypt, and the world, with minerals used in a number of industries, such as electronics and cars. Also, there are 467 Russian companies operating in Egypt with an investment volume of $7 billion, providing about 35,000 job opportunities. (Ibid.)
Away from the industrial sector. The service sector, has been affected by the war, specifically the tourism sector. Not to mention that the percentage of tourists coming from Russia and Ukraine represents 65% of the total number of tourists visiting Egypt. It was estimated, that the conflict, could translate into a loss of US$ 14 billion in tourism receipts globally in 2022. (Impact of the Russian Offensive in Ukraine on international tourism at: https://www.unwto.org/impact-russian-offensive-in-ukraine-on-tourism)
Not only direct effects, the war has also indirect effects on Egypt as the government had to mitigate related economic shocks by increasing wages, pensions, tax exemptions, and expanding social protection nets.
Opportunities the war created for Egypt:
The war is considered the second crisis Egypt government had to manage in few years after the pandemic crisis. Despite being multidimensional crisis, the government raised, during the pandemic, "turning adversity into an opportunity" vision. (The House of Representatives Spokesmen asks for accelerating digitalization, in Arabic at: https://m.youm7.com/story/2020/5/3) Based on that, the social distancing was used to accelerate the digitalization movement and policy. The war comes as a second try for the government to adopt the same policy, hopefully to limit the effects of the conflict on Egypt.
Looking at challenges posed by the Russian-Ukrainian war on Egypt, these challenges, as mentioned, hit basic and strategic sectors. Yet, it seems that this war will also provide Egypt with some opportunities. One, Egypt appears as country with a strategic location and a major actor, not regionally but internationally, through the artery of the Suez Canal. Indeed, the year 2022 witnessed a historic rise in the revenues of the Suez Canal after blocking the Russian northern corridor and the ports of the Black Sea. As a result, Egypt's regional position as an energy hub was also strengthen. Egypt signed agreements to implement several energy projects to supply Cyprus, Greece and the European Union with gas and electricity. (Four potential benefits of the War in Ukraine on Egypt economy, in Arabic, at: https://www.elbalad.news/5185201) Discovery of a new gas field by the US Chevron Company off the coast of the Mediterranean, early December 2022, is seen to increase international demand on Egypt gas in the coming few years. (US Chevron discovers 3.5tcf gas well in Egypt at: https://www.egypttoday.com/article/3/121088/us-chevron-discovers-3-5tcf-gas-well-in-egypt)
The war pushed the government in the direction of dealing with "crisis management scientifically". Egypt has started discussions on ways to enhance food security. (Government's efforts towards self-sufficiency of wheat, in Arabic , at: https://m.youm7.com/story/2022/9/30) Such moves do not depend on the returns on the time of the crisis, but it creates a constant trend. Experiments implemented on new crops varieties with high productivity. Additionally, and for the sake of securing strategic commodities, the government is seriously working to enhance the capacity of silos, and raised strategic stocks for a 6 months in some commodities. (Government's efforts towards self-sufficiency, in Arabic , at: https://misrelzraea.com) Searching for alternatives seems as an option for dealing with war repercussions, such as making bread from sweet potatoes instead of wheat. (Sweet potato and other alternatives, in Arabic, at: https://www.masrawy.com/howa_w_hyas/health/details/2022/6/29/2250870) The government intends to grind sweet potatoes to be used in the production of bread to reduce wheat consumption, given that Egypt has huge quantities of it.
The huge event of hosting COP27, the United Nations Climate Conference (COP 27) in Egypt was used in shaping a positive image of Egypt and exporting that image to the world, (The Russia- Ukraine Crisis and impacts on tourism sector in Egypt, in Arabic, at:
https://idsc.gov.eg/documentLibrary/view/7082) as well as shedding light on the tourism spots of Egypt in its diversity.
Among the 'positive effects' of that war is that it prompted Egypt to focus on and enhance ties with its development partners and international organizations, for support. For example, the African Development Bank has recently agreed to support Egypt in facing the challenges of the crisis through a rapid financing mechanism of more than a quarter of a billion dollars. (Africa Development Bank agrees on 271 million US$ fund to Egypt , in Arabic, at: https://www.skynewsarabia.com/business/1540465-271)
In conclusion, the Russian-Ukrainian war, despite its critical effects and its political and economic overlapping effects, it opened the way for Egypt to present a balanced diplomatic model that seeks cooperation and peace, and to play an international role in managing international conflicts. For example, the Egyptian leadership announced, during the COP27 opening speech, his country's readiness to work to stop the war in Ukraine, and to stop suffrages the war caused in every region of the world. (President Elsisi announced readiness to work on ending the war in Ukraine, in Arabic, at: https://arabic.rt.com/middle_east/1405601-)
Historically, Japan has developed technologies to manufacture energy-saving devices in the wake of depriving it (as a key ally of the United States) of Arab oil in the seventies of the twentieth century. Today, Egypt can use its diplomatic moves in mitigating the effects of the Russian-Ukrainian war. As Egypt heads the United Nations Climate Conference (COP 27 until November 2023) efforts can be exerted to spread the use of new and renewable energy. This will not only limit the negative effects of the war, but it will also maximize economic benefits of Egypt and most importantly will raise the level of readiness of Egypt and the world with regard to facing any future political or military crisis.