Economy sustains heavy losses due to US-led aggression
Egypt-Iraq, Economics, 4/1/2003

"Egypt's economy has suffered heavy losses estimated at US$15 billion due to the on-going and unjustified US-British aggression against Iraq," economists told opposition newspaper al-Wafd.

Egypt will take a long time to recover from these losses in the vital sectors of tourism and exports.

They confirmed that annual exports to Iraq are US$4.5 billion and that Egypt has lost a large amount of money due to the war.

Under the UN oil for food program, Egypt and Iraq signed a trade exchange protocol in 1996 through which local companies were allowed to export a variety of products to Iraq.

These products included sugar, rice, cooking oil, milk powder, detergents, tires, assembled cars and buses, power generators, irrigation equipment, water pumps, medical drugs and supplies.

36 trucks loaded with cooking oil were denied entry to Iraq and sent back to Egypt, just two weeks before the war.

Under this program, Iraqi investors were also allowed to own shares worth LE125 million in 58 Egyptian companies.

But this capital is now at stake as the Iraqis may withdraw it, and these companies will be adversely affected.

In addition, companies shipped foodstuffs to Iraq before the attack but up to the present they have not received payment, al-Wafd said.

The future of these due payments is hanging in the air, Adel el-Shahawi, chairman of the Holding Company for Foodstuffs, said.

He added that the war had caused the suspension of export contracts worth 110 million euros to Iraq.

On top of this, Egypt -- at the official request of the Baghdad Government -- built train carriages that cannot be sent to Iraq for the time being, added the newspaper.

Meantime, exports to countries close to Iraq have also dropped sharply.

Exporters and manufacturers cannot bear the high risk of sending goods to countries neighbouring Iraq, nor can they afford the sharp increases in insurance costs brought in by maritime and air transportation companies.

Therefore, exporters are applying a wait-and-see policy and postponing business plans targeting Syrian and Gulf markets until the picture is clearer.

Egyptian products make up 8 per cent of annual imports in Gulf states, al-Wafd said, adding that producers export goods worth 19.8 million dinars per annum to Kuwait.

Kuwait imports foodstuffs, textiles, metal products and air conditioning units from Egypt.

However, these exports are in doubt due to the war.

Likewise, exports to Saudi Arabia are also expected to drop due to the current crisis.

Last year, exports dropped from US$268 million to US$164 million and they are expected to fall further.

Moreover, manufacturers have stopped exporting to Turkey due to its proximity to Iraq.

The two countries signed an agreement in 1996, under which Egypt exports 7.5 million tonnes of liquefied natural gas (LNG) per annum to Turkey.

Turkey is also the first step for Egyptian exports particularly textiles and ready-made clothes to European markets, but its unclear attitude to the war will have a negative impact on the flow of exports to Europe.

Previous Stories:
  Egyptian delegation arrives in Baghdad   (4/19/2002)
  Export deals to Iraq hit $ 3.8 billion   (4/8/2002)
  Egypt talks part in rehabilitation of Iraqi factories   (3/19/2002)

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