June 27, 2016
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For Cairo, Qatar had been part of an “axis of evil,” with anger directed at Al Jazeera, the main Qatari outlet, and others critical of Egypt after the Muslim Brotherhood ouster. But the vitriol is now gone, with the first ever visit by Egyptian President al-Sisi to Doha.
For the first time since coming to power in 2014, President Abdel Fattah al-Sisi traveled to Doha last month on an official visit, a capstone in a steadily building rapprochement between the two countries in the last year.
Not long ago, however, the photo-op capturing the two heads of state smiling at one another in Doha would have seemed impossible. In the wake of the Armed Forces’ ouster of the Muslim Brotherhood government in 2013, Qatar and Egypt traded barbs.
In the lexicon of the intelligence-controlled Egyptian press landscape, Qatar had been part of an “axis of evil” working to undermine Egypt’s stability. Al Jazeera, the main Qatari outlet, was banned from Egypt, but, from its social media accounts and television broadcast, it regularly published salacious and insulting details about the Egyptian administration.
But all of that vitriol is now gone.
Both sides have exchanged a flurry of trade delegations in recent months. The two heads of state have now met twice and informed government sources say the frequency of their meetings will only increase. And the evildoer label once affixed to Qatar has shifted to some other undefined group, with one Egyptian columnist urging the “evil people” not to “kill the awakening” in the relationship as an attempt to “keep Qatari investment away from Egypt.”
In many ways, the catalyst for the opening comes down to the economic crisis facing Egypt, brought on by the effect that Russia’s invasion of Ukraine has had on the world economy. The outbreak of war sent investors in Egypt’s bond market fleeing to more secure havens, placing a significant strain on Cairo’s fiscal position as it must pay US$18 billion in debt servicing in the final two quarters of 2022. At the same time, a global inflationary wave has sent Egypt’s import bill soaring. This confluence of factors has seen Egypt facing a severe crisis in its foreign currency holdings.
To find a way out of the economic crisis and its political ramifications, Egypt has resorted to several channels. First, it has been engaged in long discussions with the International Monetary Fund for a new Extended Facility Fund loan, the lender’s funding program for countries suffering significant balance of payment issues that Egypt agreed to in 2016 and which began the country’s full enmeshment in the world economy and accelerated a host of austerity measures.
However, those negotiations have dragged on, with the two sides haggling over several conditions, including the size of Egypt’s external debt, the management of the value of the Egyptian pound, ending key commodity subsidy programs, the military’s overarching control of the economy, and promises that none of the money will be used in construction endeavors, according to several sources informed of the talks who have spoken to Mada Masr in recent months. How willing Egypt is to agree to the IMF’s conditions will dictate the size and timing of the loan it receives.
In early July, before further delays set in, an Egyptian official spelled out the government’s approach: “It is clear that the IMF deal is not moving as fast as we had hoped. Our focus now is to work on attracting Gulf investments.”
However, courting Gulf investment, Egypt’s primary second channel for financing, is not a purely economic affair. Political, diplomatic and security sources who spoke to Mada Masr in the weeks leading up to Sisi’s visit to Qatar document a growing sense of frustration at the highest levels with the compromises Egypt has been forced to make with one of its main traditional allies in the United Arab Emirates in order to secure vital economic support.
One source went so far as to describe the UAE’s activities in Egypt as more of “a patronage presence” rather than “foreign investment.” And for the administration, the sources say, it is in Egypt’s interest to allow for Qatari investment and pursue Qatari-Egyptian cooperation on areas of mutual foreign policy interest to counterbalance the UAE’s influence.
Frustration with the UAE starts with its refusal to provide the unconditional support that Egypt has depended on since 2013. Gulf deposits to the Central Bank of Egypt played a significant role in supporting foreign currency reserves and stabilizing the value of the local currency between 2013 and 2014.
During that period, the Egyptian government received large, exceptional cash flows from the Gulf, with Saudi Arabia, the UAE and Kuwait committing to $24 billion in deposits to Egypt as well as financial and in-kind grants and project aid money. And during the Egypt Economic Development Conference held in March 2015, GCC countries committed to another $12.5 billion.
There is no chance for Egypt to manage its debt crisis without losing some of its best assets.
But through the years, Gulf deposits have decreased gradually, to the point that the remaining deposits at the central bank sat at $15 billion at the end of 2021.
According to data released at the end of August by the central bank, Egypt obtained $3 billion from Qatar in short-term deposits as well as $10 billion in similar deposits from Saudi Arabia and the UAE during the first quarter of 2022, but the central bank did not clarify when their repayments are due.
“The traditional ‘lenders’ have lost their appetite for coming to the rescue in the old way of providing aid or introducing reserves,” says a government official. “What they want to do now is buy strategic assets. The trouble is that they are buying the kind of profit-making projects that the government should have worked to upgrade and expand. However, realistically speaking, there is no chance for Egypt to manage its debt crisis without losing some of its best assets.”
The selling off of assets serves two purposes for Egypt. In the first case, it will allow for liquidity for vital debt servicing. And in the second, it will help shore up “the real reserves” in the central bank that the IMF is requiring as evidence of Egypt’s ability to make good on its debt obligations, says an informed Cabinet source.
Traditionally, the Cabinet source continues, the IMF has always required an informal third party to loan agreements with Cairo that would act as a guarantor by transferring over a percentage of the total loan value to Egypt. For the 2016 and 2020 loan, the guarantor was the UAE. However, the UAE has refused to act as the guarantor in the current loan negotiations, prompting Cairo to ask both Saudi Arabia and Kuwait, who have also refused, according to the source and a second Cabinet source.
What is worse, two government sources say, the UAE has actively lobbied the IMF to take a hardline stance in negotiations regarding the military’s involvement in the economy and in favor of the full devaluation of the pound.
Egypt, government sources tell Mada Masr, was hoping to put off the devaluation of the pound until after it received the first tranche of an IMF loan in order to prevent the fall from being that steep. But that doesn’t seem fully possible now.
Sarah Saadeh, a macroeconomic analyst at CI Capital, believes that the “attractiveness” of Egyptian assets for Gulf investors “depends on two sides of the picture: the first is the price of the pound, with its attractiveness naturally increasing as the price of the pound decreases. And the second is the valuation of the assets themselves.”
“It may be the optimal situation for Gulf investors to wait for the pound to drop more sharply to take advantage of both sides of the picture, but, in practice, this does not seem realistic, because a sharp drop in the pound will most likely only happen with the signing of the agreement with the IMF,” she says. “The stock market will rebound dramatically with the announcement of the signing of the agreement, which means a rise in the valuation of assets in a way that reduces their attractiveness. The best time to seize opportunities will be right before the signing of the agreement.”
Beyond the assets’ prices, there is increasing unease in some quarters about the sheer volume of acquisitions that the UAE has been making, particularly in terms of land in the east of Egypt close to the Suez Canal, according to security reports shared with the highest levels of the executive that Egyptian government sources have seen.
Ultimately, the idea that was circulated in these quarters was that there is no harm whatsoever in opening up for Qatari acquisitions because that would actually send a clear message to the UAE that, as much as it shrugs Egypt off, Egypt would also look for alternatives.
“At least with the Qataris, things are clear,” says another government official, pointing to the transactional nature of bilateral ties with Qatar. “Whereas with the Emiratis, we thought we were allies, and then suddenly it was clear that we were not.”
Qatar and Egypt have been slowly building out a stronger economic relationship over the past year.
According to data issued by the Central Agency for Public Mobilization and Statistics in Egypt, the value of Egyptian exports to Qatar amounted to $4.5 million in 2021, compared to $395,000 in 2020, an increase of over 1,000 percent, while the value of imports from Qatar rose to $40.3 million last year, compared to $25 million in 2020.
But economic cooperation is still likely to see a major jump, as Egyptian officials are in talks with Qatari counterparts for more than US$15 billion in investments before the end of the year, according to another government official. This includes stakes in the Eastern Company for tobacco manufacturing, Vodafone, the United Bank of Egypt, and other companies in which Saudi and Emirati investment funds have made acquisitions.
Companies affiliated with Egypt’s most valuable asset, the Suez Canal, are also being subject to competition for acquisition between Qatar, the UAE and Saudi Arabia, according to informed government sources. These include Timsah Shipbuilding Company, Canal Harbor and Great Projects Company, Canal Mooring and Lights Company, Canal Naval Constructions Company, Canal Company for Ropes and Fiber Products, Suez Shipyard Company, Port Said Engineering Works Company, and Canal Company for the Nile Arsenal.
The UAE has become a major power broker.
During Sisi’s visit, the Sovereign Fund of Egypt and the Qatar Investment Authority inked an agreement for cooperation in ports, according to the presidential spokesperson.
However, the UAE has already made significant inroads in the canal and the vital Red Sea waterway.
The Gulf country has become a major power broker and the principal architect of the security framework in the fiercely competitive Red Sea, with bases in Berbera, Somaliland; Bosaso, Somalia; and several coastal ports in Yemen, where it had fought alongside the Saudi-led coalition since 2015. Abu Dhabi Ports recently took over the management of Egypt’s Ain Sokhna Port, and while Sisi was in Doha, the Emirati company acquired 70 percent of the Egyptian IACC Holdings’ assets, including majority stakes in two shipping companies operating in the Red Sea: Transmar and Transcargo International.
According to another government official, Egyptian and Qatari officials also discussed extending a pipeline to transport Qatari gas through Saudi Arabia to Egyptian ports in order to speed up the transfer of Qatari gas supplies to European markets as well as to enable Qatar to benefit from and invest in Egypt’s gas sector infrastructure and achieve profitable returns from it.
Such a move would be a major boon for Egypt’s regional energy hub dreams, which have to this point heavily relied on the re-export of Israeli gas.
And beyond investments, the Egyptian side has requested a further deposit at the Central Bank of Egypt, as well as a financial grant to the Egyptian economy ranging between $3 and 5 billion to be provided over five years, but discussions are still ongoing in this regard, according to the same Egyptian official.
A Qatari source close to Emir Tamim bin Hamad confirms the discussions regarding the potential deposit in the central bank, putting the figure at $5 billion and indicating that it comes in light of the UAE’s “withdrawal.” However, Doha is insisting that a portion of the money go to social support, as it has “received reports” that “the Egyptian people do not always benefit from assistance.”
Officials in Cairo know very well that encouraging Qatari investments in Egypt is bound to be part of a trade-off. And the clearest political compromises will come with the Muslim Brotherhood and Qatari media.
At the construction of a new terminal basin in Sokhna Port, south of the Suez Canal
Today, the Cabinet source, a government source, a political source and two security sources all say that reconciliation talks are subject to discussion between senior intelligence officers in both Qatar and Egypt — with inevitable progress expected to be made prior to the end of this year to encourage Qatari investments. The sources say that the investments are not conditional on fixing this issue but would be expedited if this matter is addressed.
According to the political source, who is close to intelligence quarters, Qatar might be contributing to the financial compensations that some Muslim Brotherhood members might otherwise pursue in courts of law overseas, thereby suspending any potential plans to sue the Egyptian regime.
Two Egyptian security sources confirm these talks, telling Mada Masr that the Egyptian side asked Qatar to help manage the reconciliation process, given the extreme sensitivity of the file amid the escalating economic crisis in Egypt, as officials in Cairo believe that Qatar can play the same role it played between the Taliban and the US.
The same security sources say that the Qataris encouraged Sisi and his delegation to make a political breakthrough by releasing a number of prominent Muslim Brotherhood leaders, especially the elderly ones, including Khairat al-Shater, Saad al-Katatny, Mohamed Ali Bishr and Mahmoud Hussein, as a way to facilitate the negotiation process between the authorities and the group. The Egyptian side promised to study this step first and lay the groundwork before proceeding with the negotiations.
The same government source says that the Qataris also requested that Egypt stop blocking access to Qatari websites in the country, most prominently including Al Jazeera and Al-Araby Al-Jadeed, which the Egyptian side promised to do in the coming weeks.
On the first day of Sisi’s visit, Qatari officials discussed with Foreign Minister Sameh Shoukry and intelligence chief Abbas Kamel the acceleration of procedures to reopen Al Jazeera’s office in Cairo and to release the channel’s imprisoned journalists, according to a government source.
But Egyptian-Qatari talks on media are not limited to Qatari outlets. Egypt, the government source says, received positive indications from the Qatari side for support of the series of new channels that the Egyptian intelligence-controlled United Media Services is planning to launch in the coming weeks.
Egypt also requested Qatari support in Ethiopia.
The two sides also have several areas of foreign policy overlap, especially in areas where Egypt has grown wary of Emirati intervention.
According to an Egyptian government source, officials in Qatar agreed to unify the countries’ positions on Libya and to support a push for a new presidential council while maintaining the Government of National Unity headed by Abdul Hamid Dbaiba, after the repeated setbacks suffered by the former Interior Minister Fathi Bashagha and his upstart government to enter the Libyan capital.
Egypt had provided backing to Bashagha’s bid to oust the GNU prime minister in large part as a plan by security bodies to cause chaos in the west of the country due to Cairo’s unease with the alignment between the United Arab Emirates and Turkey in their support of Dbaiba, Egyptian security officials previously told Mada Masr. Ankara and Abu Dhabi had backed opposing sides of the 2019 war in Tripoli but have increasingly found common ground in Libya and in their bilateral relations.
Egypt also requested Qatari support in Ethiopia, another major foreign policy arena where Egypt has seen itself working at cross purposes with the Emirates.
The UAE has been a major backer of the federal Ethiopian government’s war against Tigray forces in the country’s north. While both sides had agreed to hold peace talks earlier this year after months of an informal truce mediated in large part by the Emiratis, fighting has erupted again in the last month. Open source data shows private charter flights between the Emirates and Ethiopia, believed to be Emirati military support, have kicked up again.
Beyond the war, the UAE is making a bid to increase its footprint in Ethiopian politics, as it has made a $20 billion economic development proposal to Sudan, Egypt and Ethiopia in order to bypass the political deadlock over the filling and management of the Grand Ethiopian Renaissance Dam, an Egyptian government official and an informed political source in the Gulf previously told Mada Masr. The deal, which has brought the three countries together for technical talks, would see the Emirates invest in projects across the three Nile Basin countries over the course of seven years, “establishing a mechanism that will make it impossible for any of the three countries to harm the interests of the other two countries,” the government official said.
According to the Egyptian government source, Egyptian officials encouraged the Qataris to reconnect with Addis Ababa in order to limit Emirati influence there, which Cairo has come to realize does not serve its interests.
In return for support in Libya and Ethiopia, officials in Egypt agreed to support Qatar’s efforts to sponsor the Chadian national dialogue between the transitional military council led by Mahamat Déby and armed opposition forces, according to the Egyptian government official.
Egypt took steps toward that end, with Sisi pardoning on September 13 Tom Erdimi, the nephew of former Chadian President Idriss Déby whom he has opposed since 2005. Erdimi had been held in an Egyptian prison since 2020, and he returned to N’Djamena shortly after his release.
Erdimi’s brother Timan, co-founder and leader of the Chadian Union of Resistance Forces (UFR), returned to Chad after a decade in exile in Qatar for talks billed as aiming to pave the way for democratic elections.
Comprising at least 40 rebel groups, Erdimi’s UFR signed a peace agreement on August 8 in Doha for talks that would pave the way for elections after 18 months of military rule in Chad following the death of former president Idriss Déby.
The UFR has long accused the Chadian government of having “negotiated” with Egypt to ensure the arrest and detention of Tom Erdimi.
Chad, which is in talks to restructure its external debt in order to clear the way for further financial assistance, owes one third of its external debt to commercial creditors, and almost all of that to Glencore, one of the world’s largest multinational commodity trading and mining companies.
While Qatar’s sovereign wealth fund sold off a large stake in Glencore earlier this year, it still holds a major stake in the Anglo-Swiss company.
For Cairo, Qatar had been part of an “axis of evil,” with anger directed at Al Jazeera, the main Qatari outlet, and others critical of Egypt after the Muslim Brotherhood ouster. But the vitriol is now gone, with the first ever visit by Egyptian President al-Sisi to Doha.
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Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.
Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.
Then there is Mariupol, under siege and symbol of Putin’s cruelty. In the largest city on the Azov Sea, with a population of half a million people, Ukrainians make up slightly less than half of the city's population, and Mariupol's second-largest national ethnicity is Russians. As of 2001, when the last census was conducted, 89.5% of the city's population identified Russian as their mother tongue.
Between 2018 and 2019, I spent several months in Mariupol. It is a rugged but beautiful city dotted with Soviet-era architecture, featuring wide avenues and hillside parks, and an extensive industrial zone stretching along the shoreline. There was a vibrant youth culture and art scene, with students developing projects to turn their city into a regional cultural center with an international photography festival.
There were also many offices of international NGOs and human rights organizations, a consequence of the fact that Mariupol was the last major city before entering the occupied zone of Donbas. Many natives of the contested regions of Luhansk and Donetsk had moved there, taking jobs in restaurants and hospitals. I had fond memories of the welcoming from locals who were quicker to smile than in some other parts of Ukraine. All of this is gone.
Putin is bombing the very people he has claimed to want to rescue.
According to the latest data from the local authorities, 80% of the port city has been destroyed by Russian bombs, artillery fire and missile attacks, with particularly egregious targeting of civilians, including a maternity hospital, a theater where more than 1,000 people had taken shelter and a school where some 400 others were hiding.
The official civilian death toll of Mariupol is estimated at more than 3,000. There are no language or ethnic-based statistics of the victims, but it’s likely the majority were Russian speakers.
So let’s be clear, Putin is bombing the very people he has claimed to want to rescue.
Putin’s Public Enemy No. 1, Ukrainian President Volodymyr Zelensky, is a mother-tongue Russian speaker who’d made a successful acting and comedy career in Russian-language broadcasting, having extensively toured Russian cities for years.
Rescuers carry a person injured during a shelling by Russian troops of Kharkiv, northeastern Ukraine.
Yes, the official language of Ukraine is Ukrainian, and a 2019 law aimed to ensure that it is used in public discourse, but no one has ever sought to abolish the Russian language in everyday life. In none of the cities that are now being bombed by the Russian army to supposedly liberate them has the Russian language been suppressed or have the Russian-speaking population been discriminated against.
Sociologist Mikhail Mishchenko explains that studies have found that the vast majority of Ukrainians don’t consider language a political issue. For reasons of history, culture and the similarities of the two languages, Ukraine is effectively a bilingual nation.
"The overwhelming majority of the population speaks both languages, Russian and Ukrainian,” Mishchenko explains. “Those who say they understand Russian poorly and have difficulty communicating in it are just over 4% percent. Approximately the same number of people say the same about Ukrainian.”
In general, there is no problem of communication and understanding. Often there will be conversations where one person speaks Ukrainian, and the other responds in Russian. Geographically, the Russian language is more dominant in the eastern and central parts of Ukraine, and Ukrainian in the west.
Like most central Ukrainians I am perfectly bilingual: for me, Ukrainian and Russian are both native languages that I have used since childhood in Kyiv. My generation grew up on Russian rock, post-Soviet cinema, and translations of foreign literature into Russian. I communicate in Russian with my sister, and with my mother and daughter in Ukrainian. I write professionally in three languages: Ukrainian, Russian and English, and can also speak Polish, French, and a bit Japanese. My mother taught me that the more languages I know the more human I am.
At the same time, I am not Russian — nor British or Polish. I am Ukrainian. Ours is a nation with a long history and culture of its own, which has always included a multi-ethnic population: Russians, Belarusians, Moldovans, Crimean Tatars, Bulgarians, Romanians, Hungarians, Poles, Jews, Greeks. We all, they all, have found our place on Ukrainian soil. We speak different languages, pray in different churches, we have different traditions, clothes, and cuisine.
My mother taught me that the more languages I know the more human I am.
Like in other countries, these differences have been the source of conflict in our past. But it is who we are and will always be, and real progress has been made over the past three decades to embrace our multitudes. Our Jewish, Russian-speaking president is the most visible proof of that — and is in fact part of what our soldiers are fighting for.
Many in Moscow were convinced that Russian troops would be welcomed in Ukraine as liberating heroes by Russian speakers. Instead, young soldiers are forced to shoot at people who scream in their native language.
Starving people ina street of Kharkiv in 1933, during the famine
Putin has tried to rally the troops by warning that in Ukraine a “genocide” of ethnic Russians is being carried out by a government that must be “de-nazified.”
These are, of course, words with specific definitions that carry the full weight of history. The Ukrainian people know what genocide is not from books. In my hometown of Kyiv, German soldiers massacred Jews en masse. My grandfather survived the Buchenwald concentration camp, liberated by the U.S. army. My great-grandmother, who died at the age of 95, survived the 1932-33 famine when the Red Army carried out the genocide of the Ukrainian middle class, and her sister disappeared in the camps of Siberia, convicted for defying rationing to try to feed her children during the famine.
On Tuesday, came a notable report of one of the latest civilian deaths in the besieged Russian-speaking city of Kharkiv: a 96-year-old had been killed when shelling hit his apartment building. The victim’s name was Boris Romanchenko; he had survived Buchenwald and two other Nazi concentration camps during World War II. As President Zelensky noted: Hitler didn’t manage to kill him, but Putin did.
Genocide has returned to Ukraine, from Kharkiv to Kherson to Mariupol, as Vladimir Putin had warned. But it is his own genocide against the Russian-speaking population of Ukraine.