The UAE and Egypt recently signed a $20 billion (Dh73.4 billion) joint strategic platform to invest in a range of sectors and assets, with each country contributing 50 per cent through Abu Dhabi Development Holding Co and Egypt’s sovereign fund. The investments will focus on advanced technology and renewable energy, the services sector, and the setting up development funds.
There is no doubt these moves are in the right direction. Apart from the projects launched and investment strategies followed, the joint platform will bring about a fundamental change in the nature of economic and development cooperation among Arab countries. It will also help bring bilateral cooperation into renewed focus after many early attempts for joint Arab projects came to nothing.
It is likely the new alliance will result in promising outcomes for the Arab countries. It will not only lead to implementing strategic projects but also contribute to higher growth, more job opportunities, and a boost to living standards. It is also a culmination of the joint GCC bilateral coordination committees established in the past three years, which have proved effective compared to those established in the past.
Timing is right
The alliance comes at the right time for both. The UAE enjoys significant surpluses and investment capabilities, and has in the past set up many large investment companies, while Egypt is making remarkable progress with growth rates exceeding 6 per cent — one of the highest in the world. Additionally, the Egyptian pound is steadily improving against the dollar, while inflation has fallen to generally acceptable levels.
At the same time, its energy sector has had a change of fortunes, as Egypt has shifted within two years from being an importer of natural gas to an exporter. This has resulted in generating sizeable liquidity, which helped reduce the budget deficit and increase investments.
Additionally, the assets of Egypt’s sovereign fund are expected to rise to $60 billion, which too will support the UAE-Egypt initiative. This means Arab economic cooperation will drastically change due to new forms of bilateral partnerships, vastly different from those concluded in the past five decades through the Arab League or through Arab institutions, which came to nothing due to intractable differences.
Still got a place
The new partnership does not abolish past Arab cooperation through existing institutions, but will be more effective thanks to both sides being in agreement on common interests. Both countries’ approach can be easily replicated by other Arab countries, and this is what we expect to see in future through economic cooperation or joint ventures.
Building on this process will pave the way to review deferred agreements and development projects that are still pending, including the free trade agreement and an Arab common market. And without a doubt, having closer bilateral interests will ultimately engage other countries.
The Arab world will go through a significant transformation in the nature and structure of strategic cooperation. This will definitely result in a radical change in Arab development strategies. As demonstrated by the UAE-Egypt partnership, the development of renewable sources of energy will be one of the most important pillars of future strategies for this region.