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White House presses Hill on aid

The Bush administration has urged Congress not to cut US aid to Egypt, arguing this move would only damage US national interests. Several prominent lawmakers want greater accountability from Egypt over aid, particularly after Egyptian security recently beat demonstrators and detained journalists covering protests in Cairo in support of judges who face disciplinary action for criticizing alleged electoral abuses in last year’s presidential election.
A senior State Department official, speaking before Congress, acknowledged concern over Egypt’s crackdown on reform, but characterized Cairo as a “formidable” partner. He cited help fighting terrorism, allowing US over-flight rights to Iraq, providing troops for Darfur and help in resolving the Israeli-Palestinian conflict. While the State Department has publicly criticized Egypt twice in the past month, it has also made it clear aid should continue at current levels.
Congressional critics contend Egypt has reneged on some of the relative freedoms allowed last year during the election and has used fighting terrorism as an excuse to stifle political dissent.
Egypt is the largest recipient of US foreign aid after Israel and Iraq, receiving nearly $2 billion a year in military and economic aid from Washington.

Ferry owner indicted

The public prosecutor on May 24 indicted the owner of the Al Salam ferry and five other people on charges of negligence over the deaths of more than 1,000 passengers when the vessel sank in the Red Sea on February 3. The prosecutor has issued an international arrest warrant for the ferry’s owner, Mamdouh Ismail, who is believed to be in London. The six defendants, including Ismail’s son, face charges of negligence and failure to take sufficient action to save passengers.

Demand rises, poultry industry still suffers

Despite six human deaths and 20 million culled birds, Egyptians are once again eating poultry, creating a supply crunch as slaughterhouses struggle to meet demand. Egyptians turned away from poultry when the H5N1 bird flu virus hit the country in February, but the panic has since subsided, industry experts say.
Poultry once accounted for about half of all animal protein consumed in Egypt. Prior to the bird flu scare, red meat was priced at about £E 35 per kilo and fish was around £E 18 per kilo, while chicken was just £E 12 to £E 15 a kilogram, making it a popular choice.
The poultry industry, with an asset value of £E 18 billion, is unlikely to recoup its losses soon. Some experts estimate industry-wide losses from £E 3 billion to £E5 billion to date, and expect it will take 12 to 18 months for business to return to normal.
The bird flu virus has infected 217 people since late 2003 and killed at least 123, according to the World Health Organization. Scientists are concerned the virus may mutate into a form that passes easily from person to person, sparking a pandemic.

EU commits to ‘girl-friendly’ schools

The European Union has pledged to fund 200 new “girl-friendly” schools in an effort to broaden access to education. The EU pledge, in partnership with the National Council for Childhood & Motherhood (NCCM), follows a positive assessment of 500 existing girl-friendly schools established in recent years by the NCCM in seven governorates across Egypt.
Girl-friendly schools, also referred to as one-room or community schools, have operated since 2001 in cooperation with UNICEF and other international aid agencies. Most of these schools are located in Upper Egypt, where school attendance rates, particularly among girls, are lowest. The schools target rural areas often with no government school within walking distance. While the schools enroll boys and girls, the curricula and administration are specifically designed to encourage girls, often burdened with traditional household duties, to attend.
The new schools are expected to be open by next February. Funding for the schools comes from the EU Children at Risk program.

EFG-Hermes enters Saudi market

Saudi Arabia’s Capital Market Authority has granted Cairo-based EFG-Hermes a license for investment banking in the kingdom. Saudi Arabia represents the region’s largest financial market – about 70 percent of the investment banking fee wallet, including brokerage and asset management. EFG-Hermes investment bank currently captures 16 percent of the regional market, providing service to Egypt and the United Arab Emirates.

Railway Authority looks for real estate developers

The Egyptian Company for Railway Projects, a subsidiary of the state-owned Egyptian Railways Authority, has announced it is seeking private investors to develop land tracts it owns, valued at £E 20 billion. Investors will sign 25- to 30-year leases or enter into partnerships with the company. Three joint ventures are currently under discussion, involving Orascom Construction, the Giza-based Egyptian Transport & Commercial Services Company, as well as Italian and Belgian firms.

Activists target slaughterhouses

Animal rights activists have launched a campaign against alleged abuses in the region’s slaughterhouses. In Dubai, activists from People for the Ethical Treatment of Animals (PETA) announced it had captured on film incidents of animal cruelty at slaughterhouses in Bahrain, Kuwait, Oman, Qatar and Egypt. It also called on a halt to imports of livestock from Australia, the region’s biggest supplier.
In late February, the Australian government halted cattle exports to Egypt after a television program showed footage it alleged demonstrated inhumane treatment of cattle in Egyptian slaughterhouses. The decision was reversed two months later.

BG nixes Israel, eyes Egypt

British Gas (BG) has decided to forego an agreement with Israel and now says it will begin talks with Egypt. At stake is a 30 billion cubic meter gas reserve BG owns off the coast of Gaza. If BG and Egypt strike a deal, Israel may be left procuring gas via an Egyptian pipeline.
Negotiations reportedly broke down when Israel could not make a long-term guarantee on supply or price. Israeli officials scurried but were unable to persuade BG to change its mind.
The departure of BG will have broad implications for Israel’s energy future, analysts say, especially if it selects more expensive, higher-pollutant fossil fuels instead. Israel may also build a natural gas pipeline to Turkey to tap into its line with Russia, or even try to purchase the Gaza gas wells as a strategic reserve, rather than rely on Egypt as its sole supplier.

Privatization shifts away from IPOs

Stock price declines in the Middle East have encouraged the government to shift away from using stock listings for privatization, investment minister Mahmoud Mohieldin said. He said the government will look towards the private sector to function as a strategic partner acquiring large stakes in state companies in favor of initial public offerings (IPOs) on stock exchanges.
The Nazif government has managed to boost the economy’s growth rate from a range of 3-3.5 percent in mid-2004 to its current 5.1 percent, said Mohieldin.

OT accuses Wataniya of breach of contract

Orascom Telecom Holding (OT) will file a request for arbitration against Kuwaiti operator Wataniya Telecom over the infringement of interests of a shareholder’s agreement between the two operators over their joint venture, Tunisiana. OT first signed an agreement to operate Tunisiana, Tunisia’s second GSM network, in 2002. It also entered into a joint venture with Wataniya, whereby it sold a 50-percent stake in Tunisiana to the Kuwaiti operator during the same year.
However, Wataniya’s maneuver to bid for the third Tunisian mobile license is being characterized by OT as an infringement of its cooperation agreement. The Kuwaiti operator recently announced its entry into a new conglomerate, consisting of Univest, Egypt’s National Bank of Development and Amman Trading, to bid for the license. Wataniya, however, argued that the decision to enter into the new conglomerate is not a breach of its contract with OT; instead it will be a step towards competitiveness with OT.
Tunisiana had a 2 million subscriber base by the end of 2005, with total revenues reaching $321 million.

Intel wires into education

Intel Corporation will support the World Economic Forum’s Egypt Education Initiative. Through Intel’s Teach to the Future program, Intel will collaborate with the Egyptian government to train an additional 650,000 Egyptian teachers and student teachers in university over a five-year period using technology to enhance 21st century learning, effectively reaching 80 percent of all Egyptian teachers. As part of the program, Intel will implement an online version of the core Intel Teach to the Future curriculum during the 2006-07 school year, making Egypt the first developing nation to begin online teacher training.
The company will also donate 8,000 computers to Egypt for use in 350 model schools, where the teachers will receive training with the government providing the necessary connectivity and technology infrastructure.

New bill taxing on US expats

A last-minute provision inserted into a $70 billion tax bill signed in April by US president George W. Bush is expected to increase the tax burden on the 4.1 million Americans, excluding foreign service officers and military personnel, living outside the US. Investment income for most US expatriates will be taxed at a higher rate and tax exemption on foreign housing expenses will be reduced. Tax exemption on housing will be capped at $11,536, in spite of the difference that geographic location plays in the costs of living.
US expatriates are not required to pay taxes on the first $82,400 of their foreign income, but the additional increase of taxes on foreign investments is problematic for many American living abroad. Due to these tax increases, international companies may be more likely to hire employees from places such as Canada and Britain, urging American executives in Europe and Asia to return home.

Law proposed to safeguard historic sites

A proposed law to protect historic buildings from demolition is expected to be submitted to parliament later this year. The bill allows the government to pay for the restoration of historic buildings, and includes stiff punishment for negligent owners. It proposes fines of £E 20,000 to £E 1 million and two- to five-year jail sentences for violators.

UK warns of tainted blood products

Egypt was one of 14 countries that may have received Mad Cow disease-tainted blood products from the UK in the early 1990s, the British government has re-acknowledged. Britain issued an official warning to 14 countries that may have received contaminated blood products, including Belgium, Brazil, Brunei, Egypt, France, India, Israel, Jordan, Morocco, the Netherlands, Oman, Singapore, Turkey and the United Arab Emirates. All 14 countries were advised and instructed to undertake their own health assessment risks.
A 10-year-ban on British beef exports instated in March 1996 was lifted in March of this year.

Young leaders organize

The Young Arab Leaders (YAL), a network of forward-thinking Arab men and women who envision a prosperous Arab future, has launched a chapter in Egypt. The new chapter will facilitate an education program to benefit academic institutions and students by offering scholarships at both the undergraduate and graduate levels in an effort to achieve a higher quality of education in the country.
Each year, YAL commits to implementing an action plan that sets the strategic vision of the organization to help improve the future of the region. It undertakes projects focusing on mentorship and education, while producing sector-specific plans that aim to increase income generation opportunities for youth.

Anti-dumping measures taken against Asian lamps

Minister of Trade and Industry Rachid Mohamed Rachid has ordered an increase in import duties on florescent lamps in an attempt to stop the flooding of foreign brands that are obstructing the sale of domestic ones. He has ordered extra duties be applied on florescent lamps from India, Thailand, China, Indonesia and Vietnam from May until August 2006, to bring them up to local market value.

Japan to help finance museum project

Japan has agreed to extend loans worth $304 million to Egypt for the building of the Grand Egyptian Museum (GEM). The GEM project seeks to establish a spacious, state-of-the-art museum near the Giza Pyramids that will house many of the artifacts currently on display in the aging and cramped Egyptian Museum in downtown Cairo.
The loan will be settled in installments over 30 years with a 1.5-percent interest rate and a 10-year grace period.

Projects to boost North Coast tourism

Travco Group and Germany’s leisure travel group TUI AG have announced the inauguration of the Almaza Beach Resort, the first tourism mega-project, near Marsa Matrouh. The 3-million-square-meter project includes five hotels with a total capacity for 2,300 guests in addition to 1,000 residential and tourist villas. It includes a tennis academy, shopping mall, golf course, horseback riding tracks and a theater complex.
The resort is the first development along the country’s Mediterranean coast to cater specifically toward foreign tourists; previous development has been only for domestic tourism. The Ministry of Tourism has made the development of the North Coast one of its priorities because it recognizes the region’s huge potential for drawing tourists. Earlier this year, the Matrouh International Airport opened to increase accessibility to the area via airplanes.
In a related story, Matrouh governorate’s investment committee has agreed to implement new tourist projects valued at £E 648 million. The projects include the establishment of a three-star, 150-room hotel at Al Alamein, as well as several smaller hotels in the historic town.

Gov’t mulls bond issuance

The government has begun negotiations with investment banks on the possibility of issuing bonds overseas that are denominated in Egyptian pounds, news agencies reported. Minister of Investment Mahmoud Mohieldin said that for the government, the bonds would have the advantage of bearing a lower interest rate than domestic bonds and would eliminate the foreign exchange rate associated with dollar bonds.

IFC to support petroleum projects

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed a $25 million finance package to Calgary-based oil and gas firm Rally Energy Corporation to support petroleum exploration projects in Egypt and Pakistan. The IFC investment will support Rally Energy’s three-year capital expenditure and working capital needs.
The majority of Rally Energy’s operations are in Egypt where the corporation owns 100-percent operating interest in 20,000 feddans of the Ras Issaran oil field located on the western shore of the Gulf of Suez. The IFC deal will allow the company to further explore the oil-heavy development opportunity in order to realize its growth potential. The IFC credit will give the company the required flexibility to supplement the expected cash flow for 2006 and 2007 work programs.
The energy sector in Egypt has traditionally had the lion’s share of the foreign direct investment (FDI) in Egypt, generating 15 percent of the country’s GDP and 37 percent of its export earnings.

Intel, Orascom aim to deploy WiMAX

Orascom Telecom (OT) and Intel Capital, the venture capital investment arm of Intel Corporation, have announced plans to create a joint venture company that will work with the government and private sector towards the deployment of WiMAX (worldwide interoperability for microwave access) services. The new company will lobby to obtain suitable spectrum licenses for launching WiMAX services in Egypt.
WiMAX is based on newer, more powerful technology that replaces Wi-Fi wireless systems and is used primarily for broadband wireless mobile services. One of its key benefits is that it allows greater network distances, which will facilitate its deployment in both rural and urban areas.

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