Egypt has been undergoing dramatic changes recently, but these very changes could open the way for rare business opportunities for foreign companies, including Israeli ones.
The two months following the presidential elections in Egypt have provided a chance to examine where economic interests lie in the struggle between the political party of Egyptian President Mohammed Morsi, who is supported by the Muslim Brotherhood, and the Supreme Council of the Armed Forces, the military’s political wing.
Contrary to past prevailing opinion among American and Israeli policymakers, it seems that Israeli interests, including economic interests, are linked to strengthening of Morsi. Hard as it may be to believe, his success could mean an economic opportunity for Israel.
Morsi is a pragmatist. He knows full well that the Egyptian people elected him out of frustration over the oppression they endured under the previous regime. Corruption and poverty put him in power, and only reducing their severity will keep him there. Morsi has appointed professionals or technocrats to serve in key positions in his government, including people who do not identify with his religious opinions (and even a very small number of women and members of minority groups among them).
Morsi is also collaborating with elements he previously saw as bitter foes. He is acting to moderate extremist groups that do not benefit Egypt’s interests (such as Hamas) and is engaging in security cooperation (though quietly) with Israel on the situation in Sinai. Morsi is acutely aware that if he does not work to improve the lives of the Egyptian people, he will lose his pole position.
Herein lies the buried potential economic opportunity in Morsi’s regime. Economic development in Egypt and a gradual transition from an economy controlled by the military to one controlled by market forces requires a better relationship with the moderate elements in the Arab world and with economies that support Egypt – namely, those of the United State and Europe. It is possible that Morsi would even support cooperation with Israeli companies if it would help his regime. It is true that these things must be done secretly, since a reputation as one who can be bought with the West’s money will do Morsi’s standing no good. But Morsi looks unlikely to refuse any investment that would pour new blood into the veins of the moribund Egyptian economy, even if that investment were an Israeli one.
Israeli companies that take advantage of the momentum to identify opportunities in the awakening Egyptian economy could benefit from first-mover’s advantage to enjoy future profits. The sectors of potential economic activity are many and varied – the Egyptian business elite is in the midst of a change. In the shadow of the cadre of businesspeople that was close to Mubarak’s regime, a new and growing class of entrepreneurs is looking for any opportunity to revive the Egyptian economy, even if it means cooperation with Israeli companies.
The Qualifying Industrial Zones agreements between Israel and Egypt could serve as a basis or model for such cooperation. There is also great potential in projects that apply Israeli technology in Egypt, initiatives for improving health and infrastructure and projects to rehabilitate the Sinai Peninsula.
While such cooperation carries a significant measure of risk and the proud waving of western flags in the street of Cairo are a ways off, quiet cooperation offers opportunities which are likely to increase as long as Morsi's regime remains committed to economic improvement.
Tally Zingher, a legal expert in economic development in the Middle East, served as in-house counsel for Dubai’s sovereign wealth fund. This article originally appeared in TheMarker's Hebrew edition on Sept. 9.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now