Egyptian-EU Economic Cooperation: Opportunities and Risks

EPC | 01 Dec 2014

The EU, with 27 member-states, is the third largest economy in the world. The EU has 16% of the world population with a GDP of about €10957.9 billion, which surpasses the US GDP. The EU is also is the largest donor of official development assistance to developing countries. The EU and Egypt signed an Association Agreement in 2001 that entered into force on June 1, 2004 and incorporates cooperation in trade, economy, education and industry. Cairo is also engaged in the European Neighborhood Policy (ENP) by adopting the action plan of the neighborhood policy in April 2007.

The following are evidence of the strong EU-Egyptian economic cooperation:

  • EU grants to Egypt reached €2.296 billion in the period 1996-2013,
  • The financial and economic cooperation have accomplished several achievements in the field of development by supporting the budget. This shows an increasing confidence in the Egyptian government’s ability to carry out development in all sectors of the economy. It is worth noting that the mechanism to support the budget was linked to standards and conditions, which sometimes were tough and rigid but have been eased upon Cairo’s request,
  • The EU is the largest trading partner with Egypt; Egyptian exports to the EU increased by 13.1%, whereas EU’s exports to Egypt increased by 22.2% in the same period,
  • In June 2008, the two sides concluded trade negotiations on agricultural goods, processed agricultural goods, and fish and fish products. The EU and Egypt started bilateral talks early 2008 on liberalizing services and institutions, while negotiations continued the same year regarding mechanisms to settle disputes,
  • As part of the European Neighborhood and Partnership Instrument (ENPI), the EU has introduced the Cross Border Cooperation to support sustainable development and help to bridge the gap in the standard of living on both sides of the Mediterranean. The European Commission (EC) allocated €182 million for the period 2007-2013 to tackle common challenges identified jointly and to exploit the untapped growth potential in countries with common land or maritime borders with EU countries, while enhancing the cooperation process for the purpose of the overall harmonious development. The EC finances 90% of the cost of any project, while participant countries provide the remaining 10% of any project.
  • In 2014, the EU and Egypt started consultations on the multi-year financial program for the period 2016-2020. The EU showed readiness to support the new Egyptian government program, priorities and approaches. The program might focus on a limited number of priorities that can receive EU support and contribute to fulfilling the targets of the current government, such as improving the standard of living, support basic infrastructure and create new jobs. Cooperation is expected between the two sides based on the third chapter of the Barcelona Declaration,
  • The overall progress in implementing the action plan is limited, but encouraging, with a strong commitment towards social and economic reforms and to a less degree towards political reform.

Image Source: Reuters Pictures

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