N. A. ZHERLITSYNA

Candidate of Historical Sciences Institute of Africa, Russian Academy of Sciences

Keywords: Russian-Egyptian relations, political cooperation, energy, trade, investment

The historical character and strategic significance of the "return of Russia to Egypt" is determined by the coincidence of the political aspirations of the two countries, which see each other as potential allies.¹

There are many factors that bring the Russian Federation and the Arab Republic of Egypt (ARE) closer together. Egypt and Russia are going through a difficult time: Each of the countries is under severe pressure both at the regional and international levels. As a result of the "Arab Spring", Egypt is weakened from within by the protracted confrontation between the military elite and the Muslim Brotherhood, and is surrounded by neighbors plunged into chaos and war. Russia in the economic and political spheres is also experiencing negative consequences of Western economic sanctions and falling oil prices. In this regard, partnership between the Russian Federation and the Arab Republic of Egypt is becoming not only a common desire, but also a necessity. "The political significance of this cooperation for each of the parties is to demonstrate that they are not in an "uncontested" situation in the international arena. This is relevant both for Russia, which is currently under various kinds of pressure from the West due to the Ukrainian crisis, and for Egypt, which is in need of external support, " says the columnist of the Turkish newspaper S. Cohen ².

RUSSIA RETURNS TO EGYPT

Given the reorientation of Russia's foreign policy, an independent and influential partner in the Middle East is very important for it. Our countries share many common interests in the Middle East.

The election of Egypt's new president, AF al-Sisi, is an important event that has changed the balance of power both in the Middle East and in global politics in favor of those who oppose radical Islamism. Cairo has taken a low-key stance on the conflict in Syria, trying to minimize the dependence of its foreign policy on other countries.

Shortly after coming to power, el-Sisi began looking for new strategic partners who were not tainted by provocations during the recent political upheaval in the country. Cairo concluded that although Washington is a long-time partner of Egypt, it does not fully understand the essence of the Arab country's internal problems and does not understand the factors that determine al-Sisi's actions, including the need to fight Islamic extremists and terrorists. Russia also expressed full understanding of the actions of the Egyptian president, because it, like Egypt, faces an acute threat of terrorism.

During the Syrian crisis, Russia has significantly strengthened its reputation in the region, confidence in it has grown, and therefore Arab countries increasingly see Russia as a reliable partner and counterweight to the West. Russia's position on the events in Egypt in early 2011 was balanced and cautious. Moscow has repeatedly proved that no political fads are a reason for violating agreements and ending cooperation. This gives our country a chance to return to the region where we are well remembered and expected.

Both the Russian Federation and the Arab Republic of Egypt are interested in developing multifaceted and comprehensive cooperation. It includes relations in the political, military, economic, scientific and technical spheres, as well as knowledge-intensive sectors of the economy: energy, space exploration, and nuclear technologies. The development of innovative industries determines the future of humanity. "Egypt will not be able to claim the role of a regional and global power if it is not a full-fledged producer of goods and services in these industries," writes Egyptian journalist M. al-Said Idris in the article "Russia is an international intermediary for Egypt" in the Al-Ahram newspaper³. It is Russia that Egyptians see as an ally that can help their country achieve a breakthrough in innovation.

The Egyptian leadership understands that the main threats to the country's stability are economic backwardness, poverty and unemployment. "I'm not going to wait for the Egyptians to want change for the third time," he says.

The article was prepared in the framework of the RGNF project N 15 - 07 - 00017 "Russia's cooperation with the Maghreb countries: Dynamics and prospects in the light of political changes in the Arab world and Russian foreign Policy".

President al-Sisi ⁴. The country faces the task of making an economic breakthrough, focusing on major national projects, attracting foreign investment, and strengthening Egypt's role as a global trade and logistics center at the junction of Africa, Europe and Asia. The Egyptian President is convinced that "with a comprehensive economic plan, structural reforms and the active participation of the investment community...the emergence of a new Egypt...it will become a reality " ⁵.

Evidence of the effectiveness of the course chosen by al-Sisi is the willingness of Arab and European investors to participate in the ambitious "construction projects of the century" announced by Cairo: the construction of a new business capital of the country; the construction of an architectural skyscraper complex in the Sheikh Zayed district of the capital, including a 200-meter skyscraper in the form of a pyramid; expansion and modernization of the Suez Canal.

LONG-STANDING COOPERATION

Egypt links many of its long-term economic plans to Russia. The current rise in Russian-Egyptian relations has been made possible by the foundation of trust and friendship laid several decades ago. Egypt is a long-standing partner of Russia. Economic cooperation began in 1948. Five years after the establishment of diplomatic relations, the first agreement was signed on the supply of Egyptian cotton to the USSR in exchange for grain and other products. Soviet-Egyptian economic relations flourished in the 1950s and 1960s.

Nasser's Egypt - the largest and most influential country in the Arab world, one of the leaders of the Non-Aligned Movement and the Organization of African Unity-became the main ally of the Soviet Union in the region, the main pillar of Soviet policy in the Middle East. Egypt received large-scale financial, technical and military support from the USSR. In the 1960s, the USSR occupied the 1st place in the total trade turnover of Egypt, being the main buyer of Egyptian cotton. In accordance with the agreement on economic and technical cooperation, the Soviet Union assisted in the construction of 120 industrial facilities in Egypt, the main one being the high-rise Aswan dam. Key facilities of Egypt's economic infrastructure built with the participation of the USSR - such as the steel mill in Helwan, the aluminum plant in Nag Hammadi, the oil refinery in Suez-still play an important role in the country's economy.

Egypt became the first Arab country to purchase weapons from the USSR, and remained the leading buyer of Soviet military equipment and armaments in the 1950s and 1960s. The total amount of Soviet military aid to Egypt during these years was almost $3 billion. In addition, Egypt applied to the USSR for direct military assistance in 1967 and 1973.The USSR supported Egypt in the course of military operations against Israel. The number of Soviet military specialists in Egypt reached 20 thousand people.⁶

Relations between Moscow and Cairo, which went through a cooling period in the 1970s, began to normalize under President X. Mubarak. Mubarak visited our country more often than any other Arab leader: he visited Russia on official visits five times-in 1997, 2001, 2004, 2006, and 2008.

Even in the 1990s, when our country was in crisis, special importance was attached to the development of relations with Egypt. Thus, in May 1990, a long-term program of economic, trade, scientific and technical cooperation was signed, and in 1992, the Joint Russian-Egyptian Commission on Trade and Economic Cooperation began its work. Since 1995, the Lukoil oil company has been involved in the development of deposits in the Meleiya area in the Western Desert of Egypt. In 1997, a deal was signed to supply Egypt with a batch of T-80U tanks and Mi-172 military transport helicopters, in 1998-2000. Egypt has received Russian Volga-3 anti-aircraft missile systems and Oborona-¹⁴ long-range radars7.

In the first decade of the XXI century, Russian-Egyptian relations were built in accordance with the long-term program for the development of trade, economic, industrial, scientific and technical cooperation, signed by the two countries in 2001. The main areas of cooperation were energy, mechanical engineering, space, and the military-technical sphere.

Since 2001, Lukoil has been involved in the WEEM mining project in the Eastern Desert near Hurghada. The company discovered a number of new fields in the Meleya area in the Western Desert in 2007-2014: Severnaya Nada, Gavaher, Arcadia, Emry Deep, Rosa North and Meleya West. Lukoil produces more than 16% of oil in Egypt ⁸.

In accordance with the 2003 memorandum of understanding between the Russian Aviation and Space Agency and the National Directorate of Space Sciences of Egypt, a number of multi-year bilateral projects were launched. In 2008, an intergovernmental agreement on cooperation in the field of peaceful uses of atomic energy was signed. In accordance with this agreement, Egypt sent its specialists to Russia for advanced training.

Traditionally, Russian exports to Egypt have been based on wheat, non-ferrous and ferrous metals, wood and paper, machinery and equipment, and agricultural fertilizers.⁹

Prior to the Arab Spring, due to political and economic risks, Russian investments were low and were mainly directed to such sectors of the Egyptian economy as tourism, construction, and services, which provide a quick return on investment. Thus, 98 companies with Russian capital worked in the tourism sector, 75 companies with foreign investments in the construction sector.-

erased $20.4 million. 138 Russian companies with a capital of $10.3 million were registered in the service sector. Total Russian investment in Egypt's industry totaled $9.9 million ¹⁰.

Russian-Egyptian relations acquired the de jure character of a strategic partnership in 2009, when an Agreement on Strategic Partnership was signed during the official visit of Russian President Dmitry Medvedev to Egypt. This document defined long-term guidelines for the development of the entire complex of Russian-Egyptian relations.

If immediately after the beginning of the political crises in the Arab countries in 2011, Russian-Egyptian trade and economic cooperation went through a period of reduced activity due to political risks, at the moment we can talk about a stable growth in trade turnover and new promising areas of cooperation.

ECONOMIC COOPERATION-TO THE LEVEL OF POLITICAL RELATIONS

In March 2014, the work of the Joint Russian-Egyptian Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, which was suspended in 2011 due to the revolutionary events in Egypt, was resumed. Contacts were intensified both at the government level and between business representatives of the two countries. Chairman of the Russian-Egyptian Business Council, established in 2006 under the Government of the Russian Federation, Mikhail Orlov assesses the importance of Egypt for the Russian economy: "First of all, Egypt is a huge market - 95 million people. Even though the country has been unstable in recent years, it remains a place where there is institutional stability, solidity, financial and other institutions are located there, and therefore it is very convenient to enter different African countries through Egypt. Egypt is one of the centers of the Arab world, and it can also be called the gateway to Africa. " ¹¹

In August 2014, during the negotiations between the Presidents of the Russian Federation and Egypt, an agreement was reached on the creation of a Russian industrial zone in Egypt, Gazprom's projects for exporting Russian liquefied gas and Rosatom's participation in the construction of a nuclear power plant in Egypt were recognized as promising. All this requires development.

Military-technical cooperation between the two countries has intensified: twice, in November 2013 and February 2014, Russian-Egyptian defense and foreign ministers met in the "two plus two" format. It was decided to expand cooperation between the air and naval forces of the two countries, and contracts for the supply of military aviation equipment and weapons to Egypt worth more than $3 billion were agreed.¹²

For the Egyptian side, these agreements were of particular importance due to the threat of suspension of US arms supplies in July 2013 due to the removal of President Morsi from power. The parties agreed to train Egyptian officers at Russian universities and conduct joint exercises in 2015. During a meeting between Russian Defense Minister Sergei Shoigu and his Egyptian counterpart Sergei Subhi, it was announced that the two countries will sign a protocol on military cooperation. This document, according to the Russian minister, "will determine the vector of our cooperation in the military sphere for many years to come" ¹³. Considerable attention is planned to be paid to the joint fight against terrorism.

Political contacts at the highest level gave an impetus to further strengthening of Russian-Egyptian trade ties: In 2014, the trade turnover between the two countries increased by 86% and amounted to $5.478 billion.¹⁴

The main export items from Russia to Egypt are: oil and petroleum products; cereals - Russian wheat provides up to 40% of Egypt's needs; wood and products made from it; ferrous metals; land transport vehicles and spare parts for them; sunflower oil. The Egyptian market retains its traditional adaptability to a whole range of Russian vehicles and equipment: VAZ passenger cars, cranes, helicopters, and hydroelectric power units. The creation of a Russian specialized industrial zone in Egypt would allow our companies to increase their exports not only to Egypt, but also to the markets of neighboring countries.

Egypt is the largest consumer of our wheat, accounting for a fifth of all Russian grain exports. In 2013-2014 Russia exported 3.3 million tons of grain to Egypt, and in 2015 it is planned to increase supplies by 60% and increase exports to 5.5 million tons. 90% of Egyptian supplies to Russia are fruits and vegetables - citrus fruits, potatoes, onions. The Russian Federation ranks first in terms of imports of Egyptian potatoes, buying 300 thousand tons of the product annually.¹⁵

In September 2014, an Egyptian trade delegation headed by the Minister of Trade of Egypt M. F. Abd al-Nour arrived in Moscow to visit the international food exhibition World Food Moscow. It consisted of representatives of 64 Egyptian companies specializing in the food industry and agricultural production. Members of the delegation noted that economic relations between our countries are booming, and Egyptian exports to Russia have grown by 27.6% over ^the past year16.

The parties expect that mutual trade will continue to grow due to two factors-EU sanctions against Russia and the conclusion of Egypt's free trade agreement with the Eurasian Economic Union (EAEU). The agreement will allow exporting industrial goods and agricultural products freely, without incurring customs duties and charges. In addition, the authorities of Russia and Egypt are considering the possibility of creating a free trade zone.

Russia expects that a 30% increase in the supply of citrus fruits, potatoes and onions from Egypt will cover half of the deficit caused by the ban on imports from Western countries. Deputy head of the Egyptian company Daltex, one of the largest potato exporters, H. an-Nagar is also full of optimism: "If in previous years Egypt exported from 50 to 70 thousand tons of potatoes to Russia, today we export 5 times more"¹⁷. In order to increase the volume of exports of Egyptian agricultural products to the Russian Federation, Russian companies plan to invest in the creation of processing plants in Egypt.

Gazprom expects to build close, long-term relations with Egypt in the gas sector. Gazprom was among the four companies that won the tender for the supply of liquefied natural gas (LNG) to Egypt at the end of 2014. The company is negotiating with its Egyptian counterparts to supply seven LNG tankers annually until 2020. For Gazprom, the development of relations with this Arab country is important both from an economic and political point of view. By developing LNG production, Gazprom aims to expand the market and reduce its dependence on supplies to Europe. The contract with Egypt becomes even more relevant in the context of sanctions, allowing to diversify supplies between countries that can refuse to supply Russian gas, and those who do not support anti-Russian measures.

West Nile Delta, a joint project of BP and Russia's Alfa Group, is also planning to supply natural gas to the Egyptian domestic market. The total investment amount will be $12 billion ¹⁸.

The nuclear energy agreement signed during Russian President Vladimir Putin's visit to Egypt concerns not only the construction of nuclear power plants, but also the creation of a new nuclear industry in the Arab country. Rosatom is ready to build four high - capacity nuclear power plants in the north of Egypt-1.2 thousand tons. MW each ¹⁹. The cost of the NPP construction project will be about $4.5-5 billion. It is planned to apply the latest Russian technologies using "post-Fukushima-type blocks with an absolutely reliable level of safety" ²⁰, as well as the possibility of desalination of water. The project involves credit financing from the Russian side and training of Egyptian personnel. The nuclear project may become a major technological breakthrough for Egypt, which will help raise the country's economic and social development to a new level.

Energy cooperation between Russia and Egypt is not limited to oil and gas. It is planned to create a Russian-Egyptian research center for joint work in the field of alternative energy. Its goal is to create new technologies for processing agricultural waste into alternative fuels, as well as exchange technologies for the production of ethanol and biogas ²¹.

The Russian-Egyptian Business Council, which was restructured in 2014 to promote exports and attract investment, plays an important role in the development of bilateral cooperation. It was decided to involve representatives of various sectors of the economy in its work and to activate exhibition and fair activities. Mikhail Orlov, Chairman of the Russian-Egyptian Business Council, is sure that today Russia has a huge scope for investment in the Egyptian economy, starting from infrastructure and ending with high technologies. There are a number of sectors in which Russia can play an important role in the Egyptian economy. These are energy, pharmaceuticals (the volume of trade in this sector alone can reach a billion dollars a year) and the traditional sphere-tourism. Trade should rise to $10 billion. per year. Cooperation in the telecommunications sector and the inclusion of Egypt in the GLONASS ²² navigation system development project may also be promising.

Both the Russian and Egyptian sides are clearly aware that there are problems in the way of ambitious plans for bilateral cooperation. They are of a trade and political nature: these are issues of access of goods to the market, obtaining various permits. Welcoming the participants of the International Conference on Egypt's Economic Development (March 13-15, 2015) in Cairo, President el-Sisi, in particular, announced his country's intention to remove bureaucratic obstacles and change outdated legislation. In the near future, it is planned to revise the laws on competition, corporations, investment and management, amend the antimonopoly law and issue a new unified investment law. Speaking about overcoming organizational and bureaucratic barriers that hinder business, the Vice-President of the Chamber of Commerce and Industry of the Russian Federation, Mr. G. Petrov noted that the key role in this process belongs to the Intergovernmental Russian-Egyptian Commission and the Russian-Egyptian Business Council.²³

The establishment of a ministerial committee called "Russian House" headed by Prime Minister Igor Dodon in September 2014 proved that cooperation with Russia is particularly important for Egypt. Makhlabom. This decision is dictated by the need to bring economic cooperation between the two countries to a level corresponding to political relations. The committee has sections on oil and Mineral Resources, electricity and renewable energy, agriculture and Land reclamation, transport and Investment.

In September 2014, during a visit to Moscow by a delegation of the Egyptian Chambers of Commerce and Industry headed by the Minister of Industry and Trade M. F. Abd al-Nour, Russian business representatives were presented with investment projects under the Suez Canal development program in various fields: in the sphere of trade, tourism, and services,

industry, agriculture, and transport.

The Egyptian side spoke about long-term plans to transform the Suez Canal zone into a mega-industrial facility, including the construction of airports, ports, logistics and industrial zones, the valley of technology and the technological university, fish farms and the development of agricultural land, the creation of infrastructure facilities, including power plants, water management facilities. The Egyptians consider these projects promising for Russian investment. In 2014, the volume of Russian investments in Egypt reached $⁶⁷ million, and 398 companies with Russian participation operated in the local market24. These figures show that Russia's capacity for capital and resources is clearly limited, given the state of its economy.

As part of the agreement signed by Presidents Putin and al-Sisi, 6 major Russian companies announced their intention to invest in the construction of grain storage facilities with a capacity of 60 to 100 thousand tons, modern flour mills with a capacity of 600 tons per day, logistics centers for storing grain and food, and the creation of feed production enterprises with a capacity of 40 tons an hour, as well as milk and cheese according to modern standards. The companies plan to attract financing through the Russian Export Bank on preferential terms.

The National Union of Grain Producers of the Russian Federation, Terra Biroya (UAE) and Condor Services (Egypt) have signed a memorandum of understanding on establishing a partnership for direct grain supplies from Russia to the Middle East and Africa. As part of this project, it is planned to build an international grain logistics hub with a capacity of 7.5 million tons in the Egyptian Mediterranean port of Damietta, which will have at least 40 grain elevators. The task of our Russian partners is to ensure stable grain supplies to the region. According to the memorandum, this investment partnership should eventually take the form of a trans-regional corridor "Russia-Middle East-Africa" ²⁵.

In such an important industry for the Egyptian economy as tourism, the importance of Russia is determined by the volume of mass tourism and the prospects for investment cooperation. Egypt is the second most important tourist destination for Russians. 2.2 million Russian citizens visited the Arab country in 2013 and 3.1 million in 2014. More than 50% of tourists coming to the Red Sea are citizens of the Russian Federation, Belarus and Kazakhstan. Egypt canceled the visa fee for Russians for the summer period of 2015. The Egyptian government is interested in opening new resorts with the participation of Russian capital.

Thus, there are prerequisites for reaching a new and higher level of Russian-Egyptian cooperation. Assessing the future of these relations, Russian Foreign Minister Sergey Lavrov noted "the mature nature of the Russian-Egyptian partnership, which is taking on strategic features." ²⁶ Russia's "return" to Egypt is of great importance for strengthening the entire range of Russian-Arab ties. By expanding its presence in the Middle East and North Africa, the Russian Federation has a chance to become an important player in the new balance of power in the region and strengthen its influence in shaping a new image of international relations.

¹ For more information, see: Vasiliev A.M., Vinitsky D. I. Russia and Egypt: there are prospects, but their implementation requires time / / Asia and Africa today. 2015, N 4. (Vasiliev A.M., Vinitsky D.I. 2015. Russia and Egypt... // Aziya i Afrika Segodnya, N 4) (in Russian)

^{Cohen S.} 2 Putin - Al-Sisi Partnership - http://inosmi.ru/world/ 20150215/226271162.html

^{Al-Said Idris M.} 3 Russia-International Mediator for Egypt - http://inosmi.ru/world/20150211/226196942.html

⁴ Egyptian President: The country needs $200 - 300 billion to restore its economy. - http://www.russarabbc.ru/element_id35231

^5th International Conference on Economic Development of Egypt - http://infitah.ru/novosti-ekonomiki-i-biznesa

⁶ See for more details: Vasiliev A.M. Russia in the Near and Middle East: from Messianism to Pragmatism. 1993. (Vasiliev A.M. Rossiya na Blizshnem i Srednem Vostoke: ot messianstva k pragmatizmu. M.) (in Russian)

⁷ For more information, see Strani Afriki i Rossiya (Strani Afriki i Rossiya) (in Russian), Strani Afriki i Rossiya, Moscow, IAfr RAS, 2004, pp. 79-87.

⁸ Interview with Egyptian Oil Minister Sherif Ismail -www.russarabbc.ru/element-id-35223

^{Kasaev E. O.} 9 Russian-Egyptian economic cooperation - http://www.iimes.ru/?p-10615

^{Al-Sayyid S.} 10 Over 44 years, Moscow has invested $107.23 million in Egypt. - http://arafnews.ru/materials/us10723-mln.html

^{Kanevskaya M.} 11 Russia - Egypt: the onset of a new "Golden period" - www.Tnn-Информ - http://arafnews.ru/news

¹² Cairo preferred Moscow - www.russarabbic.ru/element_id-33633

¹³ Shoigu: Russia and Egypt to sign protocol on military cooperation - www.russarabbic.ru/element_id=35117

¹⁴ EAEU and Egypt to create working group on free trade zone - http://ria.ru/economy/20150205/1046118883.html

¹⁵ Egypt. Bilateral relations with Russia www.ved.gov.ru/exportcountries/eg_ru.news/17430.html

¹⁶ Egypt is making efforts to increase the supply of its products in Russia - http://www.russarabbc.ru/rusarab/index. php?ELEMENT_ID=33572

^{Vakhish N.} 17 Russian opportunities - http://arafnews.ru/ materials/rossijskie-vozmozhnosti.html

¹⁸ FT talks about new investments of BP and Mikhail Fridman in Egypt - http://www.russarabbc.ru/rusarab/index.php?ELEMENT ID=35180

^{Vasiliev A.M., Vinitsky D. I.} 19 Decree. op.

²⁰ Russia and Egypt signed a number of cooperation documents following the talks - www.russarabbc.ru/element-id=34911

²¹ Yegorova Egypt wants to cooperate with Russia in the field of alternative energy - http://провэд.рф/economics/fеа/20807-egipet

^{Kachevskaya M.} 22 Decree. Op.

^{Kachevskaya M.} 23 Russia is expected in Egypt-CCI-Inform...

²⁴ Visit of Egyptian business representatives to Russia-www.russarabbc.ru/element-id-35354

²⁵ Russian farmers signed a memorandum with grain traders in Egypt and the United Arab Emirates - http://www.russarabbc.ru/rusarab/index.php? ELEMENT_ID=35200

²⁶ Moscow: Russian-Egyptian partnership takes on strategic features - www.regnum.ru/news/polit/1766408.html

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