Egyptian-Turkish political tensions reached a peak this week,with each country expelling the other’s ambassador.While many argue that the political dispute will leave the economic collaboration between both countries in an undefined status, sources related to the matter remain hopeful that the economic ties will remain strong.
The Egyptian government dismissed HuseyinAvniBotsali,the Turkish ambassador in Egypt, as a response to comments made by Turkish Prime Minister RecepTayyipErdogan and what it described as “support for groups looking to destabilise Egypt”. Turkey replied with the expulsion of the Egyptian ambassador.
Adel Lamie, the head of the Egyptian-Turkish business council, expressed hope that the dismissal would not affect the countries’ economic relationship since the owners of the Turkish companies operating in Egypt represent the private sector, not the public. “We have a problem with the Turkish government, not the Turkish people,” he said.
Total trade between the two countries amounted to $5.2bn in 2012, of which imports from Turkey amounted to $ 3.6bn and Egyptian exports amounted to $ 1.6bn, according to Lamie.
He stressed the importance of “separating the political tensions from economic ties.”
The head of Egyptian-Turkish business council previously told the Daily News Egypt that Turkish investments in Egypt include about 300 factories and companies, mostly associated with the garment industry, employing 54,000 Egyptian workers.
According to Lamie, since the 25 January Revolution, only three Turkish companies have suspended their work in Egypt. He added that there is always an understanding of Egypt’s situation from the Turkish side.
Chairman of the Egyptian Turkish Company Hassan Akyuz stressed that the trade between the two countries will not be affected.
Akyuz said that the relation between Egypt and Turkey has been tense since the ouster of former president MohamedMorsi, but it has not had a significant effect on investors. “Since July, no Turkish businessman left Egypt,” he said, asserting that those who did not leave at the beginning of the tension will not leave now.
“No investor will leave a market ahead of political tensions,” Akyuz said.
Yasser Gaber, the media representative from the Ministry of Industry and Foreign Trade, said that “no official statements were issued from the ministry on the trade ties between us and Turkey.”
Gaber added that, aside from the diplomatic downgrading, the Turkish side has not issued any additional statements on the economic relationship with Egypt.
“There are no updates on how the trade between Egypt and Turkey will be affected,” he added.
The Free Trade Agreement signed between Turkey and Egypt in 2005 took effect in 2007, and promoted bilateral trade and cooperation with developing countries in the Middle East and Africa.
A report issued by the Egyptian Commercial Service stated that the Turkish market was the fifth largest for Egyptian exports as of the end of 2012, after the Italian, Indian, American and Saudi markets.
Following Morsi’s ouster in July, Egyptian and Turkish businessmen confirmed the importance of economic relations between the two countries in a conference organised by Egyptian Businessmen’s Association in collaboration with Egyptian Turkish Business Council and Egyptian Turkish businessmen association.
Turkish businessmen asserted in the conference that they wish to increase investments in Egypt, aiming to reach $5bn by 2017.
ZekiEkinci, the honourary chairman of the Egyptian Turkish Businessmen Association, pointed out in the conference that the association is looking forward to creating and expanding investment opportunities away from internal political affairs.
The political developments Egypt witnessed following Morsi’s ouster and the violent dispersal of his supporters from Rabaa Al-Adaweya and Al-Nahda squares did put the brakes on a bourse deal the Egyptian and Turkish government were working on to link the Egyptian stock market and Borsa Istanbul.A memorandum of understanding had been signed in June to develop a framework of connectivity between the two markets.
Following the heightened tension between the two countries, the Daily News Egypt called Mohsen Adel, a member of the board of directors of the Egyptian stock market, to discuss whether or not the project was cancelled.
“It is not cancelled, however, it is indefinitely halted,” Adel said. “The Turkish side has not offered any development regarding this project.”
Adel also confirmed that “there are currently no discussions or negotiations between the two parties.”
MubasherTrade Egypt, a brokerage service company and one of the five companies organising the project, said it had finished all necessary operations to prepare for the launch of the project.
“We’ve done everything except sign the contract with the brokerage companies in Turkey,” said EhabRashed, the managing director of MubasherTrade, adding that a number of investors were “enthusiastic” about the project.
In July, Turkey decided to halt its navigational lines which transfer its exports to Saudi Arabia and other Gulf countries through Egypt due to “financial constraints.”