Morsi visiting Russia in bid to deepen ties

Egyptian President hopes to deepen economic ties and get Russian tourists to start returning to Egypt.

Mohamed Morsi (photo credit: Amr Abdallah Dalsh / Reuters)
Mohamed Morsi
(photo credit: Amr Abdallah Dalsh / Reuters)
Egyptian President Mohamed Morsi was set to visit the Russian city of Sochi this week, a resort on the Black Sea and some 1000 miles away from the capital Moscow. Egyptian government sources told The Media Line  Morsi hopes to deepen economic ties and get Russian tourists to start coming back to Egypt.
"Russian tourists coming to Egypt used to contribute hundreds of millions of dollars to the Egyptian tourism industry," an Egyptian Ministry of Foreign Affairs source who spoke on condition of anonymity told The Media Line.
"Some Russian tourists used to come to Egypt two to three times a year but now due to the deteriorating security conditions, and fear, that number has dropped considerably,” he said. “In addition, the security vacuum has led to a spate of rapes of Russian women tourists, and that has made everyone scared to come to Egypt."
According to Egyptian Minister of Tourism Hisham Zazou, “Russia used to send over three million tourists to Egypt a year. Today statistics say 274,000 so far came in 2013,” Zazou told The Media Line by phone.
Zazou added that tourism is a main contributor to the Egyptian economy, representing 11.3% of the Egyptian gross domestic product (GDP) of $229.5 billion in 2011 according to the World Bank. He added that tourism contributes about 15.2% of Egypt's foreign currency supplies and employs 12.6% of the Egyptian labor force.
But a recent decision by the Egyptian government to limit the number of liquor bottles brought into Egypt by travelers to four bottles per visit, with a maximum of three visits per year, has hit tourism, especially from Russia, hard.
 "Russians like to come to Egyptian beaches, drink vodka, and have a good time. Limiting the amount of alcohol brought into Egypt by tourists will only hurt us," Magdy Daif, an Egyptian expert on Russian-Egyptian Affairs, told The Media Line. 
In advance of Morsi's visit, the Egyptian Minister of Petroleum and Mineral Resources Osama Kamal visited Moscow with a delegation of Egyptian oil and mineral industry experts last week. They examined the possibility of exporting Russian natural gas to Egypt in exchange for granting a mining licensing for the Russian international mining company, Vertex. Bureaucratic and administrative delays have held up the company's mining activities in Egypt since 2009.
"We met with the chairman of the Russia Gas Company GAZPROM, Alexei Miller, and offered Egypt to import large quantities of liquefied gas by next summer." Kamal told The Media Line.
"Agreements shall be concluded on President Morsi's visit," Egyptian Undersecretary for Oil and Gas Exploration at the Ministry of Oil & Mineral Resources Tarek El-Baraktway, who was also part of the Egyptian delegation that visited last week, told The Media Line. He also mentioned deals for Russian oil and gas exploration in Egypt.
The Egyptian government has been trying to secure a new supply of petroleum products and natural gas contracts to cover its own increasing domestic demand for food and energy.
While Egypt is trying to increase the flow of foreign investments and tourists to from Russia to Egypt, Morsi's government isn't closing any doors when it comes to aid money. Last week Qatari Prime Minister Hamad bin Jassim bin Jaber Al Thani pledged an additional $3 billion to aid the struggling Egyptian economy and assist in investing in key industries. After this pledge, Qatar will have promised  Egypt $21 billion to be invested over the next five years.
Demands for gasoline at both gas stations and in industry increased in recent months, while shipment of petroleum products to Egypt from Persian Gulf suppliers has been delayed, a Ministry of Petroleum and Mineral Resources said.
Egypt has been seeking help anywhere from the Gulf States to rising regional power Algeria, which agreed last October to boost exports to Egypt.  Talks were also held between Doha and Egypt over importing Qatari natural gas during the summer when demand increases.
Kamal announced in November that Egypt's industrial users would be allowed to import up to one billion cubic feet per day of natural gas starting in June. The state-owned Egyptian Gas Holding Company (EGAS) said recently that it is ready to announce the awarding of gas import licenses to domestic companies.
Egypt has two natural gas production and export terminals and has signed an agreement to export 250,000 million cubic feet per day of gas to Jordan through a pipeline across the Sinai Peninsula. Qatar is the leading global exporter of natural gas and has the world's third biggest gas reserves, after Russia and Iran.
Social unrest could also be stirred by the increasing fuel prices, which in turn increase food prices. Food shortages also contribute to the escalating prices. In the past five years, Egypt has experienced two food riots. The first was in 2008 and the second in 2011 that was a factor in escalating tensions that led to the Egyptian revolution that ousted president Hosni Mubarak in 2011.
Analysts say that Morsi's visit to Russia might therefore be a last-ditch attempt out for the Russians to save the day before summer comes to Egypt and gas consumption skyrockets. Libya showed it was willing to help by depositing a $2 billion interest free loan in Egyptian Central Bank last week.
They said that if the Muslim Brotherhood government fails to provide adequate food supplies at affordable prices and can't resolve the continuous fuel shortages, Morsi might be facing social unrest that could eventually cost him his job.