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Egypt parliament votes in favour of establishing Russian Industrial Zone in Suez Canal

The zone, which is expected to attract as much as $7 billion in Russian investments, aims to act as a gateway for boosting Russian exports to Africa.

Gamal Essam El-Din , Sunday 11 Nov 2018
Egyptian parliament
File photo: Egyptian parliament (Photo: Reuters)
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Egypt’s parliament approved on Sunday a landmark agreement on establishing and operating the Russian Industrial Zone in the Suez Canal Economic Area.

The agreement, signed between the two governments in Moscow in May 2018 (no.420/2018), is expected to attract $7 billion in Russian investments.

Ahmed Samir, the head of parliament's economic affairs committee, said the agreement reflects the growing political and economic relations between Egypt and Russia.

"There is cooperation between Egypt and Russia on all levels at the present time, covering military, political, and economic areas," Samir said, adding that "while Russia aims to build an industrial zone inside Suez Canal's economic area, it also helps Egypt set up four nuclear power stations at Dabaa, west of Alexandria."

Samir said the Russian industrial zone’s focuses will include electronics, electricity, construction, paper, wood, cars, and medical equipment.

"The zone will use high technology to produce competitive goods and boost the efficiency of the current industrial infrastructure in Egypt, and also aims to become a gateway for exporting Russian products to all of Africa," he said. 

Samir explained that the Russian Industrial Zone is located to the east of the city of Port Said, and will be established on 2.25 million square metres.

"It expects to attract $7 billion in investments and generate as many as 35,000 job opportunities in the first stage," Samir said, adding that "90 percent of workers in the zone will be from Egypt."

However, some articles of the agreement faced criticism from some leftist MPs.

Abdel-Hamid Kamal, a deputy representing the city of Suez, said he is happy that Egypt is moving to restore its old strategic relations with Russia.

"In old times and when the Soviet Union was in power, Russia helped Egypt build the High Dam, and because the relations between Egypt and Russia have become excellent in the past four years, Russia will help Egypt build nuclear power stations and establish an industrial zone," Kamal said.

He added, however, that "I regret that Article 11 of the agreement states that some information on the zone will be made secret, and this is in violation of Egypt's constitution."

Haitham El-Hariri, another leftist MP, also lamented that "Article 8 states that the agreement will remain immune to change by any laws or executive regulations related to its implementation for 50 years." 

"This article gives the Russian industrial zone a special privilege and does not help the principle of competition inside Suez Canal's Economic Area," El-Hariri said.

In response, Samir said "the agreement with Russia by no means deals an injustice to Egypt."

"This agreement, as I indicated, is expected to attract $7 billion in investments and this will be injected over a long period of time," Samir said, adding that "the economic feasibility study of this agreement also concluded that there should be a long period of time for Russian investments to be created inside Suez Canal."

Samir also insisted that the agreement does not have articles on "secret information."

"Article 11 deals with the secrecy of intellectual property rights, but the core of the agreement has nothing secret at all," Samir said.

Parliament speaker Ali Abdel-Aal argued that "the agreement was carefully scrutinised by parliament's legislative and constitutional affairs committee and so it became ripe for debate in a plenary session."

"The committee said the agreement is balanced and does not contravene the constitution, not to mention that it represents a progressive step in strategic cooperation with the state of Russia," Abdel-Aal said.

Abdel-Aal also argued that such economic agreements need a kind of "legislative stability."

"This is a giant and ambitious project and any dramatic legislative changes could push Russian investors to exit the Egyptian market and resort to international arbitration, "he said. 

Omar Marawan, minister of state for parliamentary affairs, said that "it is true that the duration of the agreement stands at 50 years, but it is also true that Article 11 gives the two parties – Egypt and Russia – the right to change the agreement upon joint approval from the two governments."

"Not to mention that Article 13 also allows any of the two parties to terminate the agreement, with the stipulation that it informs the other party one year in advance," Marawan said.

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