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EU offers Egypt 5 bn euros to support economy, democratic transition

At Sunday press conference with Egyptian counterpart, EU President Herman Van Rompuy unveils 5-billion-euro offer to Egypt to shore up ailing economy and support democratic transition

Ahram Online, Monday 14 Jan 2013
European Council President Herman Van Rompuy and President Mohamed Morsi
Egyptian President Mohamed Morsi and European Council President Herman Van Rompuy(Photo:Reuters)
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European Union President Herman Van Rompuy announced on Sunday that the EU had offered Egypt 5 billion euros (some $6.7 billion) in grants, loans and concession loans  to support Egypt's ailing economy and short-term democratic transition, stressing that agreement on a proposed $4.8 billion IMF loan would serve to encourage additional European financial support.

At a Sunday press conference at Egypt's presidential palace, Van Rompuy stressed the need for Egypt to achieve economic growth rates on par with pre-revolutionary growth, as this would help combat Egypt's high unemployment rates.

The EU president said that the resumption of talks between the IMF and the Egyptian government represented a vote of confidence in the country's economic future, affirming that postponing the loan agreement should not be seen as an option.

Van Rompuy added that a full-fledged EU-Egypt free trade agreement would soon be negotiated with the Egyptian government with the aim of promoting economic cooperation and boosting investor confidence, stressing that the EU represented Egypt's primary trade partner.

The aid Van Rompuy mentioned is an essential part of the package Egypt expects to receive once it reaches a deal with the IMF.

The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) will each provide 2 billion euros ($2.54 billion) in loans, the Egyptian presidency announced last November.

 

He concluded by reassuring his audience that the EU would aid Egypt in the recovery of looted state assets and assume a mediating role between respective European countries in an effort to recover stolen public funds.

Egyptian Finance Minister El-Morsi Hegazy said last week that Egypt may reach a loan deal with the International Monetary Fund next month for $4.5 billion, instead of the $4.8 billion that Cairo had hoped for.

The EU had previously announced in November that it would soon lift its asset freeze on Egyptian and Tunisian funds, imposed before the two countries' rulers were ousted in the 'Arab Spring' uprisings.

At the press conference, Egyptian President Mohamed Morsi also praised the EU's role in supporting democratic transition in Egypt and the Arab world.

"I assure you that we are fully committed to building a constitutional Egyptian state; a country of institutions; the civil state we all dream of," he said, adding that upcoming parliamentary elections would mark the "final step" in the building of the state.

"The development of democracy in Egypt is a good guarantee of our cooperation with the EU," added Morsi.

The press conference also covered several vital regional issues, including ongoing crises in both Mali and Syria.

"We must deal with the situation in Mali wisely. We are opposed to a military solution. We must instead work on promoting peace in Africa," said Morsi.

Regarding Syria, Rompuy stated that, in order to ensure a democratic transition in that country, President Bashar Al-Assad must step down.

"It is tragic that the Syrian regime is not ready to commit to a political solution. It is tragic when we know that, according to the UN, since the eruption of the uprising 60,000 have died," Rompuy said.

He went on to assert that the success of Egypt's democratic transition was important both for Egyptians and the entire region. He further urged President Morsi, along with Egyptian social and political forces, to engage in national dialogue.

Addressing Morsi, Rompuy added: "The EU will stand by your side as a friend, neighbour and partner on this path."

On the Palestine-Israel conflict, Rompuy asserted that the EU had pressured Israel to abandon its latest settlement drive, warning that ongoing construction of Jewish-only settlements on Palestinian land would inevitably impact EU-Israel relations.

Rompuy also stressed the EU's ongoing financial support for the Palestinian Authority, which, he pointed out, continued to receive one million euros in unconditional annual assistance from the EU.

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