Egypt: Cautious rapprochement with Qatar

Niveen Wahish , Wednesday 13 Jan 2021

The restoration of full diplomatic ties with Qatar will not immediately mean business as usual

The newly inaugurated Qatari Diar project
The newly inaugurated Qatari Diar project

When Omar Hazem, a young Egyptian engineer working in Qatar since 2015, knew that Egypt, Saudi Arabia, the United Arab Emirates, and Bahrain had agreed to restore full diplomatic ties with Doha at the 41st Gulf Cooperation Council (GCC) meeting last Tuesday after more than three years of boycott, he was hopeful.

In June 2017, Egypt, Saudi Arabia, the UAE, and Bahrain cut diplomatic ties with Qatar, accusing it of meddling in their affairs and of inciting terrorism. The four countries then closed off access to the Gulf country, with a boycott on air, sea, and land traffic to and from Qatar.

Hazem was particularly looking forward to the resumption of direct flights between the two countries. Since June 2017, Hazem has had to travel to a third country whenever he was coming to Egypt. He would either travel to Kuwait or Lebanon to catch a flight to Cairo. That was a major inconvenience, especially with his toddler daughter.

The tension in relations was taxing not only because of the difficult travel arrangements, but also because of a general feeling of insecurity. There was no discrimination against Egyptians in the workplace or by people in general in Qatar, Hazem stressed, but the political tension between the two countries was a shadow on their residence in the Gulf country.

The political tensions also affected hiring regulations for Egyptians. First, he said, hiring Egyptians into the country had become very difficult. Then Egyptians residing there who lost their jobs had difficulty getting their kafala (work permit) transferred to another employer and accordingly were compelled to leave the country.

Many Egyptians had left because of these regulations, Hazem said. There were around 300,000 Egyptians working in Qatar in 2018, according to a statement by Minister of State for Emigration and Egyptian Expatriates’ Affairs Nabila Makram.

Hazem is not sure how things will differ now, as no further details have been released. One businessman speaking on condition of anonymity also said it was not clear how business and investment relations would be resumed. Unless the government gives the go ahead, nothing would change, he said.

Ambassador Gamal Bayoumi is also adopting a wait-and-see attitude. He said there has not been any official statement outlining the different aspects of the agreement. Egypt was being reserved about the arrangement despite endorsing it because it has always been a supporter of stability and peace in the region, he added.

There were “sincere efforts to preserve the unity of Arab ranks and to reach a reconciliation that will reinvigorate the Arab region and create a space for constructive cooperation and the preservation of the interests of all parties,” said a statement from Egyptian Foreign Ministry Spokesman Ahmed Hafez shortly after the summit began.

The statement stressed the need for “good faith in order to achieve a genuine reconciliation that revives the special qualities of Arab relations, stimulates solidarity and the preservation of joint interests, enshrines the commitment to non-intervention in the domestic affairs of others, combats threats to the security and stability of Arab nations and peoples, and safeguards Arab national security.”

Nonetheless, on the day of the meeting, Qatari Minister of Finance Ali Sharif Al-Emadi flew to Cairo to take part in the inauguration of the St Regis Hotel in Cairo, an investment by the Qatari Diar Real Estate Investment Company.

The inauguration was in the presence of Al-Emadi and his Egyptian counterpart Mohamed Maait. The visit of the Qatari minister to Egypt was the first by a Qatari official in more than three years.

Despite the boycott, economic relations continued, and Qatari investments were not pulled out of Egypt. “Any investor would want to benefit from the Egyptian market,” Bayoumi said, adding that while economic relations could survive political discord, having good political relations always served to better them.

According to Allen Sandeep, director of research at Naeem Brokerage, the three-year boycott did not have much impact on foreign direct investments, as investments from Qatar are predominantly private and centred round two main projects: Qatari Diar and the Egyptian Refining Company.

These investments had continued without regard to the sovereign issues, he said.

Total gross investment inflows from Qatar amounted to $1.2 billion in the three fiscal years 2018-2020, less than three per cent of Egypt’s total gross inflows for the three-year period. Pre-blockade, it was about one per cent of inflows, he added.

According to Sandeep, total Qatari investment in Egypt amounts to about $5 billion, mostly related to tourism, real estate, petroleum refining and financial services. “We do not expect any major changes in the near term, either on the private or the public side,” he said.

In terms of international trade, Qatar accounted for less than three per cent of the total for Egypt in 2017, Sandeep said, adding this this figure would have dropped sizably since then as the country no longer features as one of Egypt’s main trade partners.  

Should relations resume normally, Sandeep said that Egypt stands to benefit indirectly through income from tourism and remittances.

Egyptian expatriates in Qatar amount to about six to seven per cent of the total abroad, according to recent figures, he said.

Meanwhile, Qatar stands to benefit through international trade, as its export shipments would be granted access through the Red Sea.

*A version of this article appears in print in the 14 January, 2021 edition of Al-Ahram Weekly.

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