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Egypt wins strong foothold in Iraq’s reconstruction

Millions of Egyptian workers may benefit from their government's involvement in Iraq’s massive reconstruction process.
TOPSHOT - A view shows the ravaged al-Idara al-Mahalia stadium, which was once used by Islamic State group fighters as a weapons depot, near the northern Iraqi city of Mosul on October 22, 2020. - Jihadi fighters from the Islamic State (IS) group seized Mosul in 2014, later expanding its so-called 'caliphate' to over a third of Iraq and into neighbouring Syria. In 2017, Iraqi and coalition forces forced the hardened insurgents out in a grinding urban battle that left the ancient city in ruins. The bullet-ri

CAIRO — On Dec. 4, the Federation of Egyptian Chambers of Commerce announced that a newly formed unit is collecting information on reconstruction projects in Arab countries, including financing opportunities, for the use of interested Egyptian companies.

In a statement, the federation noted that the Egyptian government has come a long way in establishing a strategic partnership with the Iraqi government regarding the reconstruction of Iraq, as well as other countries such as Lebanon, Libya and South Sudan.

On Nov. 1, Egyptian Prime Minister Mostafa Madbouly and his Iraqi counterpart Mustafa al-Kadhimi signed 15 agreements and memoranda of understanding for the reconstruction of Iraq through several projects in the electricity, renewable energy, petroleum, mineral wealth, housing, transportation, investment, trade and industry sectors in partnership with the Egyptian government and private sector.

Kamal al-Desouki, vice president of the Building Materials Industries Chamber at the Federation of Egyptian Industries, told Al-Monitor that with Egyptian and Iraqi reconstruction agreements, he expects Egyptian building material exports to reach $6 billion by 2021.

He pointed out that the expected increase in exports will require doubling production, which will encourage more investments in the building materials sector and employ thousands of workers. “Thus Egypt's participation in the reconstruction of Iraq would have succeeded in developing investments and improving the labor market in Egypt,” he said.

As Egypt and Iraq signed these agreements, the average price of reinforcing iron increased by 13% due to expectations of higher demand. On Dec. 6, it reached 10,950 Egyptian pounds (roughly $700), up from 9,700 Egyptian pounds (about $620) on Nov. 1.

Farag Abdel Fattah, an economics professor at Cairo University, told Al-Monitor that Egypt’s access to Iraqi crude oil at reduced prices is one of the most important advantages of the agreements concluded between the two governments. “This will contribute to reducing the oil import bill for Egypt, which represents about 13% of Egypt's total imports, and it will thus help reduce the trade balance deficit and save foreign currency reserves.”

Egypt imported crude oil and petroleum products with a value of $9.4 billion during 2019, according to the Central Agency for Public Mobilization and Statistics in February 2020. Egypt's total imports in 2019 amounted to about $71.9 billion.

In November, several Egyptian newspapers reported that 15 Egyptian companies intend to bid for projects in the Iraqi petroleum sector in exchange for obtaining crude oil at reduced prices. Fakhr al-Sanafi, president of the Arab Federation of Construction and Building Contractors and the Iraqi Contractors Union, told Al-Monitor that Egyptian companies are also expected to build residential complexes, solar power stations, fertilizer and fodder factories, railway tracks and several restaurants, hotels and resorts.

The Union of Iraqi Contractors, which is the main partner of the Iraqi government in pursuing reconstruction projects, has made projections for rebuilding Iraq, estimating that the process will cost about $100 billion, includes rebuilding much of the infrastructure in the governorates of Anbar, Mosul, and Salahuddin, in addition to 120 housing complexes with over 3.5 million housing units in 15 governorates.

The plan also includes the establishment of 17 natural gas and solar energy power plants in 10 governorates, 35 hospitals in nine governorates, 22 fertilizer and feed factories, 22 other foodstuff factories, eight commercial complexes and industrial zones, 73 hotels, resorts and floating restaurants on the Tigris and Euphrates rivers, as well as 12 railway tracks.

Rashad Abdo, head of the Egyptian Forum for Economic Studies, told Al-Monitor that these projects are both labor intensive and require skilled workers, “which is more available in the Egyptian labor market than elsewhere in the Arab world.”

Abdo added, “Effective Egyptian participation in these projects will provide job opportunities for Egyptian workers, especially those who lost their jobs in the Gulf in light of the economic crisis resulting from the coronavirus pandemic. Egyptian workers finding employment abroad would benefit the Egyptian economy, as Egyptian labor abroad is considered a major source of hard currency in Egypt."

The Federation of Chambers of Commerce's Employment Enrollment Abroad Division, which negotiates with foreign companies to hire Egyptian workers, said in a Nov. 1 press statement that the reconstruction projects in Iraq could provide job opportunities for over 2 million Egyptian workers.

Meanwhile, a retired general with the Egyptian police told Al-Monitor on condition of anonymity that despite the economic benefits, Egyptian participation in the reconstruction of Iraq also presents risks for Egyptian workers because the security situation is still unstable there, with ongoing terror activity and US and Iranian forces present. He said that Egypt and its workers may be targeted, as has happened more than once.

Armed terror organizations kidnapped four Egyptian engineers working for Orascom Construction in 2005, and some newspapers reported at the time that the terrorists demanded ransom and that the company’s work in Iraq be halted.

Abdul-Khabir Atta, a professor of political science at Assiut University, told Al-Monitor that the reconstruction projects in Iraq are an opportunity for Egypt to curb Turkish and Qatari influence over Arab countries.

Atta noted that Egyptian participation in reconstruction will spoil the plans of both Turkey and Qatar, whose relationship with Egypt is plagued with tension over their support for the Muslim Brotherhood.

The Turkish government had announced in February 2018 that it would become the largest contributor to the reconstruction of Iraq by investing $5 billion there, while Qatar declared in January 2019 its intention to invest $1 billion in Iraq as well.

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