I, like many others, was surprised by the sudden decision taken by Saudi Aramco to stop supplying Egypt’s needs of petroleum products, despite the agreement between Egypt and Saudi Arabia stating that the latter will secure Egypt’s requirements for petroleum products at 700,000 tonnes per month for five years. The value of the agreement between the two countries amounts to $23bn to be repaid over 15 years. The agreement came to spare Egypt from the fuel crisis, while cancelling it puts Egypt in a difficult position and may cause a severe crisis similar to that we suffered during the era of the Muslim Brotherhood government.
The Ministry of Petroleum attempted to mitigate the impact of this news by saying that the agreement is still in effect and that shipments were only halted for October. Yet, I am worried that the length of this suspension would stretch further on the back of political tension between the two states. Since I am primarily concerned about the side effects of a series of differences on the economic level, I will not seek to explain the political situation of the two countries over the controversy on Syria, Libya, and Yemen, or the Egyptian and Iranian rapprochement.
Halted oil shipments are just one of a series of crises that may affect Egypt as a result of increased tension between the two countries. Remittances of one million Egyptians in Saudi Arabia are one major source for hard currency, which can be used to pressure Egypt in light of the high unemployment rate. Similarly, Saudi Arabia’s deposits—most recently the $2bn deposit—are key to reaching an agreement for a loan with the International Monetary Fund. The Saudi foreign ministry has rejected an informal Egyptian request to exempt Egyptian labour from the recently imposed high fees, or to cut them. This would impact Egyptian expats in the kingdom, who secure hard currency flow into Egypt.
I realise how deep the relationship between the two countries is. And I understand that the differences will not be for long. At the same time, I strongly believe that Egypt must change and reduce its dependence on Saudi financial support. In other words, we must seek new ways of self-reliance rather than automatically tending towards Gulf aid. The state should maintain a proper balance between solving economic crises on the one hand, and preserving the sovereignty of political positions on the other. Whoever has the strength, owns his decision.
Hany Aboul Fotouh is a banking expert.