Middle East: Bridge over troubled waters - Andrew White

A planned causeway between Egypt and Saudi Arabia could bring the two countries closer economically, socially, and politically.

A long, thin finger of water which thrusts up from the northern rim of the Red Sea, the Gulf of Aqaba has long represented a dividing line between the continents of Africa and Asia. However, that could be about to change as Saudi Arabia and Egypt have announced plans to push ahead with a $3bn causeway linking the home of Islam with the most populous country in the Arab world. The project, which had for years been delayed by bitter diplomatic wrangling, has been heralded by the governments of both countries as a way to improve economic and social relations. The proposed 32km causeway will emerge from the desert in Ras Nassrani, in the Egyptian resort of Sharm El-Sheikh, arching over the Tiran Strait and passing through Tiran Island, as it stretches to Ras Hamid near Tabuk in northern Saudi. It represents not just a physical bridge between the two states, but a political one too: a concrete-and-steel tie between the House of Saud, and the Muslim Brotherhood which rose to power in Egypt in the wake of the Arab Spring revolts.

For Egypt and its new leaders, the financial incentives for pushing ahead with such a project are manifold. Under the rule of former President Hosni Mubarak, the country’s annual GDP growth rate rose to 7.2 per cent in 2008, from 4.1 per cent in 2004, and remained at 5 per cent in 2009 and 2010, despite the global economic downturn. Now the country’s economy is struggling to recover from the trauma of Tahrir Square. Local, regional and international confidence in Egypt as a place to do business has all but evaporated in the climate of political uncertainty which permeates the streets of Cairo. Egypt’s unemployment rate in the second quarter of 2012 was 12.6 per cent, compared with 11.8 per cent in the year-earlier period, and 8.9 per cent in the fourth quarter of 2010, the last quarter in which Mubarak was in power. Behind closed doors, meanwhile, business leaders accuse the new government of leading a witch-hunt against enemies of the state whose only crime was to have been successful under the previous regime. Accusations of bribery and corruption – sometimes legitimate but too often supported by vague or unsubstantiated evidence – have led to the arrest and imprisonment of a number of high-flying businessmen, and big business has ground to a halt amid the fallout.

'‘Hussain Omran, chairman of the foreign trade department at the Egyptian Ministry of Commerce, said that a causeway between the two countries would increase trade by more than 300 per cent, from $4.2bn annually to more than $13bn in two years’'

Of course, not all benefitted under Mubarak, and by the end of his rule spending on transport links, utilities, schools, and healthcare facilities had slowed to a trickle. With private sector growth non-existent in 2012, Egyptian President Muhammad Mursi is hoping that massive infrastructure spending will give the country the boost it so sorely needs, and to that end he has repeatedly urged his officials to remove all obstacles facing Saudi investment in Egypt.

The government has opened an office in Cairo to deal exclusively with the problems faced by Saudi investors in Egypt, and a 50-strong delegation of Saudi businessmen and other officials recently visited the Presidential Palace, where Mursi granted them a private audience and assured them that Saudi investment projects in Egypt (worth as much as $27bn) would proceed without delay. Egyptian officials also presented 15 new projects valued at $8.5bn to the Saudi delegation during the visit, much of it concerned with the privatisation of Egypt’s creaking state-owned assets. The privatisation process, introduced by former Prime Minister Ahmed Nazif, had proved to be a bone of contention between the two countries after Egyptians filed a series of lawsuits challenging the privatisation of state-owned companies that granted ownership to Saudi investors. It has been estimated that more than 20 such investment projects were halted by legal action, or by workers’ strikes.

Trade is also expected to blossom when the causeway opens. In March, Hussain Omran, chairman of the foreign trade department at the Egyptian Ministry of Commerce, said that a causeway between the two countries would increase trade by more than 300 per cent, from US$4.2bn annually to more than $13bn in two years. Tourism, too, should benefit.

While Western tourists are shying away from the pyramids and sun-loungers, Dr Hisham Zaazoua, senior assistant to the Egyptian Tourism Minister, says the number of Saudi tourists to Egypt could soar to more than 1.2 million annually, compared to the current figure of 300,000, upon completion of the causeway. Saudi, meanwhile, is likely to benefit from a huge rise in religious tourism. At present, during the religious seasons of Hajj and Umrah, more than three million Muslims travel to the Kingdom, and many more will be able to do so if the causeway offers easy access to pilgrims from across the Levant and North Africa.

Religious considerations, of course, underpin the political consensus which has emerged from decades of dispute and delay. Only after a July 2012 meeting between Mursi and Saudi’s King Abdullah, was the causeway development fast-tracked: senior figures in both administrations have since been enthusiastic in their public proclamations on the subject, and a technical committee convened in September to discuss the practicalities of the project. When the Muslim Brotherhood swept to power earlier this year, Saudi leaders feared Egypt’s new government might seek to build closer relations with Iran, the country Saudi regards as its greatest threat, and to export Islamism beyond its already porous borders. However, Mursi’s visit to Riyadh was his first presidential visit abroad, a move many observers interpreted as a sign that the Muslim Brotherhood in Egypt will seek to reinforce its image as the moderate face of political Islam, one which is turned to rulers in the Gulf, as opposed to Tehran. Saudi is looking for assurances that Egypt and its high-profile Islamist government will not seek to foment the rise of Islamist blocs in other states across the region, or indeed within the Kingdom itself. And a new era of economic, social, and political cooperation, such as that advanced by the causeway project, could go a long way to soothing the pressing concerns of both governments.

Andrew White is a freelance writer and former editor of Arabian Business magazine. He is based in Dubai and can be contacted at mrblanc@gmail.com