Russia aims to follow China’s lead with African ties

By Hisham AbuBakr Metwally Source:Global Times Published: 2018/5/28 20:23:40

Illustration: Luo Xuan/GT

Russia's Minister of Trade and Industry Denis Manturov and his Egyptian counterpart Tarek Kabil signed an agreement to establish a Russian industrial zone during the 11th Egyptian-Russian Economic Commission meeting in Moscow on Wednesday. This will boost cooperation between the two countries, especially in the industrial, agricultural and customs fields.

The establishment of a Russian industrial zone in Egypt will serve as a historical milestone in the context of the development of bilateral relations between the two countries, according to Manturov. It will also promote Russian high-tech products in the huge new markets in the Middle East, Africa, Europe and Latin America.

Egyptian-Russian economic relations are seeing rapid development at various levels. The political and economic ties between the two countries have historical and solid foundations, and trade relations are seeing remarkable progress. Bilateral trade in the first quarter of 2018 reached $1.33 billion, a jump of 55 percent from $862 million in the same period last year.

The Russian industrial zone, located in East Port Said and within the economic zone of the Suez Canal, has an area of 5.25 square kilometers and investment of $6.9 billion, enough to provide an estimated 35,000 jobs. The Russian industrial zone project covers several industrial fields, including construction equipment, glass and ceramics, wood and paper, autos and medicine.

Russia has developed a new economic strategy in Africa by establishing a strong economic relationship with Egypt. It has switched from using influence based on its military power to developing its economic capabilities. This agreement was preceded by a major deal to build nuclear power plants, which gives Russia a firm foothold in the African continent. Russia wants to reach African markets through Egypt as well as through establishment of industrial areas in other African countries. Russia is planning to create similar industrial zones around the world, covering the most promising regional markets. Uruguay is likely to be the next location.

Russia is seeking to create a strong model of economic cooperation with Egypt to encourage other African countries to build similar ties with it. Russia also hopes to build structural changes that can ease its dependence on oil revenues and develop its industrial exports. Russia has seen the Chinese experience in Africa and the many successes China has achieved through economic cooperation with African countries. Russia and China are also members of the BRICS, which will boost further cooperation with African countries.

In April 2017, Egypt hosted the two-day China-Africa Cooperation Zone Symposium. China is one of the most important partners in the fields of industry and trade with African countries. Egypt has seen a rise in Chinese investment within the economic zone of the Suez Canal, especially in the textile sector, and broader cooperation between China and African countries has increased significantly in recent years. The volume of bilateral trade between China and African countries was $170 billion in 2017 and 3,100 Chinese companies are working on important projects in a number of African countries, including infrastructure projects. There are also cultural events and exchange projects every year.

Chinese company TEDA, which is one of the oldest and largest developers of the Suez Economic and Cooperation Zone, is currently working on a new industrial zone with an area of 7.23 square kilometers. Some of the factories in the new zone have already started production and others are about to start.

The Russian industrial zone will need 13 years before it starts working which means China's investments will enjoy the market without much Russian competition for a long time. Also, the presence of Russian industries in the Suez Canal area will boost industrial production and the number of buyers, which will benefit Chinese factories. It will also help to develop Sino-Russian ties and cooperation.

In the end, Russia's desire to establish an industrial zone in Egypt is the best testimony to the validity of China's strategy in Africa.

The author is the first economist researcher with the Central Department for Export & Import Policies under the Egyptian Ministry of Foreign Trade and Industry.


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