Italy-Egypt, in 2023 trade worth almost 6 billion with a giant in crisis

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A giant in crisis, under the weight of inflation, maturing debts and the repercussions of the war in the Middle East. But also a primary interlocutor for the EU and Italy on the chapter that seems most delicate for both, not even three months before the European elections: the risk of a new migratory crisis on European shores. It is the double track that will guide the March 17 mission to Egypt of the President of the European Commission Ursula von der Leyen, the Italian Prime Minister Giorgia Meloni and her counterparts Kyriakos Mītsotakīs (Greece) and Alexander De Croo (Belgium). The objective of the visit is the announcement of a new 7.4 billion euro package to assist Cairo on the energy sector and the migration issue, following the agreement already signed with Kais Saied’s Tunisia. In the case of Italy, significant relationships are also at stake in terms of economic relations, with Meloni itself anticipating the signing of bilateral agreements within the scope of the so-called Mattei plan. The agreements being signed with al-Sisi will flow into the six pillars of the Plan revealed at the Italy-Africa summit last January: education and training, health, water and hygiene, agriculture, energy, infrastructure.

Exchange worth almost 6 billion, Italy 2nd market in Cairo

In the first 10 months of 2023, according to data from the Ice agency, Italy established itself as Egypt’s seventh supplier and second customer on a global scale, with a share of 3.9% of exports flowing to the North African giant and 7.8% of Cairo’s foreign sales. Overall trade between the two countries stood at 5.96 billion euros in 2023, with a positive balance of 690 million between 3.32 billion in Italian exports and approximately 2.6 billion in imports from Cairo. The trend is downward, with an overall decline in trade (-13.5% between 2022 and 2023) marked by a decline of 11.3% in exports and 16.3% in imports.

Italian sales in Egypt are dominated by machinery for almost a third (30%, 997 million), followed by coke and refined petroleum products (16.9%, 561 million) and base metals and metal products (339 million, the 10.2%). On the opposite side, that of imports, over a quarter of Italian purchases in Egypt are destined for base metals and metal products, excluding machinery and plants (669 million, 25.4% of the total), followed at similar values ​​by substances and chemical products (636 million, 24.1%) and, at a greater distance, products from the extraction of minerals from quarries and mines (365 million, 13.9% of the total). The stock of Italian foreign direct investments (FDI) in Egypt stood at 7.8 billion euros in 2022, the latest year available, compared to a reverse flow of Egyptian FDI into Italy of 126 million euros. Data reported by Ice in March, but stopped in 2021, record the presence of a total of 114 Italian companies in the country, for a turnover of around 6.6 billion euros.

The Cairo crisis and the migratory unknown

While waiting for EU funds and agreements with Italy, Egypt is in a crisis that overlaps economic and political tensions. Cairo, fresh from the vote that reconfirmed al-Sisi in December, finds itself increasingly suffocated by a situation that includes inflation close to 30% and a wide range of repercussions of international crises. After the setback on grain imports from Ukraine with the Moscow-Kiev conflict, Cairo now finds itself in the path of a triple impact of the war in Gaza: the bottleneck of trade flows on the Red Sea, the decline in tourist flows “inhibited” by the conflict and the repercussions on the energy export of liquefied natural gas, a domino effect that reduces the inflow of foreign currency and risks shaking Cairo’s public finances in view of the settlement of almost 30 billion in debt in 2024 only.

The other unknown, not surprisingly at the heart of the “partnership” proposed by the EU, concerns the evolution of an already ongoing migration crisis. Cairo has recorded the influx of around half a million Sudanese fleeing the conflict that has been tearing Khartoum apart since April 2023, adding to two other – literal – borders that worry Cairo: the one to the west with Libya and, above all, the one to the east with Gaza. Egypt acted as a hub for the delivery of humanitarian aid to Gaza through the Rafah crossing, the city which hosts the majority of the missing Gazans and risks being the next target of the Israeli offensive. Al-Sisi has made it clear that Egypt will not welcome fleeing Palestinians, allowing a migration emergency viewed with fear by Europe to implode. Brussels’ plan to stem it starts from the over 7 billion that should be proposed on March 17, following the explicit example of the memorandum with Tunisia.