Русский
Egypt’s Suez Canal Authority, the Egyptian state body responsible for operating the waterway, is seeking to sign a partnership deal with Russia. The two countries are already working together on a major industrial project in the Suez Canal Economic Zone in eastern Port Said.
Osama Rabie, chairman and managing director of the Suez Canal Authority, said on Monday (August 5) that Russia currently has no direct partnership with the canal itself – only with the economic zone, stating that “We also hope for such a partnership agreement.”
In 2018, Russia and Egypt signed a deal to establish a Russian industrial zone on a 5.25 million-square-meter site, to be developed over 13 years. Dubbed ‘Sun City,’ the project will provide Russian manufacturers with access to markets in Egypt, the Middle East, and Africa. China also has an adjacent manufacturing park, where it is possible Chinese and Russian investors could collaborate.
Industries expected to operate in the zone include automotive, pharmaceuticals, oil and gas, mining, and nuclear technology. Egyptian officials say the venture will create 35,000 jobs and attract around US$4.6 billion in investment. Businesses will benefit from preferential tax policies. Egypt is also a member of the African Continental Free Trade Agreement, which eliminates taxes on intra-African trade. 55 African countries are committed to this deal.
The Sun City project will allow Russian investors to manufacture, assemble and process production lines in Egypt, with zero import duties or VAT until the work is completed. Investors then have the opportunity to reexport them elsewhere (such as to the CIS countries) or to sell onto the Egyptian or other African markets, at which point some tariffs and VAT become due. The benefits are three-fold for Russian investors: a cash-flow expense saving until the product is ready, lower Egyptian worker overheads, and profits tax breaks lasting several years. Egypt is also negotiating a Free Trade Agreement with the Eurasian Economic Union at which point the zone will truly show its economic and trade value.
In May, Egypt and Russia held an intergovernmental commission on trade and cooperation in Moscow, where both sides reaffirmed the importance of the project as a way to boost industrial ties.
Egypt was one of four nations – along with Ethiopia, the United Arab Emirates, and Indonesia – that became full BRICS members in 2024. BRICS was originally formed in 2006 as an economic group between Brazil, Russia, India, and China, with South Africa joining four years later. According to Russian President Vladimir Putin, BRICS has already surpassed the Western-led G7 in terms of combined GDP.
The Suez Canal remains a vital artery of global trade, carrying an estimated 12-15% of total cargo, 30% of container traffic, 9% of seaborne oil, and 8% of LNG.
Further Reading
