Squaring the Circle at the India-Egypt Summit

Context:

Indian Prime Minister after concluding his visit to the United States, now on his first trip to Egypt, the first official bilateral visit by an Indian PM since 1997. 

Ties between India and Egypt:

• Linkage: India-Egypt ties are perhaps the oldest civilisational link.
• Proofs: Ashoka’s edicts refer to his relations with Egypt under Ptolemy II. 
  • In 2750 BCE, the Pharaoh Sahure sent ships to the “Land of Punt”, which historians identify with peninsular India. 
  • By the middle of the second millennium BCE, Egyptian mummies were wrapped in muslin dyed with indigo, both from India.
• Common Goal: In modern times, Mahatma Gandhi and the Egyptian revolutionary Saad Zaghloul shared a common goal on independence from British colonial rule.
  • Both nations made a joint announcement of the establishment of diplomatic relations at the ambassadorial level three days after India’s independence.
• Treaties: A Friendship Treaty was signed between Prime Minister Jawaharlal Nehru and President Gamal Abdel Nasser in 1955.
  • The two countries have celebrated the 75th anniversary of establishing diplomatic ties. 
• Cooperative Area: Presently, both share a cooperation in culture, youth matters, cyber security, information and technology (IT) and public broadcasting. 
  • Both have commitment to multilateralism, the principles of the United Nations Charter, international law, the founding values of the Non-Aligned Movement, and respect for the sovereignty and territorial integrity of all states.
  • They initiated new engagements to intensify military-to-military engagements and planned more joint exercises between the armed forces of the two countries. 
  • They agreed to fight terrorism in all forms and intensify consultation between their respective National Security Councils.

Significance of Egypt to India:

• Strategic Location: The Suez Canal is a major transportation link in marine trade, handling about 12% of all international trade

  • It serves as a gateway to both Europe and Africa and hence, has greater market exploration and opportunities.

• Energy Resources: India is a significant importer of crude oil and natural gas and Egypt  can be a reliable partner in fulfilling India’s energy needs.

• Influence in the Arab World: The Arab League is headquartered in Cairo (the capital of Egypt). 
  • The Arab League countries have their own strategic importance.
  • Egypt has productive diplomatic ties with the West and Organisation of Islamic Cooperation (OIC).  
  • Hence, with Egypt’s strong ties, it would be an advancement in the ties with the West, Arab World and the IOC.
• Shared Concerns: Both have a serious concern on the spread of violence, terrorism and extremist ideology.

Opportunities for India:

• Similar Conditions: Both have similar socio-economic conditions. 
• Market Access: Egypt’s largest imports are refined petroleum, wheat (world’s largest importer), cars, corn and pharmaceuticals — all of which India has the potential to supply.
  • The Egyptian government has an ambitious infrastructure development agenda and is one of the world’s largest arms importers, which presents opportunities for India.

Areas of Cooperation:

• Trade & Economy: Egypt has traditionally been one of India’s most important trading partners in the African continent. The India-Egypt Bilateral Trade Agreement has been in operation since March 1978 and is based on the Most Favored Nation clause.
  • Major Egyptian exports to India include raw cotton, raw and manufactured fertilizers, oil and oil products, organic and non-organic chemicals, and leather and iron products.
  • Major imports into Egypt from India are cotton yarn, sesame, coffee, herbs, tobacco and lentils.
• Emergency: During the pandemic and the Russian-Ukraine war, both showed remarkable strengthening ties.
  • Egypt sent medical supplies and doses of the antiviral Remdesivir injection to India and in exchange, India approved the maiden shipment of wheat to Egypt in May 2022. 
• Tourism: Egypt is keen to push for more tourism from India, and ease the movement of people so that there is more forex inflow into their tourism-dependent economy.
• Education: India is setting up higher educational institutions and campuses in Egypt- a proposal for establishing an IIT in Egypt.
• Technology: Both have held workshops on Agriculture-Biotechnology and Nanotechnology.
  • The grants-in-aid projects include Pan Africa Tele-medicine and Tele-education project at Alexandria University, the Solar electrification project in Agaween village, and Vocational Training Centre for textile technology in Shoubra, Cairo, which have been completed. An IT Centre at Al Azhar University, CEIT, is also operational from February 2019.
  • Space cooperation is an emerging vertical of cooperation between India and Egypt. Joint Working Group meetings and discussions between ISRO and NARSS (National Authority for Remote Sensing and Space Sciences) have been held.
• Defense: Egypt is interested in procuring defense equipment from India, which includes LCA Tejas, missiles like Akash, DRDO’s Smart Anti-Airfield Weapon, and radars.
  • Recently, the first-ever joint exercise between the special forces of the Indian Army and the Egyptian Army named “Exercise Cyclone-I” was held in January 2023.

Challenges:

• Lack of Efficacy: The underperformance of bilateral ties is not due to a lack of bilateral institutional mechanisms, but their efficacy and sense of purpose. 
• China’s Closer Ties: Egypt is being seen as getting close to China. Chinese investments are very huge and outnumber India’s investments, which is a serious challenge from an Indian perspective.
• Economic Crisis: Egypt is in high economic instability. The Egyptian economy is in a serious crisis. The huge financial commitments have coincided with a static economy, pandemic, global slowdown and the Ukraine conflict.
  • Egypt’s foreign debt is over $163 billion (43% of the GDP) and its net foreign assets are minus $24.1 billion.
  • The acute forex situation compelled the government to issue in January 2023 an order for the postponement of projects with a large foreign currency component and cuts to non-essential spending.

Way Forward:

• Focus on Efficacy: Need to be more cautious about bilateral ties, efficacies and sense of purpose.
• Invest More: Need to invest more to reduce the influence of China, not only to strengthen our footholds but to protect Egypt from dept trap diplomacy of China too.
• Help Egypt to Come Out of Economic Crisis Situation: India may countenance manageable eco-political risks to partake Egypt’s lucrative opportunities through various innovations such as the EXIM line of credit, barter, and rupee trading. 

Conclusion: 

The forthcoming Cairo Summit is an opportunity for India to avoid the pitfalls. Indian summiteers in Cairo may need to carefully balance their exposure to Egypt with the opportunities on hand.
India may, instead, consider trilateral funding arrangements for such projects in Egypt or elsewhere with its partners in the Gulf, the G-20 or the multilateral financial institutions.

News Source: The Hindu