Israelis see business ties with Egypt continuing

Israel Export Institute chairman Ramzi Gabbay: The current situation is simply too good for both sides.

The day after the declaration that Muslim Brotherhood candidate Mohamed Morsi is the winner of the presidential election in Egypt, many questions hang over the future of relations between Egypt and Israel, relating both to diplomacy and security, and to business.

Frequent closures of the Nitzana Border Crossing to the flow of goods because of security decisions by the Egyptians, transfer of goods from Israel to Egypt by sea, and liaison meetings between Israeli and Egyptian business people in third countries because Israelis can't obtain visas for Egypt that's how commercial relations between the two countries look after the revolution that toppled President Hosni Mubarak and led to the rise to power of the Muslim Brotherhood in Cairo.

Despite all that, Israeli business people who trade with Egypt report that business activity is reasonably normal, if only because of Egypt's interest in providing bread to its people. "The cooperation between the two countries serves both sides," Dan Catarivas, director of the Division of Foreign Trade and International Relations at the Manufacturers' Association of Israel, told "Globes" today. "Many jobs in Egypt derive from commercial relations with Israel, and any Egyptian government that holds the reins of power will want, first and foremost, to take care of livelihoods and employment for as many people as possible. I don't at the moment see the Egyptian regime doing anything to harm the cooperation that has been in place for years. Business ties between the two countries remain strong despite the tension and despite the instability, because both sides look at things realistically and aren't rushing to destroy something that's good."

According to the Israel Export & International Cooperation Institute, there were 117 exporters to Egypt active in Israel in 2011. Exports of goods from Israel to Egypt grew by 60% last year, to $236 million. The Export Institute attributes the steep rise to a dramatic rise in Egyptian demand for Israeli chemicals, mainly agricultural fertilizers. However, Israel's imports from Egypt dropped by 50% last year to $180 million. The sharp decline in imports continued in the early months of 2012, largely because of the cessation of the flow of natural gas. At the same time, exports to Egypt have continued to rise steeply.

Relations will continue to be good

"Relations so far have been good, and will remain so, even after the revolution," says Export Institute chairman Ramzi Gabbay, who himself exports textiles and raw materials for the textiles industry to Egypt. "I have no doubt that the new leadership in Egypt too will see the business activity with Israel as a factor that generates employment, chiefly in areas suffering from high unemployment, and so it will seek to maintain it. The current situation is simply too good for both sides, and I can't see any reason for anyone to change that, unless all kinds of political considerations start to infiltrate thinking about these matters. If, heaven forbid, that should happen, business will be harmed, and we will feel it in the textiles and plastics industries. But I'm optimistic, and believe that things will carry on as they have been."

Israeli business people have already got used to the new reality in Egypt, and are prepared to sacrifice convenience for the sake of keeping profitable activity going, particularly in textiles, given the availability of very cheap labor. According to Israeli business people, since the change of regime in Egypt the Egyptians have not been issuing Israelis with visas, preventing them from reaching manufacturing sites in the industrial zones in Giza, the Suez area, and El-Arish. They have to conduct meetings with their colleagues every two or three months in third countries in Europe.

In recent weeks, officials from the Ministry of Industry, Trade and labor have been informing Israelis businesses that export their products to Egypt of the closure of the land crossing at Nitzana, because of decisions taken on the Egyptian side. Employees of the Israel Airports Authority have been operating the Israeli side of the crossing normally and continuously, but the closure on the Egyptian side means that goods cannot pass through. According to Gabbay, this situation forces many Israeli exporters to resort to shipping goods to Egypt the expensive way, on container ships, but adds, "The goods reach Egypt within a single day, and there's no problem with that."

Published by Globes [online], Israel business news - - on June 25, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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