External Affairs Minister Sushma Swaraj visit, and efforts by India and Egypt to firm up their bilateral relations comes at an interesting time.
By Monish Gulati and Chayanika Saxena*
The visit of External Affairs Minister Sushma Swaraj to Cairo on August 23-24, this year was amongst a series of high-level visits exchanged by the two countries in recent months. The visit of the EAM was intended to bring both the countries closer by identifying issues of mutual concern and pledging to work together. Sushma also built on the common ground of security and terrorism traversed by the Indian Deputy National Security Advisor Arvind Gupta during his visit to Egypt a few months earlier. Her visit also strengthens India’s ongoing outreach to the Middle East and Africa.
The EAM’s visit, and efforts by India and Egypt to firm up their bilateral relations comes at an interesting time – appropriately put in context by two significant events; the opening of the ‘new’ Suez Canal on August 5 and discovery of the largest gas field in recent time off the coast of Egypt, announced on August 30, 2015. This article examines these developments from the India-Egypt bilateral perspective.
The relations between India and Egypt have had a general tone of cooperation and cordiality to them. Where the political dispensation in India towards Egypt has been almost unflinchingly favourable and supportive since its independence, it has been the political developments in Egypt that have had a major bearing on the trajectory of the bilateral relationship. For instance, after what has been termed as a rather arid spell in their relations under the regime of Hosni Mubarak, bilateral ties between India and Egypt took a positive turn with the Egyptian Revolution in 2011.
The Egyptian presidential elections held in 2012 saw the Muslim Brotherhood coming to power and Mohammed Morsi becoming the president of Egypt. The electoral victory of the Muslim Brotherhood became a watershed moment not only in the history of Egypt but the entire Arab world and marked the emergence of political Islam in Egyptian politics. Visiting India in March 2013, Morsi oversaw a massive jump in the trade between the two nations by a good 30%, with the countries also signing agreements on information and communication technology, cyber security, cultural heritage, micro and small enterprises, vocational training etc.
While the upward swing in their economic relations was encouraging, the Egypt-India ties still did not come up to their full potential. Morsi, even as he signaled the revival in Indo-Egyptian ties, arrived in New Delhi after a stopover in Pakistan, with which Egypt has had close ties. It was this sort of signaling that has in the past held back India-Egypt relations. Analysts believe it is an issue that has been ‘course corrected’.
Morsi’s rule ended abruptly due to intervention by the military and Abdel Fattah el-Sisi, his defence minister became the new president of Egypt. President el-Sisi is the sixth and incumbent president of Egypt, in office since June 8, 2014.
Suez Canal upgrade
On the August 6, 2015, a pound 6 billion-project upgrading the existing Suez Canal by adding a parallel waterway, which took a year to complete, was opened by the Egyptian president with much fanfare. It involved building a 35km Ballah bypass along the 193km long canal and deepening it so as to allow bigger tankers and container vessels to travel in different directions simultaneously. It is planned to deepen the canal further. It is the third time since its original build that the waterway has been widened to allow for two-way parallel canal traffic. The plan is for up to 97 ships instead of the current 49 ships to transit the original 11- hour canal ship transit from south to north. The current project has been domestically financed by special Investment Certificates paying 10-12 per cent interest.
The advantage of the Suez is that ships save as much as 10 nautical days at sea instead of sailing around Africa, and is today the fastest link between Asia and Europe accounting for almost 7% of global seaborne trade. It is a claim by economists that the project will not only expand (double) the capacity of the tonnage passing through the Suez Canal but more than double the annual revenue to $13.5 billion by 2023. Minister of Shipping, Road Transport and Highways Nitin Gadkari visited Egypt as the prime minister’s representative to attend the opening ceremony of the New Suez Canal. For a country like India which does not have overland access to markets of Europe and North Africa, the Suez Canal is its lifeline.
Egypt is also giving shape to the Suez Canal Area Development Project which would involve development of five new seaports in the three provinces surrounding the canal, a new industrial zone west of the Gulf of Suez, exclusive economic zones of around 460 sq.km around the waterway, huge fish farms, seven new tunnels to Sinai, a new Ismailia city, and a technology valley at Ismailia. India is looking to enhance its investment profile in these opportunities.
Zohr offshore gas field
The Italian energy company Eni, in a press release on August 30, announced that it has found a “super giant” natural gas field off the coast of Egypt. Discovered more than 13,000 feet below the seabed in water nearly 5,000 feet deep, the field could contain up to 30 trillion cubic feet (tcf) of gas, the largest discovery in the region and one of the largest single finds in history. At a comparatively shallow depth, Zohr would be easier to develop (than other gas deposits in the region), and Eni, believes it can begin to develop the field as early as next year, though the time frame is ambitious according to some experts.
Egypt has 65 tcf of proven reserves. However, since 2011, Egypt’s domestic consumption of gas has increased manifold, while its exports of liquefied natural gas (LNG) reduced; its exports to Jordan have reduced significantly due to terrorist attacks on gas pipelines crossing the Sinai Peninsula. There has been a fall in export earnings, incoming investments, payment issues with foreign oil and gas companies, and Zohr is expected to arrest this trend. Zohr is estimated to hold equivalent of about 18 years of current Egyptian gas consumption.
The discovery of gas at Zohr is likely to pose tough questions to Israel’s offshore gas plans; its largest field, Leviathan, which is yet to be exploited, contains an estimated 22 tcf. Israeli business case on Leviathan is believed to include potential dealings with Egypt as both a customer and an export partner. Some experts reckon that Zohr will essentially annul the MOUs Israel and Cyprus recently signed with Egypt to supply gas to the Egyptian domestic market and export-oriented LNG plants.
These developments could revive the option of exporting Israeli gas to Turkey, which has its own issues with the new Egyptian discovery because it lies close to Cyprus’ maritime border, which it does not recognize. Then there are Russian plans to export LNG to Egypt and gas by pipeline to Turkey and further on to Europe.
In the case of Egypt, the magnitude of the gas find raises again the prospect of export of Egyptian LNG, and with the recent expansion of the Suez Canal – even to the Asian market competing with Qatari and Iranian gas exports. The discovery of Zohr proclaims the East Mediterranean as the new frontier in oil and gas production.
Egypt is likely to pursue a more vibrant foreign policy, once unyoked from its energy dependency and provided with two major potential sources of revenue. As a dominant player both in the Arab politics and the African continent, Egypt is set to interact more nimbly with the regional and global powers including US, Russia and China.
For India, better relations with Egypt not only present an opportunity to build on historical ties, but also to forge an enduring partnership to meet emerging global challenges of energy security, terrorism and climate change.
*Monish Gulati is the Associate Director (Strategic Affairs) and Chayanika Saxena is a Research Associate at the Society for Policy Studies. Both authors can be contacted at [email protected] This article was published by South Asia Monitor