Turkey and Egypt mend relationship with state visit

Reuters/Murad Sezer

• Erdoğan and Sisi sign 17 MoUs
• Energy, defence and finance deals
• Relations soured in 2013 after coup

Turkey and Egypt have moved closer to rapprochement after a decade of strained ties.

Turkey’s president Recep Tayyip Erdoğan and Egypt’s president Abdel Fattah Al-Sisi signed 17 memorandums of understanding during the latter’s one-day visit to Ankara on Wednesday.

Among the agreements signed were commitments to boost cooperation in finance, energy, defence and tourism.

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Ties between the two countries have been challenged since Egyptian president Mohamed Morsi was removed from power and jailed in a coup in 2013, leading to Turkey downgrading diplomatic relations until 2020, when Cairo and Ankara again exchanged ambassadors.

Despite this rift at the state level, Turkish investment in Egypt has gained momentum in recent years. It has been driven in part by companies in the textiles and manufacturing sectors moving their operations offshore to take advantage of lower costs and Cairo’s trade access agreements with international markets. 

Turkish investments in Egypt are worth more than $3 billion, most centred in dedicated free trade industrial zones. 

This figure will be bolstered by $200 million after the signing of an agreement on the sidelines of the summit by Turkish company Polaris to acquire a 2.6 million square metre block of land at New October City outside Cairo to be developed as an industrial zone, due to be operational within five years.

Turkey’s industrialists will be pleased with the improved relations with Egypt, in particular those in the ready wear sector and other labour intensive industries, said Ahmet Öksüz, the board chairmen of the Istanbul Textile and Raw Materials Exporters’ Association.

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“One of course would rather have our industries stay in our country but the current economic situation pushed this move,” Öksüz told AGBI. 

“The input costs in Turkey have become very high, while in Egypt labour costs are low, energy inputs are also low and trade access with the US is a great benefit on top of this.”

Under the protocols signed by the two leaders, a target for bilateral trade of $15 billion is to be reached within five years, with a 20 to 25 percent increase projected for next year alone. 

If achieved this would represent something of a reversal of recent trends, with two-way trade falling to $6.6 billion in 2023, down from the $7.8 billion the year before, according to data from Egypt’s Central Agency for Mobilisation and Statistics. 

This pattern has continued into 2024 with bilateral trade easing to $3 billion in the first half of the year, though this may move up a gear as cooperation increases.