VZCZCXYZ0008
RR RUEHWEB

DE RUEHEG #0456/01 0760827
ZNR UUUUU ZZH
R 170827Z MAR 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 1919
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS CAIRO 000456 
 
SIPDIS 
 
STATE FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON EPET EFIN EAGR ETRD ENRG PGOV EG
SUBJECT:  EGYPT'S ECONOMY:  WEEKLY PRESS ROUND-UP 
 
¶1.  The following is a summary of notable economic news stories as 
they appeared over the past week in the Egyptian press. 
 
REF:  CAIRO 209 
 
Energy Sector 
------------- 
¶2.  On March 5, Minister of Petroleum Sameh Fahmy spoke to the 
Canada-Egypt Business Council about the impact of the global 
economic crisis on the energy sector in Egypt.  He predicted that 
the larger oil companies would suffer more than mid-sized firms, and 
that there would be a slowdown in deep marine gas fields due to the 
higher cost involved in developing off-shore. According to Fahmy, 
global natural gas production is likely to slow down in 2009, but 
eventually prices will recover.  He also pointed out that current 
prices have eased the impact of Egypt's domestic energy subsidies on 
the GOE budget. 
 
¶3.  The cabinet formed a committee of government officials from 
ministries represented in the board of the Egyptian General 
Petroleum Corporation (EGPC) (reftel) and a number of external 
technical experts to determine the responsibilities of the proposed 
independent regulatory agency for oil and natural gas. The committee 
includes representatives of the petroleum, finance, trade, 
investment and economic development ministries. The new regulator is 
expected to oversee all elements of the related to oil and natural 
gas business. It reportedly will also facilitate liberalization of 
transport and distribution of oil and gas. It will also be 
responsible for avoiding any monopoly in the natural gas and oil 
sector.  It is not yet clear if the regulator will report to the 
Prime Minister or whether Minister Fahmy will maintain some 
oversight role. (Al Masry Al Youm, March 5) 
 
Water Resources 
--------------- 
¶4.  On March 11, the government announced the appointment of Mohamed 
Nasr El Din Allam as Minister of Water Resources and Irrigation, 
replacing Mahmoud Abu Zeid.  Initial press reports were that Abu 
Zeid was resigning for health reasons.  Now the media is speculating 
that President Mubarak was annoyed at Abu Zeid's failure to respond 
to criticism of GOE water usage policies by the Ethiopian delegation 
during recent meetings of the Eastern Nile Council of Ministers, 
under the Nile Basin Initiative. 
 
¶5.  Bio note:  The newly-appointed Minister of Water Resources and 
Irrigation, Mohamed Nasr El Din Allam, has until now been the 
chairman of the Irrigation and Hydraulics Engineering Department at 
Cairo University.  He received his PhD in the early 1980s from the 
Massachusetts Institute of Technology (MIT), and worked for USAID in 
Egypt from 1990-1993.  He is the first Minister of Water Resources 
and Irrigation to come from academia, rather than the ministry or 
the Water Research Center.  (Al Masry Al Youm, March 12) 
 
Cotton 
------ 
¶6.  Press reports indicate that Egypt's cotton production fell fifty 
percent this past year as the area of land under cotton cultivation 
went from 583,000 acres in the 2007/2008 season to 313,000 acres in 
2008/2009.  The drop in production has resulted in significant price 
increases for domestically grown cotton.  Several business groups in 
the cotton industry are calling on the government to subsidize 
Egyptian cotton at the rate of LE150 (US$ 27) per kantar (equivalent 
to 157 kg of seed cotton) within the framework of the GOE's 
announced plan to subsidize cotton and impose a temporary ban on 
imports.  The world demand for Egyptian cotton is expected to 
decline by approximately 6% in the 2008/2009 season compared to the 
previous one.  (Al Masry Al Youm, March 9) 
 
¶7.  The textile industry, however, is complaining that cotton prices 
are too high.  The industry-sponsored Spinning and Weaving Council 
has asked Minister of Agriculture Abaza to allow cotton imports from 
East Asia, arguing that Asian cotton was cheaper than Egyptian 
cotton.  Press reports indicated that government-owned factories are 
feeling the effects of the recession, and that the Egyptian textile 
producers need access to cheaper Asian cotton to stay competitive. 
The industry expects textile exports will fall this year.  (Al Mal, 
March 10) 
 
Egypt Criticized for New Textile Duties 
--------------------------------------- 
¶8.  According to media reports, the Indian government has asked 
Egypt to remove additional duties recently imposed by Egypt on 
Indian cotton textile imports, or pay suitable compensation.  One 
senior Egyptian government official told reporters that if India and 
Egypt are not able to reach agreement on the new duties, India could 
take the case to the WTO.  With the global downturn reducing the 
demand for most goods, countries are resorting to various 
protectionist measures to check imports. Egypt recently raised 
duties on cotton textiles from India to 30%, compared to the 
previous rate of 15%.   (Daily News, March () 
 
Real Estate Tax Delayed 
----------------------- 
¶9.  Minister of Finance Boutros Ghali has announced that due to the 
continuing impact of the economic crisis, implementation of real 
estate tax reforms will be delayed until January 2010.  In the 
meantime, he said, the government does not plan any new taxes.  (Al 
Ahram, March 9) 
SCOBEY 
 
 
Rashid: No Anti-Dumping Fee on Imported Steel 
--------------------------------------------- 
Despite press reports of industry pressure, Minister of Trade and 
Industry Rashid said the government would not impose anti-dumping 
fees on imported steel, mainly from Turkey.  Rashid described the 
current market situation as "honest competition" between local and 
imported steel, and said that lower steel prices would benefit 
consumers.  He denied reports that Egyptian manufacturers had 
officially requested the imposition of anti-dumping fees.  (Al Masry 
Al Youm, March 6). 
Scobey