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UNCLAS CAIRO 001020 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD ENRG PGOV EG
SUBJECT:  EGYPT'S ECONOMY:  JUNE 4 PRESS ROUND-UP 
 
¶1. (U) The following are notable economic news stories that appeared 
over the past two weeks in the Egyptian press: 
 
---------------- 
Telecom- MobiNil 
---------------- 
 
¶2.  The Egyptian Capital Market Authority (CMA) blocked France 
Telecom's (FT) bid to buy outstanding shares of mobile phone service 
provider Mobinil, saying the purchase offer was unfair to 
shareholders.  This is the second time the CMA objected to the 
company's offer in a drawn-out dispute between FT and Orascom 
Telecom over Mobinil.   Reports indicate FT submitted a purchase 
offer for all of the Egyptian Company for Mobile Services (ECMS), 
Mobinil's operator, for about LE237 (USD42) per share, higher than 
their April offer of LE187 (USD33).  An arbitration court ruled last 
March that FT would submit a purchase offer for all of ECMS at a 
price of LE273.62 per share (USD49). (All newspapers, 5.28.2009) 
 
--------------------------------------- 
Rationing Water Usage/ Rice Cultivation 
--------------------------------------- 
 
¶3.  Prime Minister Ahmed Nazif stated at a May 26 ministerial 
meeting that Egypt is working on policies related to rationing water 
use and maintaining the ban on rice exports. In the meeting, 
Minister of Agriculture Amin Abaza and Minister of Irrigation 
Mohamed Nasreddin Allam discussed strategies for reducing water 
quotas for cultivation, especially for water intensive crops such as 
rice, bananas and sugar cane.  By banning rice exports, more water 
is available for other crops.  Cabinet spokesman Magdi Radi said 
Nazif supports a continue ban, and urged both ministries to 
establish which areas are suitable for rice cultivation.  (Ahram, 
5.27.2009) 
 
------------------------------- 
Water and Nile Basin Initiative 
------------------------------- 
 
¶4.  President Mubarak met with the Ministers of Irrigation, 
Agriculture, and Trade on the status of the Nile Basin Initiative 
(NBI).  This comes on the heels of Egypt's refusal to sign the Nile 
Cooperative Framework Agreement (CFA) which affects the Nile water 
usage under the NBI.  Afterwards, Minister of Irrigation Allam said 
Ethiopia took a positive position vis-`-vis the GOE regarding the 
discussion of the CFA.  Nazif will visit Ethiopia in June to expand 
bilateral cooperation in the fields of agriculture, water 
management, electricity and trade. (Ahram, 5.26.2009) 
 
-------------- 
Cotton Exports 
-------------- 
 
¶5.  According to the Cotton Testing and Arbitration Committee, Egypt 
exported USD43.7 million worth of raw cotton to 20 countries during 
the 2008-2009 season. More than 60% was long staple, according to 
the Italian Trade Commission (ICE) office in Cairo.  Egypt exported 
most of its cotton (90%) to a dozen private companies in Qatar, 
China, Turkey and India. (ANSAmed, 5.22.2009) 
 
--- 
Oil 
--- 
 
¶6.  Minister of Petroleum Sameh Fahmi, visited Iraq and signed a 
cooperation agreement related to exploration, refineries and other 
downstream gas operations with his Iraqi counterpart, Minister 
Hussien El Shaharstani.  The agreement allows Egyptian companies to 
participate in oil and gas exploration/development agreements either 
by direct negotiations or through public tenders. (Ahram, 
5.21.2009) 
 
--------------- 
Monetary Policy 
--------------- 
 
¶7.  The Central Bank of Egypt's (CBE) Monetary Policy Committee 
(MPC) agreed on May 14 to cut overnight deposit rates by 50 bps to 
9.5% per annum and overnight lending rates by 100 bps to 11% per 
annum. The discount rate was also cut by 50 bps to 9.5% per annum. 
(CBE press release, 05/14/2009) 
 
---------- 
Investment 
---------- 
 
¶8.  The Industrial Development Authority will implement several 
reforms designed to stimulate investment starting in June 2009. 
They include reducing the waiting period for obtaining a license for 
factory construction to 15 days from the current six months; a grace 
period of four months for those without letters of guarantee for 
projects established over three years; faster renewals by the 
industrial registrar--within 24 hours for a six month validation; 
and the provision of final approvals for energy-intensive projects 
within one week. (Alam Al Youm, Akhbar, 05/20/2009) 
SCOBEY