Egypt-Qatar Relations: Challenges and Prospects for Cooperation

The Egyptian-Qatari relations have witnessed a positive development reflecting the desire of the two countries to improve inter-state relations, overcome past differences and launch new relations of great strength and partnership. This positive development was not surprising but took time to solve problems and reach common ground in a way that would serve the interests of the two countries and give strength to their bilateral relations.

Serious steps towards rapprochement

The accelerating regional and international changes have pushed to advance the course of relations between the two countries at the political and economic levels, which has taken a positive turn in early 2021, for the two countries to overcome the political dispute that escalated in 2013, and joint cooperation and the promotion of interests became imperative.

With the escalation of the Russian-Ukrainian conflict, the real returns on Arab investments in Western countries witnessed a noticeable decline. Hence, Egypt has become one of the best investment opportunities in the region and the world, especially as it enjoys a geographical location that represents a main gateway to African and European markets, which would establish a new Arab stage of cooperation.

In this context, the Strategic Forum for Public Policies and Development Studies “Draya” issues this report to shed light on the reality of the Egyptian-Qatari relations politically and economically, as well as exploring prospects for joint cooperation between the two countries as follows:

First: Indications of political convergence and the pivotal issues of agreement

Second: The reality of Egyptian-Qatari cooperation

1- Trade exchange between the two countries

2- Qatari investment in Egypt

Third Prospects for joint cooperation

1-   Expected Qatari investments in Egypt

2-   Major challenges to joint cooperation

First: Political rapprochement on pivotal issues

The Al-Ulla summit agreement, which was held in the Kingdom of Saudi Arabia on January 5, 2021 during the 41 Gulf summit meetings, reflected a great development in the reality of Arab-Qatari relations in general and Egyptian-Qatari relations in particular, after diplomatic relations between the four Arab countries (Egypt – Saudi Arabia – UAE – Kuwait-Bahrain) were suspended) with Qatar as a result of disagreement over many core issues.

Egypt and Qatar inaugurated a new phase of inter-relations during which the two countries sought to activate the level of communication. A Qatari delegation visited Cairo in March 2021, followed by the visit of Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani in May of the same year to deliver a written message from the Emir of Qatar Tamim bin Hamad Al Thani to President Abdel Fattah Al-Sisi, expressing his country’s aspiration to strengthen relations with the Egyptian state.

That visit was followed by about 17 visits and meetings between the two sides, which culminated in the visit of Emir Tamim to Egypt on June 24, 2022, and the visit of President Sisi to Qatar on September 13, 2022. This positive change in the Egyptian-Qatari relations is a good indicator that establishes more economic relations between the two countries and provides cooperative horizons and long-term investment frameworks.

The main themes and issues under agreement now are as follows:

• Ceasing all contacts with the political opposition in Saudi Arabia, the UAE, Egypt and Bahrain
• Stop interfering in the internal affairs of sovereign countries and naturalizing wanted citizens from Saudi Arabia, the UAE, Egypt and Bahrain
• Reducing trade and intelligence cooperation with Iran in order to avoid interference in the internal affairs of Arab countries on the one hand, and to ward off direct and indirect US sanctions on Qatari companies operating in Arab countries on the other hand.
• Reducing military cooperation between Doha and Ankara, especially with regard to building a Turkish military base on Qatari territory, which represents a major dispute over Turkey’s incursion into the internal affairs of many Arab countries, especially Syria, Libya and the Kurdistan Region of Iraq.

– Qatar’s adoption of the designation of extremist groups (such as the Muslim Brotherhood, ISIS, Al-Qaeda and Fateh al-Sham “formerly known as Jabhat al-Nusra”) within the list of terrorism announced by Saudi Arabia, Bahrain, the UAE and Egypt.

• Stop all means of support and funding for individuals, groups or organizations that have been designated as terrorist by the four Arab countries, the United States and other countries.
• Freezing the assets of terrorist figures, fugitives, and wanted individuals, while providing the required information about their residence, movements and money.

– Deepening Qatari-Arab cooperation through the involvement of financial and development institutions in the financial support granted to Arab countries that have suffered loss of life and financial losses as a result of Qatar’s policies in recent years.

Second: The reality of Egyptian-Qatari cooperation

1- Trade exchange between the two countries:

The volume of trade exchange between the two countries amounted to about $44.8 million during 2021, compared to about $25.4 million recorded in 2020, an increase of 76.4%.

As for the remittances of Egyptians working in Qatar, the data showed that they rose to $1.34 billion during the fiscal year 2019/2020, an increase of 4.3% over the previous fiscal year, while the remittances of Qataris working in Egypt amounted to $2.8 million in 2019/2020, compared to 4.9 million dollars in 2018/2019, down 43.5%.

2- Qatari investment in Egypt:

Qatar’s long-term and short-term investments have recently risen, with short-term indirect investments at the end of March 2022 amounting to about $8 billion in deposits with the Egyptian Bank, estimated at $5 billion, and stock market flows at about $3 billion.

With regard to long-term investments, they exceeded $10.2 billion and are expected to rise to about $20 billion by the end of 2022, compared to $673.3 million in 2020.

It is worth noting the diversity of Qatari investments in Egypt in many different economic sectors, especially banks, real estate and the energy sector. The most prominent of these investments are Qatar National Bank Al Ahli Egypt (QNB) and Al Diar Real Estate Company As well as the contribution of Qatar Energy Company through the Arab Refining Company with investments in the Egyptian Refining Company project.

Third: Prospects for joint cooperation

1- The expected Qatari investments in Egypt:

According to official data, a memorandum of understanding was signed between the Qatar Investment Authority and Egypt’s Sovereign Fund for Investment and Development, a memorandum of understanding on cooperation in the field of ports, and a memorandum of understanding for cooperation in the fields of social affairs.

Qatar announced its desire to invest $4.5 billion in Egypt, through the signing of Qatar Energy Company with ExxonMobil, an agreement for Qatar to acquire 40% of its stake in an exploration field in the Mediterranean off the Egyptian coast.

In light of the trend towards strengthening economic cooperation between Egypt and Qatar, the most important sectors of interest to both sides can be explored, as follows:

Arab investments indicate the possibility of enhancing cooperation between Arab parties to serve common interests through the sovereign funds of the Gulf States and the Egyptian sovereign fund. The sectors of energy, infrastructure, agriculture, joint manufacturing and tourism are the most important sectors of interest among all parties.

There are several indicators confirming  Qatari interest in the energy, maritime transport and ports sectors in Egypt, as Doha seeks in the coming period to direct large investments in these sectors in particular.

2-The most important challenges to joint cooperation

The data of the current scene indicates the involvement of Qatari foreign policy during the last period in destabilizing the internal stability of many Arab countries, which requires exerting more effort and Qatari cooperation to bridge the rift with these countries. Perhaps the most prominent challenges are the following:

– Extremist groups, especially the Muslim Brotherhood, have penetrated the Qatari state for decades, stretching from fifties of the last century

– Qatar’s commitments with Turkey and Iran  during the last period, perhaps the most important of which is the establishment of a Turkish military base on Qatari territory.

• – Extension of Iranian influence on the formulation of Qatari policies and influence on the trends of foreign investments in Qatar, especially Egypt and Jordan.

– Dispersing Arab efforts in ethnic and ideological conflicts without reaching an agreement and joint multilateral cooperation with international bodies that would enhance the Arab role in international politics.

-The absence of complete coordination on many important files, such as the Libyan file and the Sudanese file, may open the way for points of contention in the future.

The state of international polarization and the economic policy turmoil of the European countries and the G7 countries enhance opportunities for joint cooperation in the Arab region in particular and the Middle East and North Africa in general, as well as provide an opportunity to consolidate long-term cooperation for sovereign investment funds in the region and Southeast Asia.

The Egyptian-Qatari rapprochement on the one hand and the Qatari-Arab rapprochement on the other hand remains within the framework of the agreement on the features of the unified Arab policy towards international issues, and this cooperation is not limited only to the economic aspect as is rumored in many media platforms.