27.09.2022

The economic crisis in Turkey will hit Egypt

Engulfed Turkey, the economic crisis culminated in may, when the Turkish Lira lost about 20% of its value (reaching the 4.25 to the dollar).

Egyptian, Arab and regional media are actively discussing the possible impact of the crisis on the free trade agreement between Turkey and the Arab countries, primarily Egypt.

Relations between Cairo and Ankara have deteriorated in 2013, after Egypt’s Armed forces ousted President Mohamed Morsi and his government, which was dominated by the movement “Muslim brotherhood”. Turkish President Recep Tayyip Erdogan described the overthrow of Morsi as a military coup and has granted political asylum to the leaders of the Brotherhood, which the new Egyptian authorities accused in the preparation and financing of terrorist acts.

The West is trying to destabilize the situation in the Balkans, Ankara is actively opposed. This was stated by the President of Turkey Recep Tayyip Erdogan at a press conference with the Serbian leader Aleksandar Vucic.

May 26, well-known Egyptian journalist Dharavi al-Hawari warned about the intention of fleeing to Turkey the leaders of “Muslim brotherhood” to protect the Turkish economy and thereby help Erdogan in the upcoming presidential elections.

According to this plan, they claim to want to flood the Egyptian market Turkish goods via company-importers that they own in Egypt, which will create a surplus of dollars and reduce the exchange rate of the Turkish Lira. Hawari sure that massive Turkish imports to Egypt will harm the Egyptian economy.

May 29, member of the parliamentary Committee of Egypt Maysa Atva together with other deputies sent a request to the Ministry of Finance to obtain information about the steps to prevent flooding the Egyptian market with cheap Turkish goods.

“The devaluation of the Turkish Lira is associated with a reduction in dollar liquidity in the Turkish market,- said the news portal Al Monitor Atva. Leaders and members of the “Muslim brotherhood” is not just talking about the Turkish crisis in their blogs and the desire to do everything possible to help Turkey to get more dollar liquidity from Arab countries, primarily Egypt, after covering Arab markets for Turkish goods. This, of course, extremely dangerous for the Egyptian economy”.

According to her government, Abdel Fattah al-Sisi must take immediate action to thwart this plan. High anti-dumping duties on Turkish products should be combined with the tightening of state control over the market.

“Supporters of Turkey in Egypt can import Turkish goods, which are not needed for the Egyptian market, in order to suck the dollars from Egypt and other Arab countries, and pour them in Turkey,” concludes Atva.

The Egyptian Union of Industrialists called on may 27 to increase requirements for the quality of coming to Egypt Turkish products.

“The weakening of the national currency, as in the case of Turkey, inflation accelerates and raises the prices of raw materials to most sectors of the economy – said the Deputy Chairman of the Union Mohammed Bodysuit. – Therefore, Turkey has to reduce the quality of their products to maintain price stability. In addition, a huge amount of Turkish goods at a lower price than Egyptian, could deal a severe blow to the Egyptian industry, Egyptian even if competing products higher quality”.

According to the head of the Egyptian center for economic studies of the lobster Muhanna, calling for the imposition of import duties and stricter requirements for the quality of Turkish imports violate free trade agreement between Egypt and Turkey. Any duties can be imposed only for a limited time. We should not forget that Turkey has not imposed similar duties on Egyptian goods, where the value of the Egyptian pound fell sharply against the dollar in 2015 and 2016.

The dynamics of the exchange rate of the Turkish Lira

“The introduction of anti-dumping duties on Turkish goods will enable Egyptian manufacturers to monopolize the market and set higher prices, – the representative of the General Federation of Egyptian chambers of Commerce of Bahjat Hasan. – It will cause harm to consumers. Something similar happened when the Egyptian government imposed anti-dumping duties on imports of iron and steel from Turkey in December 2017”.

Despite the demands on precautionary measures, analyst at the Center for political and strategic studies Yusri al-Abbawi does not expect that Egypt will take advantage of Turkey’s economic crisis to take revenge on the regime of Erdogan:

“The Egyptian government does not mix economic interests and political disagreements in the relations with Turkey. This is evidenced by the recent meeting of the Minister of trade and industry of Egypt Tarek of Kabila with Turkish investors, as well as repeated calls by Cairo to increase Turkish investments in Egypt.”

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