The handshakes between Egyptian President Abdel Fattah Al-Sisi and his Turkish counterpart Recep Tayyip Erdogan are becoming increasingly warm.
For ten long years the two men had rather cold relationship, it had become obvious within the international community that they could hardly tolerate the presence of each other.
A first tentative rapprochement took place in Qatar a year ago, on the sidelines of the Football World Cup; this was a brief but cordial handshake. In the two following meetings – first at the G20 summit in New Delhi in September and then at the Organisation of Islamic Cooperation summit in Riyadh a few weeks ago – it became clear that the two leaders were trying to leave their lukewarm bilateral relationship in the past.
For ten years it was almost impossible to break the ice between Turkey and Egypt. In 2013, al-Sisi overthrew Egypt’s democratically elected President Mohamed Mursi, in a coup. After the Arab Spring Mursi was elected into power, and was supported by hardline Islamists of the Muslim Brotherhood, and Erdogan sided with Mursi.
Erdogan called Egypt’s new strongman “putschist”, “murderer”, “tyrant” – and even “Pharaoh” – while adopting the symbolic greeting of the Muslim Brotherhood with the four raised fingers and the folded thumb. Cairo accused Erdogan of supporting the terrorist activity of the Muslim Brotherhood, as well as for offering shelter to Islamists. The interests of the two countries were also diametrically opposed in Libya, particularly with regard to the exploitation of natural gas deposits.
However, the ongoing economic crisis in Turkey has forced Erdogan to seek an opportunity for rapprochement. In 2023, for the first time in nine years, economic delegations from the two countries met in an attempt to revive bilateral trade relations. Turkish business leaders had been dissatisfied with the economic environment in their home country, as Erdogan’s erratic monetary policy of sticking to low interest rates has pushed inflation to unimaginable heights.
Official inflation in Turkey exceeds 61 per cent, energy costs remain high and the central bank’s mercurial policy does not make the situation any easier.
The policies devised by the current Finance Minister Mehmet Simsek and Central Bank Governor Hafize Gaye Ercan, promote a more “conventional” monetary policy and promise single-digit inflation rates by 2026.
Erdogan has not yet managed to convince the markets nor the Turkish business world. In their efforts to reduce production costs and limit uncertainty in exchange rate fluctuations, Turkish businesses are exploring the possibility of investing overseas. Egypt seems like an attractive option, especially as the visa requirement for Turkish citizens was abolished; labour costs, as well as overall production costs, are significantly lower in Egypt. Turkish investments have reached $2.5 billion and are estimated to exceed $3 billion in 2024.
Turkish businesses in Egypt employ 70,000 workers and an estimated one third of total production in the textile sector comes from Turkish subsidiaries. This is terrible news for the Turkish economy, as Turkey is not only missing out on crucial tax revenues but is also losing steam in the competition with its neighbours – and, more importantly, Greece.
With the Greek economy on the rise – and foreign investment towards the country increasing year-after-year – the fact that Turkish businesses are leaving Turkey for Egypt is welcomed by Greece’s regional economic positioning in the Eastern Mediterranean.
