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No more ‘free’ Saudi money for Egypt: Saudi businessman – Corruption in Egypt wheat sector widespread — Interior Ministry official

CAIRO, April 8, (RTRS): Saudi Arabia’s financial support for strategic ally Egypt will no longer involve “free money” and will increasingly take the form of loans that provide returns to help it grapple with low oil prices, a Saudi businessman familiar with the matter said.

“This is a change in strategy. Return on investment is important to Saudi Arabia as it diversifies sources of revenue,” the businessman told Reuters on Friday during what has been described as a “historic” visit to Cairo by Saudi King Salman.

Saudi Arabia, the United Arab Emirates and Kuwait showered Egypt with billions of dollars after then-military chief Abdel Fattah el-Sisi toppled President Mohamed Morsi of the Muslim Brotherhood in 2013 after mass protests against his rule.

But low oil prices and differences over regional issues have called into question whether such strong support is sustainable.

Egypt is struggling to revive an economy hit by years of political upheaval since the 2011 uprising that ousted President Hosni Mubarak, as well as an Islamist insurgency based in the Sinai Peninsula.

The more measured Saudi approach could increase pressure on Sisi to deliver on promises of an economic turnaround and job creation in the most populous Arab nation through infrastructure mega-projects.

“Saudi Arabia will be making investments and soft loans. No more free money,” said the businessman.

Gulf monarchies applauded Sisi after he seized power in 2013, removing the Muslim Brotherhood — seen as an existential threat to their wealthy nations — and mounting the fiercest crackdown on dissent in Egypt’s modern history.

Sisi went on to become elected president on promises of stability but cracks are beginning to appear in what was once the cult-like adulation he enjoyed among many Egyptians, with TV talk show hosts increasingly critical of government officials.

The Gulf Arab allies have grown increasingly disillusioned at what they see as Sisi’s inability to address entrenched corruption and inefficiency in the economy, and at Cairo’s reduced role on the regional stage.

Riyadh’s new approach does not mean the Gulf States will abandon Egypt financially or politically.

With Iraq, Syria and Yemen immersed in civil war, and Saudi Arabia preoccupied by its region-wide rivalry with Iran, Riyadh is determined to stop the Egyptian state from failing. It will maintain some aid despite its own tighter budgets from falling global oil prices, analysts say.

After meeting Sisi on Friday, King Salman announced that a bridge connecting Egypt and Saudi Arabia would be built across the Red Sea. No details were given.

Saudi Arabia is expected to sign a $20 billion deal to finance Egypt’s oil needs for the next five years and a $1.5 billion deal to develop its Sinai region, two Egyptian government sources told Reuters.

Saudi businessmen are investing $4 billion in projects including the Suez Canal, energy and agriculture, and have already deposited 10 percent of that sum in Egyptian banks, the deputy head of the Saudi-Egyptian Business Council said this week.


CAIRO: An Egyptian Interior Ministry official has warned that rampant corruption in the country’s strategic wheat sector must be tackled, a local newspaper reported on Friday.

“We discovered a hacking of the system. We discovered huge sums,” Al-Watan newspaper quoted Major General Hosni Zaki, an assistant to the Interior Minister and head of an intelligence unit that investigates supplies of commodities, as saying.

“If the crisis is not solved, leakage of subsidies will continue.”

In March, Supply Minister Khaled Hanafi told Reuters the world’s top wheat buyer was close to eradicating graft in the industry, defending the country’s management of the system against criticism that it is vulnerable to corruption.

In 2014, President Abdel Fattah el-Sisi’s government rolled out a system of smart cards designed to stop unscrupulous bakeries selling government-subsidized flour on the black market.

Zaki said that from January to April there were 210 cases of corruption due to hacking of the smart card programme, under which each family is provided with a plastic card enabling it to buy five small flat loaves of bread per family member a day. He put the cost of that graft at 22.7 million Egyptian pounds ($2.56 million), and said it involved 2,017 smart cards.

“Unfortunately the punishment is very weak and is not proportionate to the size of the violations,” said Zaki, referring to a fine of 500 Egyptian pounds. “We must strengthen the punishment.”

He said workers in the company that runs the smart card system, traders and government employees had been arrested under a crackdown on corruption. Zaki did not elaborate.

The Interior Ministry spokesman was not available for immediate comment.

Challenging the Reuters story, Supply Minister Hanafi repeated his assertions that the system has saved millions of dollars in bread subsidies, reducing imports, and ended shortages that once prompted long queues outside bakeries across the country.

A Reuters spokeswoman said the news agency stood by its story following his comments.

Wheat has become a big issue in recent months because the stability of Egypt’s supply chain has been threatened by an agricultural quarantine official’s zero-tolerance policy on ergot, a common fungus.

The stakes are high for Sisi, who has promised to end graft, including irregularities in the wheat industry. Wheat shortages have sparked riots in the past. When Egyptians revolted against autocrat Hosni Mubarak in 2011 one of their most potent chants was “Bread, freedom and social justice”.

The bread subsidy programme, which feeds tens of millions of poor Egyptians, is central to avoiding unrest.

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