Saturday 24 June 2017

Saudi Arabia to restart Egypt oil shipments

Saudi Arabia to restart Egypt oil shipments
(Financial Times 03/17/17)
Saudi Arabia to restart Egypt oil shipments

Crucial deliveries to resume in sign frosty relations are thawing.

Saudi Arabia is to resume crucial oil exports to Egypt in a sign that relations between the two regional heavyweights are thawing, six months after the kingdom abruptly halted the shipments.

The Egyptian Petroleum Ministry said it expected deliveries of oil products to restart by the end of this month or early April, adding that it was working with Saudi Aramco, the kingdom’s state oil company, on a timetable.

Saudi Arabia agreed in April to provide Egypt with 700,000 tonnes of oil products every month for five years as part of wider aid package to the north African state, which is struggling with a sharp economic downturn. The shipments were suspended in October with little explanation from either Cairo or Riyadh.

But the normally deferential press in both countries carried angry exchanges over the issue, signalling a behind-the-scenes crisis triggered by divisions over the Syrian conflict and delays in the handover of two Red Sea islands to Saudi Arabia.

Analysts said the election of Donald Trump in the US, who considers Egypt and Saudi Arabia as important allies in his anti-Isis strategy, had focused minds on a rapprochement. Saudi Arabia is also keen to rally Sunni Arab support in its efforts to counter Iran’s influence across the Middle East, and believes it can benefit from reasserting a strong axis with Cairo, analysts said.

“Because of the Trump factor and the new Saudi strategy to counter Iran, we are back into a ‘forgive and forget policy,’” said Abdullah Alshammri, a former Saudi diplomat. “Riyadh’s policy towards Egypt can be described as emergency diplomacy — it is time to work only against Iran, and we need Cairo.”

Ziad Akl, an analyst at Cairo’s Al-Ahram Center for Political and Strategic Studies, said neither country could afford a prolonged rift.

“The magnitude of the interests at stake between Egypt and Saudi Arabia does not allow it,” he said. “Also there is US, Russian and European interest vested in the Saudi-Egyptian alliance. Since the 1980s the two countries have been part of any regional strategic move by the other.”

Riyadh has poured billions of dollars into propping up Egypt’s economy since mid-2013 when Abdel Fattah al-Sisi, the president, ousted his elected Islamist predecessor in a popularly backed coup.

But relations soured over the Red Sea islands and differences on regional policy, particularly in regards to Syrian President Bashar al-Assad.

Mr Sisi has publicly expressed support for the Syrian regime and — more concerning for Riyadh — voted in favour of a Russian draft resolution on Syria at the UN Security Council in October.

Saudi Arabia supports rebels fighting to oust Mr Assad, and worries that Iran is using the conflict to strengthen its influence across the region. Russia and Iran are the two main foreign backers of the Syrian regime.

Cairo’s announcement last April that the two Red Sea islands of Tiran and Sanafir would be handed over to Saudi Arabia under a secretly negotiated border agreement stoked anger in Egypt.

The move came as a shock to many Egyptians and led to the largest public protest against Mr Sisi since he came to power. Activists mounted legal challenges and Egyptian courts twice ruled to nullify the agreement.

However, Ali Abdel Al, the speaker of the Egyptian parliament, recently said the assembly would “carry out its constitutional prerogatives” in relation to the agreement. The comments stirred speculation that the agreement might be put to a parliamentary vote to ratify in a bid to circumvent the court rulings.

That might help ease tensions with Saudi Arabia, but ignoring the courts would risk another domestic backlash against Mr Sisi’s government.

“It would give rise to popular anger and create a structural crisis within the Egyptian political system,” said Mr Akl. “I think they will try to put it off as much as possible.”

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