Egypt seeks closer US economic ties but Gaza tensions linger

President El Sisi proposes establishment of a US industrial zone in the Suez Canal Economic Zone at Cairo forum

Panellists discuss economic opportunities and bilateral trade at the US-Egypt Policy Leaders Forum in Cairo. Photo: Egyptian Cabinet Media Centre

Egypt is seeking to build closer economic ties with the US even as simmering tensions over the Gaza war continues between the two countries.

The two-day US-Egypt Policy Leaders Forum in Cairo brought together American and Egyptian business leaders who discussed the possibility of bilateral deals and economic opportunities.

But while the forum sends a strong signal of economic co-operation, it is entirely detached from the political discord over Gaza, said Karim El Omda, an economic analyst.

“The discord in relations between both sides over Gaza is quite evident at the summit,” Mr El Omda told The National on Monday, highlighting the absence of key figures involved in Gaza-related negotiations.

“Officially, the forum is being held to boost relations, but those relations are framed through strictly economic terms this time,” he said.

Egyptian President Abdel Fattah El Sisi did not attend the sessions, nor did the intelligence chief or a representative of the military, two of the state actors most-involved in Gaza negotiations.

Mr El Sisi did host a group of US chief executives for closed-door talks on Monday and a communique issued by his spokesman emphasised his readiness to co-operate with American businesses across various economic sectors.

An aerial view of the new extension of the Suez Canal, Egypt. EPA

The President also proposed the establishment of a US industrial zone in the Suez Canal Economic Zone and highlighted Egypt's strategic location as a gateway to African, Arab and European markets.

At the event, Prime Minister Mostafa Madbouly, who led the Egyptian delegation, also emphasised the importance of private-sector growth.

Recent reforms, such as the State Ownership Document, are aimed at reducing the state’s role and boosting foreign investment, he said in his opening speech.

Meanwhile, the US side featured a delegation of 55 senior executives representing 42 major American companies including Kraft Heinz, IBM and General Motors.

“Egypt’s strategic location, diversified economy and continued push for digital transformation make it a prime partner for US investment,” Suzanne Clark, president and chief executive of the US Chamber of Commerce, said at the event.

The forum featured several outcomes aimed at boosting bilateral trade and investment. Among the most significant was a decision by Mr Madbouly to reduce fees required by importers of US meat products to obtain halal certifications from the government.

Authorities have also decided to “ease restrictions” on the import of fully-assembled American cars into the Egyptian market.

Both measures were praised by the US ambassador to Egypt, Herro Mustafa Garg. “The government has taken bold steps to remove long-standing, non-tariff market barriers to American exports," she said. "This represents a significant win for both our countries, for our companies and for our people."

A “historic customs deal” between Cairo and Washington was anticipated in the near future, she said in her speech, but did not share any further details.

Deadlock on Gaza

The forum’s focus on economics, however, underscores the widening gap in US-Egypt political relations.

Tensions have been simmering since the start of US President Donald Trump’s second term, which began with the announcement of a controversial plan to annex Gaza and relocate Palestinians to Egypt and Jordan – a proposal both countries rejected.

The war in Gaza, which erupted on October 7, 2023, has since claimed nearly 54,000 lives, according to Gaza Health Ministry figures.

An Israeli aid blockade imposed in March exacerbated an already catastrophic situation, causing widespread starvation over the past two months that has been repeatedly decried by international organisations.

Although aid shipments resumed last week, the UN has warned they fall far short of humanitarian needs. Images of starving Gazans storming aid deliveries last week have sparked global outrage, with the UN calling this phase of the war the “cruellest yet”.

Egypt has been a vocal critic of the US’s handling of the Gaza conflict, particularly its perceived bias towards Israel.

Mr Trump’s later demand for US ships to pass through Egypt’s Suez Canal free of charge further alienated Cairo, which has repeatedly called for fairer US mediation in the Middle East.

Mr El Omda said the agenda and attendees at the two-day event in Cairo provided a strong indication that the forum separated the political from the economic.

“The political issues which have soured Egypt’s relations with the US since Trump came to power have not yet been resolved," he said.

Mr Trump’s recent Gulf tour, which many hoped would help ease tensions, failed to address Egypt’s concerns over Washington’s perceived bias towards Israel.

“That is not surprising since GCC [Gulf Co-operation Council] countries have different priorities with regards to the war in Gaza than Egypt, which shares borders with the enclave and has seen its economy severely impacted by the war,” Mr El Omda added.

Economic priorities

Looking ahead, Egyptian officials have made it clear that economic recovery remains a top priority.

More than 1,800 US companies operate in Egypt, with total investments exceeding $47 billion. Bilateral trade between the two nations reached $8.6 billion in 2024, making Egypt the US’s fifth-largest trading partner in the region.

“Egypt will not allow political discord to derail its economy at the present time, especially as the country’s external debts mount and its economic position looks more precarious,” Mr El Omda said.

Meanwhile, Mr Trump’s approach to the region, often characterised by grand promises (or threats) that are later scaled back, suggests the US is unwilling to sacrifice its economic ties with Egypt over political disagreements, he added.