Turkish President Recep Tayyip Erdogan has made overtures to Egypt. Reuters
Turkish President Recep Tayyip Erdogan has made overtures to Egypt. Reuters
Turkish President Recep Tayyip Erdogan has made overtures to Egypt. Reuters
Turkish President Recep Tayyip Erdogan has made overtures to Egypt. Reuters

Egypt and Turkey resume talks to ease fraught relations


Hamza Hendawi
  • English
  • Arabic

Egypt and Turkey on Tuesday resumed negotiations to normalise ties in a relationship that has been strained for almost a decade over many bilateral and regional issues.

Four months ago, the two countries began exploratory talks in Cairo to mend relations after goodwill gestures from Turkey.

The negotiations with Egypt, while still at an early stage and led only by deputy foreign ministers, are part of an energetic diplomatic drive by Ankara to improve frayed ties with Arab heavyweights such as the UAE and Saudi Arabia.

The Turkish effort is motivated largely by Ankara’s wish not to lose the goodwill of some of its largest trade partners and to secure a place in plans under way to turn the Eastern Mediterranean into a global energy hub after the discovery of massive natural gas reserves.

The energy plans are led by Egypt, and Turkey’s arch-rivals Greece and Cyprus. They also include Israel, Jordan, Italy and the Palestinians.

“Our friends at the ministry are meeting [Egyptian officials]. If we decide together after the meetings, we will take the necessary mutual steps to appoint an ambassador,” Turkish Foreign Minister Mevlut Cavusoglu told broadcaster NTV on Tuesday.

Egypt and Nato member Turkey have not shared ambassadors since 2013, when relations soured over the removal of Mohamed Morsi of the now-banned Muslim Brotherhood by the military, then led by head of the army and future president Abdel Fattah El Sisi.

Egyptian President Abdel Fattah El Sisi. Reuters
Egyptian President Abdel Fattah El Sisi. Reuters

Egypt and Turkey have also been at loggerheads over Libya, where the two backed rival factions and what Cairo sees as Ankara’s menacing support to extremist groups and military presence across much of the Middle East.

The Turkish minister also held out the possibility of striking a maritime deal with Egypt in the Eastern Mediterranean, similar to the one Ankara struck with the government in Tripoli, the fractured Libyan capital, about two years ago.

That deal led to renewed tensions between Turkey and neighbouring Greece and Cyprus over energy exploration in the region. Egypt also rejected the deal.

The emergence of an anti-Turkey coalition in the East Mediterranean was a wake-up call that the deterioration in Ankara’s relations with all states in the region was dangerous
Samer Shehata

Mr Cavusoglu also proposed a summit of East Mediterranean nations to reconcile disputes over maritime borders and the exploitation of the area’s energy riches.

“Turkey and Egypt, along with other Middle Eastern states are modifying their positions as a result of changing dynamics and opportunities in the region, such as the arrival of the Biden administration,” said Samer Shehata, a Middle East expert at the University of Oklahoma.

“For Turkey … what appears to be the emergence of an anti-Turkey coalition in the East Mediterranean was a wake-up call that the deterioration in Ankara’s relations with all states in the region was dangerous.”

Mr Shehata cited as contributing factors to the growing potential for improved Cairo-Ankara relations the thaw in ties between Egypt and its Gulf Arab allies and Qatar. He listed the continuing international mediation effort to end the war in Libya, where huge business opportunities await both nations if peace is restored.

“There’s also President Recep [Tayyip] Erdogan’s realisation that the El Sisi regime was not going anywhere and that continued ideological or principled opposition to Cairo’s new rulers would bring little benefit,” he said.

Egyptian security officials said Turkey has met some conditions set by Cairo for relations to be normalised but much remains to be done by the Turkish government.

Turkey has already ordered a halt to years of scathing criticism of Mr El Sisi and his government by Turkey-based TV networks run or inspired by the Muslim Brotherhood, which has been declared a terrorist organisation in Egypt.

Egypt reciprocated by stopping personal attacks on Mr Erdogan in the pro-government media.

Ankara has also moved to restrict the Brotherhood’s political activity on Turkish soil.

More recently, said the officials, Turkish authorities slapped travel bans on Brotherhood members wanted by Egypt in connection with terror attacks, including the assassination in 2015 of chief prosecutor Hisham Barakat and senior police and army officers.

“These are individuals who planned and ordered assassinations,” said one official. “They are about 15. Some of them tried to flee Turkey when relations began to improve, but were stopped by authorities.”

Nicos Anastasiades, President of Cyprus. AP
Nicos Anastasiades, President of Cyprus. AP

The security officials, who spoke on condition of anonymity, said senior Egyptian intelligence operatives were among the Egyptian delegation in the talks with Turkish officials. The two-day talks end on Wednesday.

The potential for improved relations between Egypt and Turkey comes at a time when Cairo’s ties with Greece and Cyprus have deepened.

Cyprus is a Greek-majority East Mediterranean island invaded by Turkey in 1974, ostensibly to protect the island’s Turkish minority after a coup by radical Greek Cypriots seeking union with Greece, which was then ruled by a right-wing junta.

Turkey occupies a third of Cyprus to this day.

But the relative thaw in Cairo’s relations with Ankara appears to have had no impact on Egypt’s close ties with Greece and Cyprus, which include frequent joint war games and co-operation in a wide variety of fields.

Greek Cypriot President Nicos Anastasiades was in Cairo this week for talks with Mr El Sisi. The two leaders agreed to expedite work on an underwater pipeline to bring Cypriot natural gas to Egypt to be liquefied and exported to Europe.

Greek Prime Minister Kyriakos Mitsotakis was in Egypt in June, when he and Mr El Sisi agreed to forge closer relations in the fields of energy, trade and tourism.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: September 07, 2021, 3:24 PM