Egypt and Saudi Arabia ink $22b investment fund

Leaders of 2 nations sign string of agreements and settle longstanding maritime dispute

CAIRO • Egyptian President Abdel Fattah al-Sisi and Saudi King Salman agreed to set up a US$16 billion (S$22 billion) investment fund and settled a longstanding maritime dispute as the monarch continued his rare visit to the country.

A day after King Salman announced a plan to build a bridge over the Red Sea to Egypt, the heads of state met at the historic Abdeen Palace in Cairo on Saturday to oversee the inking of a string of agreements Egypt hopes will help boost its battered economy.

In one of the most high-profile announcements, Cairo said it had agreed to demarcate its maritime borders with Saudi Arabia, officially placing two islands in the Strait of Tiran in Saudi territory.

The 80-year-old Saudi monarch's visit to Egypt has been seen as a clear show of support for Mr Sisi, the former military chief who toppled his Islamist predecessor Mohamed Morsi in 2013.

Since touching down on Thursday, King Salman and his delegation have announced a slew of investments in Egypt. A live Egyptian state television broadcast on Saturday showed an official announcing the latest agreements, signed by a representative of each country.

The two nations agreed "to set up a Saudi-Egyptian investment fund with a capital of 60 billion Saudi riyals (S$22 billion)," the announcer said, giving no further details. More than a dozen other accords, including a memorandum of understanding to set up an industrial zone in Egypt, were also announced.

Saudi Arabia has been a key backer of Mr Sisi since the overthrow of Mr Morsi, whose Muslim Brotherhood movement was viewed by Riyadh with suspicion. It has since pumped billions of dollars in aid and investment into Egypt.

Egyptian officials and media have heaped accolades on King Salman, with state television welcoming him to what it called his "second country" - a country Riyadh views as a cornerstone in its ambitions to be a regional leader against Iran.

But the agreement announced by the Cabinet on Saturday to settle the dispute over the islands of Tiran and Sanafir provoked an immediate backlash in Egypt, where thousands tweeted a hashtag accusing Mr Sisi of selling the islands.

Earlier on Saturday, King Salman paid a visit to the prestigious Al-Azhar mosque. He was due to address Parliament yesterday and receive an honorary doctorate from Cairo University today.

On Friday, both leaders lavished praise on each other's countries and their relationship.

"This visit comes as a confirmation of the pledges of brotherhood and solidarity before the two brotherly countries," Mr Sisi said in a televised speech.

The visit follows months of reports in Saudi and Egyptian newspapers of strained ties over Cairo's unwillingness to participate fully in Saudi-led military operations against Iran-backed Shi'ite rebels in Yemen.

Mr Sisi's close relationship with Russian President Vladimir Putin, who militarily backs Syrian leader Bashar al-Assad against Saudi-supported rebels, has reportedly also caused friction with Riyadh.

However, for Saudi Arabia, which is in competition with regional rival Iran, keeping Egypt under its aegis is crucial.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on April 11, 2016, with the headline 'Egypt and Saudi Arabia ink $22b investment fund'. Print Edition | Subscribe