Egypt’s Morsi Fails To Secure Loan, Grain From Russia

Egyptian President Mohamed Morsi asked Russia on Friday for grain and a loan to help ease a deepening economic crisis but secured neither at talks with President Vladimir Putin.

Russian officials said only that Moscow would consider the loan request, which a Moscow-based source had earlier put at about $2 billion, and that it might increase grain supplies if its harvest reached the target level this year.

Egypt has slid into economic crisis after more than two years of political upheaval and failed to secure a loan from an International Monetary Fund delegation that left Cairo this week. Its grain stocks have dwindled and the crisis has made it harder to arrange payments for wheat imports.

“We have agreed that we will gradually work towards diversifying our trade and economic ties, pay more attention to investment cooperation,” Putin said after the talks in the Black Sea resort of Sochi.

Egypt’s trade and industry minister, Hatem Saleh, asked about the possible loan said: “We have reached no conclusion on that loan.”

He gave no further details but Yuri Ushakov, an aide to Putin, said: “We are talking here about an amount that is not small.”

Russian Agriculture Minister Nikolai Fyodorov confirmed the two sides had discussed a possible increase of Russian grain supplies to Egypt, traditionally the world’s largest wheat importer and the biggest importer of Russian wheat.

But indicating no immediate deal had been agreed, he said only: “If Russia harvests 95 million metric tons of grain this year, it’s quite possible that this request (for grain) will be met.”

The 95 million metric ton figure is Russia’s revised harvest forecast for this year.

The Russian grain union had said this week that the government could loan Egypt money to buy Russian grain but should not lend it grain from state stocks.

FRESH START

Morsi came to Russia as part of Cairo’s effort to forge what officials have described as a more balanced foreign policy following the overthrow of former President Hosni Mubarak, under whose rule Egypt became a staunch ally of the United States.

Moscow and Cairo were strong allies during the Soviet era but the relationship deteriorated during Mubarak’s long rule.

Egypt also proposed on Friday that Russia participate in construction of a nuclear power plant and in development of the country’s uranium deposits, Russia’s Energy Minister Alexander Novak was cited as saying by Russian agencies.

Egypt has said it wants to build to build four nuclear plants before 2025 that would add capacity of up to 4,000 megawatts.

Russia is trying to increase its influence in the Middle East and Arab nations after the overthrow of allies such as Libya’s Muammar Gaddafi during the Arab Spring popular uprising, which cost Moscow billions of dollars in arms and other contracts.

Its foothold in Syria in doubt is also in doubt because of the civil war which threatens to overthrow long-time ally President Bashar al-Assed, whose government has been an important arms purchaser for Moscow.

Russia, a net creditor, has been sought out by countries in financial difficulty that want easier financing terms than those offered by the IMF, such as Cyprus and Serbia.

Russia is historically the world’s number three wheat exporter, but was hit by a drought last year which reduced its grain crop by a quarter to 71 million metric tons and quickly depleted its stocks.

State stocks now amount to about 2 million metric tons of grain, mainly wheat. This year’s harvest is expected to provide Russia with an exportable surplus of about 20 million metric tons of grain for 2013/14.

The IMF mission left Cairo on Tuesday after 12 days of talks without an agreement on a proposed $4.8 billion loan for the most populous Arab state.

Both Cairo and the IMF reported progress and said talks would continue, but diplomats and analysts said a weak, dysfunctional government, lacking economic expertise, seemed unable to commit to even the relatively modest reforms sought by the global lender.

The IMF’s director for the Middle East and North Africa, Masood Ahmed, told reporters in Washington that the sides were trying to conclude talks on the loan “as quickly as feasible”.

Talks are taking place on the sidelines of IMF and World Bank meetings in Washington. An IMF deal will help shore up confidence in Egypt’s economy and reassure private investors and donors that the country is committed to the economic reforms, which include cutting fuel subsidies and raising sales taxes.

Reuters