Egypt second tranche loan talks with Saudi Arabia stall: sources

Talks between Egypt and Saudi Arabia over the second tranche of the Sinai development loan are currently stalled, Egyptian government source told Amwal Al Ghad on Tuesday.

The agreement, titled King Salman’s programme for the development of the peninsula of Sinai, was signed by government officials from the two countries in Riyadh in March 2015. The agreement was aimed at giving Egypt a $1.5 billion soft loan to help it develop Sinai, through Saudi Fund for Development.

Earlier in August, Egypt received the first tranche worth $300 million of Saudi Arabia’s loan agreement aimed at developing the Sinai Peninsula. However, the rising tensions between the two countries over the ongoing war in Syria and the recent court rulling confirming Egyptian sovereignty over Tiran and Sanafir islands have contributed to halting the loan negotiations, the source said.

The crisis was prompted by Egypt’s voting in a UN Security Council session on Oct.10 to support Russia’s draft resolution concerning the situation in Syria. The Russian draft resolution called for bringing humanitarian aid into besieged areas, urging all parties to halt offensive operations and stressing that moderate Syrian opposition forces must separate from Jabhat Fatah al-Sham — formerly known as Jabhat al-Nusra. The draft was unacceptable to Saudi Arabia, which seeks to depose the regime of Syrian President Bashar al-Assad, and which viewed Egypt’s vote for the resolution as a deviation from the Arab position.