Biggest U.S. trade visit shows Egypt falling back in favor

The U.S. sent its biggest-ever trade delegation to Egypt, the latest sign that the allies have repaired the rift that followed the army’s ouster of an elected president last year. Executives from about 70 companies, including Apache Corp. and Coca-Cola Co., held talks with officials in Cairo to explore opportunities in a country struggling to recover from more than three years of unrest. The mission, organized by the U.S. Chamber of Commerce, also met with President Abdel-Fattah al-Sisi, the former general who was elected in May after leading the overthrow of his Islamist predecessor, Mohammad Morsi.

The U.S. cut some of its annual $1.3 billion military aid to Egypt after the army takeover, though without labeling it a coup. The American position has softened amid efforts to build a regional alliance, which Sisi’s Egypt has vowed to join, against Islamist militants. Secretary of State John Kerry said in June that full aid would resume soon.

The reconciliation has angered rights activists who blame Sisi for the harshest crackdown on freedoms and political dissent in decades. The U.S. trade mission is “deeply troubling,” according to Sarah Leah Whitson, director of the Middle East and North Africa at Human Rights Watch.

“The Egyptian government is desperate for just this kind of international pat on the back and it’s very eager to demonstrate that everything is back to normal in Egypt,” she said in a phone interview.

Since Morsi was removed from office amid protests against his one-year rule, security forces have killed hundreds of his supporters, and courts have jailed activists after trials that human rights workers said were flawed.

The government says it’s fighting against terrorism amid a surge in militant attacks. It blames most of the violence on Morsi’s Muslim Brotherhood, which denies the charge and says it’s committed to seeking change peacefully.

Eddie Vasquez, a spokesman for the State Department’s Near East Bureau, said American concerns “regarding Egypt and human rights and restrictions on civil society are well known, and we continue to engage with the government on those issues.”

“International investment in Egypt’s economy supports the Egyptian people,” he said in an email. “Egypt’s economic and workforce development is vital to its long-term stability. A stable Egypt is in the United States’ security interests.”

Sisi inherited an economy stuck in the worst slowdown in two decades, and one of the Middle East’s biggest budget deficits.

But there are signs that the worst may be over. Economic growth accelerated to 3.7 percent in the three months that ended in June, from 2.5 percent in the previous quarter, and more companies have announced plans to raise capital through share sales. Sisi cut fuel subsidies soon after his election, a move welcomed by investors.

Egypt’s benchmark EGX 30 Index for stocks has surged more than 40 percent this year, making it the world’s best performer according to data compiled by Bloomberg. It added 1.2 percent as of 10:15 a.m. in Cairo.

Curt Ferguson, head of Coca-Cola Co.’s Middle East and North Africa division, who attended the meeting with Sisi, said the talks were strictly about business.

“Politics were out of it,” he said in an interview. “Investors look at countries like a bank: You want stability, you want the ability to withdraw funds when you want to, you want to be able to get a return. We see that being enhanced” under Egypt’s current leadership, he said.

The company started building a $122 million juice factory on the outskirts of Cairo last month, part of a five-year plan to invest $500 million in the expansion of its operations in Egypt, he said.

Investment Minister Ashraf Salman told the delegation that the government was working on laws to make it easier for companies to do business. Mounir Fakhry Abdel Nour, the industry and trade minister, said there’s a plan to liberalize electricity prices, according to the state-run Middle East News Agency.

Michael Hanna, a senior fellow at The Century Foundation, a U.S.-based think tank, said the mission reflects U.S. efforts to bring ties back to normal. Egypt, on the other hand, wants to build a relationship “based on economic ties and is much less interested in other aspects,” he said by phone.

“It’s highly unlikely that this is a sustainable basis going forward,” he said.