Tourism: Unwanted in Europe, Russians more than welcome in Egypt

By Hassam Rabie
Posted on Tuesday, 20 September 2022 15:57

Russian tourists at the Egyptian resort of Sharm el-Sheikh in September 2021. ©KHALED DESOUKI/AFP

Since 31 August, it has become more complicated for Russian citizens to travel to any of the 27 countries of the European Union (EU). It is now longer, more complicated and more expensive to obtain a visa, and while some European capitals have rejected the idea of closing their doors completely, other member states are advocating a total ban on access as long as the war in Ukraine continues.

In Egypt, which was already a popular destination for Russian tourists, it is believed that some of the holidaymakers who have been denied a stay in Europe will return to the banks of the Nile or the Red Sea. And with this in mind, everything is being done to make things easier for them. The Egyptian central bank is thus in discussions with its Russian counterpart in order to make it possible to use the rouble on its territory. And more particularly to make the Egyptian banking system compatible with Mir payment cards. Set up in 2015 after the first sanctions imposed on Russia following the annexation of Crimea, Mir is a payment protocol that competes with Visa or Mastercard. While its beginnings may have been laborious, it is now estimated that 100 million Mir payment cards are in circulation and allow for payments to be made in various Asian or Middle Eastern countries, on the Chinese website Alibaba or even in Turkey.

From an Egyptian perspective, Europe’s travel restrictions on Russian nationals are a potential boon. On 11 September, Egyptian Prime Minister Mostafa Madbouly told a gathering of tourism investors in the South Sinai resort of Sharm el-Sheikh that the country expects tourism revenues of $30 billion in 2023, up from just $13 billion in 2021. In particular thanks to the Russians, who already represent about 30% of foreign tourists in the country and who should be particularly numerous this winter.

Diversification of foreign exchange reserves

Cairo’s stated objective is to become the primary destination for Russian holidaymakers, and it is to this end that Mir’s compatibility with the Egyptian banking service could be announced as early as the end of September, i.e. before the start of the winter tourist season. Information confirmed by Tez Tour, one of the main travel agencies specialising in Russian tourism in Egypt: “The leaders of the Egyptian central bank have agreed on the implementation of the Russian payment system at the end of September,” an Egyptian official told us. But they are still assessing European and American reactions to this decision.

As soon as the decision comes into force, Russian tourists and travel agencies will be able to pay in roubles to book their accommodation and other tourist services in Egypt. This is necessary because, since the outset of the war in Ukraine, Western sanctions have become increasingly severe, making it more and more difficult for Russian citizens to obtain dollars, the currency they formerly used to pay for their holidays. Allowing for payments in roubles would logically help attract them to the country.

Beyond the sole question of tourism, the Egyptian authorities also hope that compatibility with the Mir system will help them buy products imported from Russia directly in roubles and to diversify their foreign exchange reserves in which, for the time being, the dollar remains largely dominant. This omnipresence of the American currency puts Egypt under pressure, as since the start of the Russian-Ukrainian conflict its dollar reserves have been steadily melting, going from about $41 billion at the end of January to $33.37 billion currently. Using the Russian currency would make all the more sense as Moscow is already a major trading partner: in 2021, imports from Russia totalled $4.178 billion. In particular, Russia supplies 70% of Egypt’s wheat imports.

But the question remains: isn’t a possible rapprochement between Cairo and Moscow, even concerning the technical compliance of banking systems, likely to provoke a hostile reaction from the Europeans or Americans? “No,” says Said Sadek, professor of political sociology at the American University in Cairo, “because Egypt has managed to create a kind of free space in its relations with Russia, far from Western pressure”.

‘Rational politics’

Since the start of the Russian-Ukrainian war, Cairo has adopted a neutral policy. While it voted in March for a resolution demanding that Moscow stop the war in Ukraine immediately, and then in April for the suspension of Russia as a member of the UN Human Rights Council, Egypt immediately issued statements to justify its position to the Russians. It has also repeatedly rejected the idea of sanctions against Russia, recalling that such sanctions can only legitimately be imposed in the context of a UN decision.

“Egypt has adopted a rational policy regarding the Russian-Ukrainian war,” says Sadek. “Cairo is particularly dependent on Russia for the purchase of wheat and fertiliser components. The West understands how indispensable Russia is to Egypt”. Last June, he says, the EU granted €100 million in aid to the country so that it could obtain wheat supplies, knowing full well that all or part of this sum would be paid to Russian suppliers.

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