Egypt: Italy spat and the in­evitable ques­tions about ENI

Financial Mirror (Cyprus) - - FRONT PAGE -

The bru­tal mur­der of Gi­ulio Re­geni, an Ital­ian doc­toral stu­dent, in Egypt in Jan­uary is threat­en­ing the once close re­la­tions be­tween Cairo and Rome, with spec­u­la­tions the Egyp­tian se­cu­rity ser­vices might be in­volved.

Since he came to of­fice in June 2014, Pres­i­dent Ab­delFat­tah al-Sisi has forged close ties with Ital­ian Prime Min­is­ter Mat­teo Renzi. Italy is Egypt’s first Euro­pean trade part­ner (and the sec­ond over­all, af­ter the U.S.).

Back in Novem­ber 2014, Prime Min­is­ter Renzi hailed Egypt as a “strate­gic part­ner” dur­ing a visit to Rome by Pres­i­dent Sisi (his first of­fi­cial visit to Europe af­ter his ac­ces­sion to power), at a time many western coun­tries viewed the new Egyp­tian regime with a cer­tain ap­pre­hen­sion. Re­geni’s killing came just as busi­ness, po­lit­i­cal and se­cu­rity co­op­er­a­tion be­tween Italy and Egypt were be­ing ramped up.

Sour­ing re­la­tions be­tween Italy and Egypt have not af­fected ENI’s oper­a­tions in Egypt yet, though the sub­ject is in­creas­ingly be­ing brought up. De­spite cut­ting short a visit to Cairo by a high-pro­file Ital­ian trade del­e­ga­tion af­ter Re­geni’s body was found, Ital­ian au­thor­i­ties do not ap­pear to be will­ing to use cor­po­rate re­la­tion­ships to put pres­sure on Egypt, at this point.

In a 1,175-word anal­y­sis, re­served to its clients, MESP ad­dressed the fol­low­ing points: How long could this sit­u­a­tion per­sist, and how far could it go, be­fore Ital­ian com­pa­nies op­er­at­ing in Egypt, and ENI in par­tic­u­lar, start to feel the im­pact of the de­te­ri­o­rat­ing re­la­tions be­tween Egypt and Italy?

Over the past few years, ENI’s re­la­tions with Egypt un­der­went ups and downs. Af­ter the dis­cov­ery of Zohr in Au­gust 2015, Pres­i­dent Sisi re­quested then-Petroleum Min­is­ter Tarek el-Molla to “over­come all ob­sta­cles” in the way of ENI and its ac­tiv­i­ties in Egypt. The har­mony be­tween the two sides al­lowed ENI to speed up work in Zohr. Will ENI still en­joy the same op­er­a­tional ad­van­tages?

How far can Egypt go in dis­turb­ing the work of Ital­ian com­pa­nies op­er­at­ing in Egypt, and ENI in par­tic­u­lar?

Sisi’s strat­egy of di­ver­si­fy­ing for­eign part­ners (Italy, but also GCC, France, Rus­sia etc.), as op­posed to re­ly­ing on a sin­gle part­ner as was the case un­der Hosni Moubarak’s regime, may prove to be ben­e­fi­cial. Will the de­te­ri­o­rat­ing re­la­tions with Italy en­cour­age a third party to step in? Or does this in­ci­dent on the con­trary prove that coun­try risk is too high?

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