World Bank to Egypt: Implement change before Sharm summit • NYT decries “Egypt’s Latest Outrage” • new electricity law coming • EETC plans 10 solar stations • 7 bidders for gas import tender • private insurance funds must appoint investment manager

FX WATCH

The Egyptian pound held steady at the CBE dollar sale on Monday after the government established a fourth weekly dollar auction. In the unofficial market, the pound was trading at about 7.70 to the dollar, according to a trader who spoke with Reuters.

WHAT WE’RE TRACKING TODAY

Oman’s Sultan Qaboos’ absence is becoming a cause of concern, according to Reuters, as the childless monarch’s health remains in question. Analysts are calling for him to follow the footsteps of Jordan’s King Hussein and name a successor.

WHAT WE’RE TRACKING THIS WEEK

The World Bank Group’s Senior Director of Energy and Extractive Industries Global Practice began her three-day visit of Egypt yesterday to discuss the institution’s support to the country’s energy sector. Read more in our Egypt Politics + Economics section, below.

LAST NIGHT’S TALK SHOWS

Lamees El Hadidy championed a number of causes last night, including the government’s latest attempt to relocate Downtown street vendors who continue to sell their wares on the doorstep of the Egyptian National Theater near Ataba Square. The vendors have been removed multiple times over the past six months, but they return in even larger numbers.

“The National Theater, one of our great cultural treasures, is about to reopen; we cannot have these vendors outside the theater,” shouted El Hadidy. A senior Interior Ministry official promised her that the vendors would be removed once and for all before the official reopening of the theater on the 20 December (this coming Saturday).

El Hadidy presented a segment on the impressive renovations that have taken place at the National Theater, which has been shut down since it was severely damaged in a fire in 2008. She interviewed Minister of Culture Gaber Asfour from the theatre’s stage, with the minister telling her that EGP 104 mn was spent on the renovations.

“How can such a beautiful place exist within the chaos that is outside,” asked El Hadidy.

“I have called on the Prime Minister and the Ministry of Interior to take immediate action,” said Asfour.

El Hadidy also reported on the air pollution problem in the Downtown area, which has been intensifying due to the illegal burning of tires under the nearby Ghamra Bridge.

“There are a number of schools clustered in an area very close to where the tires are being burned. The toxic smoke has had a very negative effect on the health of children in the nearby schools,” said El Hadidy.

Frantic parents called in to relay stories about asthmatic children that are being kept at home until something is done about the fires. El Hadidy tried to reach officials from the Cairo governorate to no avail. She promised viewers that she would pursue the matter personally with the Prime Minister.

Magdy El Gallad interviewed Karim Refaat, Founder and Chief Executive Officer of N Gage Consulting, an Egyptian public affairs strategy and government relations firm.

“The Egyptian economy is solid. Our institutions did not collapse despite everything that the country has been through. The first thing that the private sector needs to do now is to help the government tell this story to the outside world,” said Refaat.

“Our company tries to be the link between the foreign investor and the government. We began in February 2013, and today we represent more than 15 investors.

“I would just like to point out that while our bureaucracy is slow to react, they do eventually take action and solve problems. We generally take a bottom-up approach and, believe it or not, we do encounter good calibers in the government even within mid-level employees. We don’t necessarily have to meet with a minister to solve the problems of our clients,” said Refaat, in what was probably the first ever example of praise for government employees on an Egyptian talk show.

Commenting on the Sharm El Sheikh Investment Summit, Refaat said, “Investors have told us that they are less concerned with the projects being presented and more concerned with legislation and the business environment. Solve the existing problems and facilitate procedures, and the investors will come. We are the most stable country in the region right now,” he added.

Youssef El Housseiny was ready to slit his wrists last night over the raid that took place on the so-called Atheist Café in Downtown Cairo on Sunday. “The outside world is laughing at us right now! How can we still be talking about ‘Satan worshippers’ in this day and age? What’s next? Will you shut down Café Riche or Five Bells in Zamalek? I’m completely appalled that this mentality exists. This kind of ignorance is sabotaging everything that President Al Sisi is trying to do to advance this country.”

El Houssieny’s blood pressure continued to rise as he reported on Egypt’s Minister of Agriculture seeking a fatwa from Al Azhar on genetic engineering. At this point he smacked himself on the head with his notes and his next few sentences were bleeped out by OnTV.

WORTH READING

Israel is leading the way for a global rethinking of the way computer science is taught to schoolchildren and should serve as a model for a paradigm shift in Egyptian education. Most countries shifted from teaching programming in the 1970s and ‘80s to teaching “ICT” in the 1990s — meaning word processors and spreadsheets. While these skills are obviously essential, it has also more or less meant the global dumbing-down of workforces, with developed nations witnessing ever-decreasing numbers of computer science graduates.

The UK has woken up and taken their cue from the Israeli experience, andstarting this school year, children as young as 5 in British schools will be introduced to the fundamentals of computer science. In the 10 years since Israel revised the way it approached computer science education, making it as essential as math or language, Israel’s “tech companies now attract more venture capital and private-equity cash than any European country, according to a report from consulting firm Ernst & Young.”

In a country with limited natural resources, it would behoove Egypt to do the same. Why Schools in England Are Teaching 5-Year-Olds How to Code. (Read in Bloomberg, and for further reading, see the UK’s Next Gen Skills page on the Israeli experience here)

SPEED ROUND

The EGX30 rebounded yesterday, gaining 1.34% to close at 8,832 points with turnover of EGP 632.5 mn, about 7% below the 90-day average. CIB and EFG Hermes were the biggest gainers; CIB was up 2.42%, and EFG 2.07%. Foreign investors helped lead the modest rally.

Regional markets showed improvement overall, with the Tadawul down by 2.6%, the MSM down by 0.9%, the KSE flat, Qatar up 3.1%, DFM up slightly by 0.1% and the ADX down 0.7%.

U.S. markets were down slightly (DJIA down by 0.58%, S&P 500 down 0.63% and NASDAQ off 1.04%). Most European markets were deep in the red, with DAX down 5.36%, CAC 40 down by 5.22% and the FTSE 100 down by 1.91%.

Brent and WTI both continued to slide; Brent dropped 0.70% to USD 60.63 and WTI by 0.33% to 55.68.

The World Bank is calling on Egypt to take tangible action in implementing much-discussed legislative reform before the March investment summit, Reuters reports. Investors say they have only seen the general outlines of much-discussed “one-stop-shop” legislative reforms, prompting Haleh Bridi, a regional director for the Middle East and North Africa, to call upon Egypt to actually implement the reforms before the March conference. “You need to demonstrate your seriousness by actually doing some of these things now. Let us see if that will happen… This would be a very important signal to the international community as to whether they can go beyond resolve, if they actually have the implementation capacity.” (Read)

In a further sign of Cairo’s deepening energy and security partnership with Tel Aviv, Israel’s Globes has a report today that the Israel Electric Corporation “may withdraw a USD 4.2 billion lawsuit that it filed against Egyptian government gas companies for halting the gas-flow to Israel. Senior IEC officials have dropped hints recently that pressure had been applied to the company, apparently by Israeli government figures, to end the arbitration proceedings. IEC said in response, ‘There is no truth to this.’” (Read)

An AFP story on the link-up of the Egyptian and Saudi power grids is getting wide play this morning, with new detail that makes it appear substantially more credible, including the nugget that the USD 1.5-2.0 bn project will take at least three years to complete after the project tender is awarded in mid-2015. The tender process is due to kick off next month, it seems. Source: an undersecretary at KSA’s Ministry of Water and Electricity. (Read)

Scandal sheet “Sada El-Balad” has declared that Abraaj is considering withdrawing its Bisco Misr takeover bid. The same piece insists that Kellogg has Israeli shareholders.

Apache Corporation announced yesterday that it will be selling its stake in two LNG projects: Wheatstone LNG (Australia) and Kitimat LNG (Canada), along with accompanying upstream oil and gas reserves, to Woodside Petroleum for USD 2.75 bn. (Read the release here)

Ahram Online carries an interview with Dutch counterterrorism expert Peter Knoope on the root causes of terrorism, which he cites as a lack of justice in general and social justice in particular. The interview is unremarkable except for this following exchange:

“Ahram Online: Egypt has decided to evacuate many Rafah residents from their homes to create a buffer zone between Egypt and Gaza: do you think that such measures can help in the war against militant groups there?

Knoope: A buffer zone helps to create more security. More specifically it helps to induce state security. The only way to fight terrorism is through the improvement of human security, however only when state security and human security are synonymous can such measures help in the long run.”

This isn’t really something we’ve heard before from Western commentators, least of all counterterrorism scholars, above the din of international criticism for the creation of the buffer zone. (Read the entire interview here)

Russia’s central bank raised its key interest rate to 17% from 10.5% on the back of the ruble’s new low against the USD. “Raising interest rates by 6.5 percentage points in the middle of the night is a sure sign of an emerging-markets currency crisis,” said the New York Times this morning. Meanwhile, Fortune takes a moment to reflect on what the drop in the ruble as a consequence of the two-pronged attack of sanctions and dropping oil prices means for Russia. In short: expect more erratic behavior foreign policy and increased repression domestically. (Read)

The award for most inadvertently funny headline on the ongoing shakeout in the global oil market goes to Reuters this morning: “Saudi Arabia is playing chicken with its oil.” Grammar / syntax aside, the author raises a question worth pondering: “…Saudi Arabia is playing a dangerous game — there is little evidence that authoritarian regimes like Russia and Iran would change their behavior under economic pressure. Worse, the Saudi policy could backfire, making Russia and especially Iran more intransigent in countering Saudi influence in the Middle East.” (Read)

Police stormed Sydney cafe to end hostage siege, three dead: The gunman was mentally unstable, had a long criminal history, and did not seem to have any links to terrorist groups. “News footage showed hostages in the cafe holding up a black and white flag displaying the Shahada, a testament to the faith of Muslims. The flag has been popular among Sunni Islamist militant groups such as Islamic State and al Qaeda.” (Read)

DIPLOMACY

President Abdel Fattah El Sisi met with the President of the Republic of ChadIdriss Déby in Cairo on Sunday. Other than two MOUs set to be signed regarding health and agriculture cooperation, the key highlight of the meeting was consensus building with regards to the “Neighbors of Libya Group to formulate a decisive and unified stance towards the situation in Libya before the convening of the next African Summit,” according to a statement released by the Office of the Presidency.

Meanwhile, a human rights activist writing for the Huffington Post this morning has advice for the US ambassador: “Five Useful Things America’s New Ambassador to Egypt Can Do“. Perhaps more interesting, for those of us who no longer move in circles diplomatic, is the news (to us) that Stephen Beercroft hasn’t taken up his duties yet, but is apparently expected to do so in the coming weeks.

EGYPT IN THE NEWS

News of the deportation of American scholar Michele Dunne of the Carnegie Endowment for International Peace continued to dominate the international news headlines on Egypt. The story took a new turn after theEgyptian Ministry of Foreign Affairs issued a brief press release stating that Dunne had originally “gone to the Egyptian Embassy in Washington to request a non-tourist visa … yet Dunne suddenly withdrew her passport without completing the necessary procedures and decided to travel to Egypt,” according to the MOFA statement.

The New York Times reports that in an interview, an MOFA spokesperson said that Dunne “would be welcome to return regardless of her views.” (Read)

That certainly wasn’t enough for the Times’ editorial board, whose leader this morning is headlined “Egypt’s Latest Outrage,” accompanied by a photo captioned simply “Cairo” of a crowd of Egyptians giving what looks like the Heil Hitler salute. We kid you not. The highlights: “…more than USD 1.3 billion in American military aid … repress Egyptian(s) … harass foreigners …  bizarre … preposterous … no tolerance for dissent … much to criticize … overthrew Egypt’s first democratically elected president … a government that is ruthless and self-destructive…”

The Wall Street Journal’s Washington Wire blog takes a decidedly more aggressive tone than usual in Egypt’s Crackdown on Political Speech. The piece starts with the question: “What is Egypt afraid of?” The author is not a WSJ reporter, but Robin Wright, a joint fellow at the U.S. Institute of Peace and the Woodrow Wilson International Center for Scholars.

The criticism continued with Egypt, impartiality and speaking truth to power: Internet white knight HA Hellya a.k.a. H.A. Hellyer has written an op-ed in Al Arabiya on Michele Dunne’s deportation from Egypt. (Read, or skip)

The beat-down continues, whether on the Dunne case or the “Satanist Café”:

• Egypt denies entry to thinktank critic in renewed crackdown on dissent (Guardian)
• Closure Of “Satanic Café” Shows Egypt’s Atheists Are Next In Line For Crackdown (BuzzFeed)
• Egypt And Turkey Are Now Tin-Pot Dictatorships (Business Insider)

Reuters’ Lin Nouheid has a lengthy feature out today, headlined “Sisters in the vanguard as Egypt’s Muslim Brotherhood battles to survive,” leading with, “In homes and streets around Egypt, women are keeping alive a group the authorities are determined to crush. They teach Muslim Brotherhood values to children, organize its protests, preserve its networks, and take an ever more prominent role in politics.”

Along Cairo’s metro route, at the station where xenophobia meets paranoia, three Egyptians, two with British passports, were apprehended after a passenger says he overheard them speaking in English about plans to commit acts of arson and vandalism on the upcoming anniversary of the January 2011 protests. “It was not immediately clear if the Egyptian was also released or if the case was closed.” (Read)

In a story that barely meets the definition of “news,” the organization headed by the fugitive Qaradawi deplored the Interpol red notice that has been issued for his arrest. Check the great picture Reuters used for the piece that shows Qaradawi looks like an virulently-angry Ikhwani demagogue even when he’s napping in public. (Read)

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

New electricity law will liberalize energy flows — Minister
Al Masry Al Youm | 14 Dec 2014
A new electricity law will restructure the current electricity policy and establish a free market system for energy distribution, similar to other countries around the world, Electricity Minister Mohamed Shaker said. The new law is expected before the Sharm investment summit in mid-March. Shaker also said the new law will boost transparency, help use of Transmission System Operators (TSOs), increase the efficiency of power production, encourage participation by the private sector and promote the use of renewable energy sources. Shaker said, despite liberalizing electricity distribution, mechanisms will be put in place to protect social segments that are entitled to help. (Read in Arabic)

20% of Egypt’s energy needs to come from renewable sources by 2020; demand growth rising c. 6.3% p.a.
Al Masry Al Youm | 14 Dec 2014
Electricity Minister Mohamed Saker has reiterated the government ambitious target of seeing renewable energy account for 20% of the nation’s power production by the year 2020. Shaker explained that 12% of energy will come from wind power and 8% from various other renewable sources (water, solar and others). This means that 7,200 megawatts of electricity are expected to come from wind mills. He also said the private sector is expected to implement around 67% of the plan. Shaker also revealed that Egypt’s annual demand for electricity is growing by about 6.3% per year. (Read in Arabic)

Egyptian Electricity Transmission Company (EETC) plans to build 10 solar stations
Al Mal | 15 Dec 2014
The EETC intends to place ten 36kw solar stations on the rooftops of 1,000 governmental buildings, according to its chairman Ahmed Al Hanafi. This change comes on the back of a project sponsored by the Ministry of Electricity, to be a shining example of electricity conservation and have its subsidiaries running on solar energy. Mr. Al Hanafi noted that a solar station as such costs EGP 500,000, bringing the total cost of the project to EGP 5 mn, and should be completed by 2015. (Read in Arabic)

OIL & GAS

Offers received from BP, Vitol, Trafigura, and Golar LNG for gas import tender — EGAS
Daily News Egypt | 15 Dec 2014
EGAS has received offers for a gas import tender from BP, Vitol, Trafigura, Golar LNG, and three other companies, and the winner of the tender will be announced by the end of December, according to a senior official with EGAS speaking with Daily News Egypt. The tender includes importing 500m cubic feet of gas per day beginning in March. (Read)

BG to lead global alliance to promote Egyptian natural gas
Akhbar KSA | 14 Dec 2014
BG Egypt chief Arshad Sufi said BG agreed with BP and Gaz de France (GDF) to help facilitate the delivery of natural gas production from concessions owned by both companies to the Egyptian market. Sufi explained that BG would use its infrastructure in the deep waters of the Mediterranean to help expedite the delivery of natural gas production from other companies to the local market, thereby easing Egypt’s energy crisis by increasing gas supplies. Sufi also praised recent reforms taken by the government, saying they helped build a sense of optimism. He also stated that Egypt was capable of solving its current problems, but needed to address its energy crisis, saying energy was the backbone of any economy. (Read in Arabic)

TOURISM

Travco Group signs LOI with Alfa Star
Reuters | 15 Dec 2014
Polish tour operator Alfa Star said on Sunday that it has signed a letter of intent with Travco Group, where Travco will provide the company with funds and will buy 30% of its stake. Travco Group will be the exclusive representative of Alfa Star in Egypt, the UAE, Jordan, and Oman. (Read)

BANKING & FINANCE

EFG Hermes has four UAE deals in the pipeline
Mubasher (English edition) | 15 Dec 2014
Seif Fikry, CEO for the Lower GCC at EFG Hermes, said the group has four transactions in the pipeline in the UAE, including two IPOs and two M&A transactions. According to Mubasher, EFG Hermes had executed seven deals in the UAE, including M&As and three IPOs for companies in sectors including agrifoods, tourism, real estate, and consumer finance. (Read)

OTHER BUSINESS NEWS OF NOTE

Investments in the automotive sector reach USD 2 bn – Minister of Investment
Al Mal | 14 Dec 2014
Ashraf Salman, the Minister of Investment said that investments in the automotive sector have reached USD 2 bn with 556 companies working in supporting industries. The industry’s revenues are EGP 40 bn, with 50% going to the customs authority. (Read in Arabic)

Private insurance funds with EGP 100 mn in capital required to appoint an investment manager
Al Ahram | 14 Dec 2014
EFSA deputy chairman Dr. Mohamed Moeet, said regulations governing private insurance funds with over EGP 100 million in capital have been amended to require the hiring of an investment manager or an asset management firm. Moeet emphasized the importance of private insurance funds in pumping investments and helping to grow economic activity. He also revealed that private investment funds have assets of EGP 43 billion on behalf of 4.6 million subscribers and with EGP 4.7  billion in paid claims in 2014. Meanwhile, EFSA chairman Sherif Samy said it was important to learn from the experiences of other countries in managing of investment funds. Samy explained that it was important to better govern investment funds to ensure payment to investors and adequate coverage for required payouts. (Read in Arabic)

Omran to retail investors: The world is not coming to an end
Al Ahram | 14 Dec 2014
EGX head Mohamed Omran took to the press to reassure local investors after Sunday’s hemorrhaging that, well, these things happen. Stock markets around the world have always been volatile, he said, adding that, “Even with all the losses incurred on Sunday, the EGX throughout 2014 returned 29%, which is the highest by comparison to its peers in the MENA… Egyptian investors are wiser now when dealing the volatility of the EGX.” Omran noted that the Egyptian stock market is healthy at the moment and that Sunday’s plunge came as Egyptian shares followed the lead of the global selloff, which itself was sparked largely by what has been happening of late with oil.  (Read in Arabic)

EGYPT POLITICS + ECONOMICS

World Bank Group’s senior director of energy visits Egypt
Press Release | 15 Dec 2014
Anita George, the World Bank Group’s Senior Director of the Energy and Extractive Industries Global Practice, began her 3-day visit of Egypt yesterday to hold discussions with the government about the energy sector. Ms. George will also hold meetings with the Minister of International Cooperation, the Minister of Electricity, the Minister of Petroleum, and the Minister of Finance, as well as members from the Egyptian business community. “The Bank’s specific role in the energy sector will be decided in full consultation with the Government of Egypt. We stand ready to support public and private facilitation of clean energy financing of renewables and energy efficiency projects,” she said. (Read)

Egypt inches closer to elections as Maglis El-Dowla signs off on electoral districts law
Ahram Online | 15 Dec 2015
Maglis El-Dowla (the State Council) has signed off on the electoral districts law okay’ed by Cabinet last week, paving the way for elections. Ahram Online recaps the amendments, quoting the institution’s senior advisor as noting that independents will now compete for 237 seats, not 232: “This will involve the creation of 83 (rather than 78) constituencies that will elect a single independent MP, 123 (rather than 119) which will elect two MPs and 30 (rather  than 35) to elect three MPs, thus spreading the 420 independent MPs stipulated by the House of Representatives law across 237 constituencies.” (Read)

REGIONAL

Algeria eyes Latin LNG market; shale gas, drilling of Ahnet pilot well completed
Interfax Global Energy and Gulf Oil & Gas | 13-15 Dec 2014
Meetings have been taking place between Argentinian and Algerian officials with an aim to see LNG exported from Algeria to the Latin American state, according to Interfax. Gulf Oil & Gas notes that a pilot well in Algeria completed shale gas drilling and compression last week, according to Sonatrach’s Interim CEO Said Sahnoun. (Read about the Argentina story in Interfax and the shale gas drilling inGulf Oil & Gas)

Journalists show solidarity in wake of Turkish gov’t crackdown
Zaman | 15 Dec 2014
According to Turkish journalists critical of the Erdogan regime, Turkey has never faced a more repressive environment with regard to its media, even including times of military coups and political upheaval. “There were military coups in the past. Now, a civilian coup is being staged. This coup is being done to cover up allegations of corruption, theft and bribery. This is what the unfortunate thing is,” Cemal said. Journalist Mustafa Akyol, a writer whose work Enterprise follows with interest and who unfortunately will most likely be jailed at some point in the future wrote: “People who follow the developments in the world via conspiracy theories [nearly all Turks] will inevitably engage in tyranny. It is sufficient for them to grab power.” (Read)

INTERNATIONAL

OPEC won’t cut production even with USD 40 / bbl oil – UAE
Bloomberg | 15 Dec 2014
The UAE believes firmly that OPEC will stand by its decision not to cut production even if oil falls to US 40 / bbl. In the long term, OPEC’s Secretary-General expects US oil industry will decline after 2020, but in the meantime, he expects prices to rebound “soon” as the global economic cycle changes. (Read)

Kenya reduces maximum fuel retail price
CNBC Africa | 14 Dec 2014
Kenya’s Energy Regulatory Commission reduced the maximum retail prices of fuel on Sunday. The agency is responsible for setting a cap on the maximum fuel retail prices on the market to protect consumers from “unfairly high prices” and reflect the cost of importing. A liter of gasoline now costs USD 1 after the new cap. (Read)

ON YOUR WAY OUT

Ahmed El-Sewedy will head the China-Egypt Business Council, Egypt Independent reports this morning with a pickup from Al-Masry Al-Youm. (Read)

Ittihadiyya signed-off on a number of US cooperation agreements on Sunday, Ahram Online reports, including EGP 55 mn in funding from the US and the OFID to partially finance a power plant in Assiyut. (Read)

UK ambassador attends launch of Malvern College franchise in Egypt:“British Ambassador John Casson […] attended [on Sunday night] the launch of Malvern College Egypt to highlight how Britain is investing in Egypt’s future by investing in the education of Egypt’s young people. Malvern College Egypt will open in 2016 and it will be the first time any top British school has opened an international branch in Egypt.” (Press Release)

“Egypt looking to mend economy with energy moves” — a nice overview from OBG. (Read)

The vessel that struck an Egyptian fishing boat Sunday, killing at least 13? It was Kuwaiti. (Read)

Prep-school grads can now hold the power of arrest: President Abdelfattah El-Sisi issued a decree yesterday creating a new (low-ranking) police rank and giving it the power of arrest. Rank-holders must be 19-23 years old and have completed prep school. (Read)

The British Film Institute compiled a list of the best films of 2014 available here.

One of the world’s six remaining northern white rhinos died at a San Diego zoo, bringing the species a step closer to extinction. (Read)