Cathedral attack was suicide bomber, El Sisi says, as victims laid to rest

** TAKE OUR NEW QUARTERLY SURVEY, wherein we ask you, dear readers, to drill down into what USD : EGP rate you’re using in your 2017 budgets, your outlook on the economy, whether you would like to hold more assets outside of Egypt — and what gets you out of bed in the morning. The survey runs from today through Tuesday, 20 December at 5pm. We’ll have the results in our 29 December Year-in-Review edition. Tap here to take the survey — it won’t take more than a minute unless you’d like to leave us a long note.

Thank you for your patience yesterday, and thank you for continuing to read us every morning.We’re about 99.9% certain we’ve resolved the tech problem that saw yesterday’s first edition dispatched with neither formatting nor links. The problem appears to have been related to a silent upgrade in one of the tools we use to produce Enterprise (our suspicion is Google Docs).

Al Borsa / Business News are hosting their Third Annual Egypt Automotive Summitat the Semiramis InterContinental Cairo today. Topping the discussions at the conference is the automotive directive and its impact on the industry, said Moustafa Saqr, chairman of Business News. Count on top industry figures to be present, including Raouf Ghabbour (GB Auto), Farid El Tobgy (Bavarian Auto Group), Isao Sekiguchi (Nissan Egypt), and Tarek Atta (General Motors). The roster also includes representatives from Volkswagen and Peugeot Citroën, among others.

There has been no word whether the African Development Bank (AfDB) has voted to approve the second USD 500 mn tranche of its USD 1.5 bn development loan to Egypt. The vote was scheduled to take place yesterday. The AfDB did announce, however, that a global coalition of donors pledged USD 7.1 bn over three years to its African Development Fund to scale-up support for the private sector in 38 lower income African countries. The World Bank is expected to vote on its USD 1 bn second tranche of the USD 3 bn facility signed with Egypt on 22 December.

The Ismail cabinet will discuss a final draft of the new Investment Act at its weekly meeting tomorrow. Meanwhile, some in government continue to wage war against using tax exemptions as investment incentives, with an unnamed Finance Ministry official allegedly having told Al Shorouk that “tax exemptions leave room for more corruption.” The statement echoes former minister Hany Dimian, who opposed free zones on the grounds that they encourage customs evasion. The source added that the ministry is in talks with the General Authority for Investment and Free Zones (GAFI) to come up with investment incentives that don’t entail tax exemptions — and thereby defeat the purpose of the legislation. Head of GAFI Mohamed Khodeir, however, argued that the new law aims to decrease tax evasion and fraud, and offers closely regulated temporary tax exemptions. The story does not make clear whether the objection is the position of the Finance Ministry or statements from a lone Dimian loyalist.

Philippe Le Houérou, the International Finance Corporation’s (IFC) Executive VP and CEO, is in Egypt tomorrow for a two-day visit that runs until Friday. Le Houérou, on his first official trip to the MENA region as head of IFC, will meet top government officials and business leaders to underscore IFC’s commitment to supporting the country’s private sector, creating jobs, and fostering sustainable growth. IFC says Le Houérou will also sign three agreements that support infrastructure development, and improve access to finance for small businesses and young entrepreneurs.

The IFC has pledged USD 10 mn to Algebra Ventures, which will announce tomorrow the launch of a venture capital fund that we expect will be in the USD 50 mn neighborhood. The fund, led by Tarek Assaad, Ziad Mokhtar and Khaled Ismail, has also landed commitments from the Egyptian-American Enterprise Fund and Cisco, as we have previously reported.

The US Federal Reserve should raise interest rates a quarter point in a statement expected tomorrow, but both the Wall Street Journal and the Financial Times expect its job going forward will be made a bit more challenging until the contours of Trumpian economics become clear. CNBC reported that Republicans in Congress and the Federal Reserve may be ready to strike a compromise on legislation that would give it greater scrutiny over the central bank. This would likely stop short of dictating rules on setting interest rates.

The National Conference for Egyptian Scientists and Experts Abroad will be held in Hurghada this week, running 14-15 December under the auspices of President Abdel Fattah El Sisi with the slogan "Egypt Can."

Coptic Cathedral bombing continues to dominate airwave: The nation’s talking heads continued wall-to-wall coverage of Sunday’s terror attack on the Church of St. Peter and St. Paul. CBC’s Lamees Al Hadidy declared that the bombing underscores a flaw in the nation’s security apparatus, pointing to reports that the alleged suicide bomber, 22-year-old Mahmoud Shafik, was detained by police on weapons charges and then released in March 2014 (watch, runtime: 12:34). El Hadidy also said that President Abdel Fattah El Sisi’s speech yesterday delivered one of the strongest calls for national unity yet.

She noted that the president seemed to express frustration that the legal system has made it more difficult to prosecute suspects (watch, runtime: 3:11). Lamees agreed with a number of lawyers and legal commentators that terrorism cases need to run through the civilian judicial system, saying, “I’m not with referring terrorism cases to military trials, I’m with improving the normal judicial system to achieve swift and fair justice,” (watch, runtime: 46:49).

Yahduth fi Masr’s Sherif Amer focused on the Interior Ministry’s statement tying the terror cell responsible for the bombing to the Ikhwan leadership in Qatar.

Kol Youm’s Amr Adib praised the ability of the Sisi administration to identify the suicide bomber in one day. Adib dismissed doubts about the accuracy of the ministry’s identification of the bomber, saying that he had information that a DNA test confirmed the bomber’s identity (watch, runtime: 16:12). Adib ran what he said was a security-camera clip of the bomber entering the church (watch, runtime: 2:52).

A longer version of the video, which includes the subsequent blast, has gone viral (watch, runtime: 1:12).

Adib also covered news of the Egyptian Navy taking possession of a German submarine (watch, runtime: 8:22).

Ibrahim Eissa criticized statements from government officials promising to “avenge” those killed in the attack, saying a nation of laws would pursue justice (watch, runtime: 1:28). The suspendered-one also said it should have been the prosecutor general who announced the name of the suspected bomber rather than the president, as this may pressure investigators to simply corroborate El Sisi’s declaration (watch, runtime: 4:05). Eissa then spent the rest of the episode hammering what he said was Salafist hate-mongering about Copts (watch, runtime: 20:21).

Funeral masses and processions were held yesterday for the victims of terror attack on Cairo’s Coptic cathedral. Pope Tawadros II “called the dead martyrs and sought to heal any sectarian friction caused by the attack, saying it ‘is not just a disaster for the church but a disaster for the whole nation.’ He also condemned attacks against the security forces,” according to Reuters. President Abdel Fattah El Sisi joined mourners, saying the attack was against the state as a whole.

Attack carried out by suicide bomber: The president vowed to deliver justice and reiterated that the entire nation was joining the families in three days of mourning. El Sisi also announced that the attack was conducted by a 22-year-old suicide bomber and that four co-conspirators were arrested. One of those apprehended, and the alleged mastermind of the group, had apparently received instructions directly from the Ikhwan leadership in Qatar, according to a statement from the Interior Ministry last evening. The Associated Press, meanwhile, reports the suspected suicide bomber had a 2014 run-in with police, citing as its source a man identifying himself as the bomber’s lawyer.

Calls for resignation of Interior Minister Magdy Abdel Ghaffar entered the mainstream yesterday, with Rep. Mohamed Emara, an independent from the Delta governorate of Beheira, giving voice to a call that had largely been confined to social media.

We’re not saying this presages a thaw in relations, but Saudi’s King Salman Ben Abdul Aziz was one of the world leaders to offer condolences onthe attack, Al Mal reported.

Constitutional and legislative changes in the offing? In response to the attack, House Speaker Ali Abdel Aal issued a rallying cry in parliament yesterday, saying MPs will do their part in the fight, which could include amending the constitution. Mohamed El Sewedy, leader of the Support Egypt coalition (the largest in Parliament), is pushing for amending the penal code and restricting appeals on terrorism charges, Al Shorouk reports. Sources in the House tell Al Borsa that there are popular calls to place all churches, in addition to key infrastructure, under the protection of the armed forces, which would place an attack on them under the jurisdiction of military tribunals. Bahaa’ Abu Shaqa, chair of the House Legislative Committee, said defendants charged under the Anti-Terror Act should be limited to just one appeal. Separately, an MP said he is drafting a private-member’s bill “proposing amending a terrorism-related law to transfer terror cases to military tribunals.”

Talking heads of the Western think-tank class struggled for relevance in the wake of the attack, but Mokhtar Awad nails it on the head: If you read nothing else on the attacks from a security point of view, read his “Copts Bear Brunt of a Shift in Terror Strategy in Egypt.”

Human Rights Watch says “Egyptian authorities should bring to justice those responsible for the violence and take measures to properly protect the Coptic community from such attacks.” HRW’s MENA director Sarah Leah Whitson said “the egregious attack … should be recognized as an attack on all Egyptians.”

HRW’s Ken Roth kicks over hornet’s nest: Whitson’s comments came as remarks from HRW boss Ken Roth incensed a number of prominent Twitter commentators. The always on-point Maged Atiya (tweeting as @salamamoussa) wrote: “It is simply shameful that @KenRoth head of @hrw does the wet work of anti Copts with such glee” in response to Roth’s tweet that “Egypt’s Copts discover after backing Sisi’s coup that his persecution isn’t limited to the Muslim Brotherhood.” Roth’s comment that “If bombing Coptic church was work of Islamist militants, that’s a horrible, lawless way to fight Sisi’s repression” earned him a rebuke from commentator Samuel Tadros that it is “Hard not to conclude that @KenRoth is an anti Coptic bigot.”

Making the rounds of Twitter last night were two essays by prominent Coptic commentators abroad, including “How Not to Understand Egypt’s Sectarianism” by Paul Sedra and Maged Atiya’s suggestion it is time that a national corps be created to guard churches.

Rosneft buys take in Zohr: Russia’s Rosneft has bought a 30% participating interest in Eni’s Shorouk offshore concession, where the Zohr supergiant is located. Rosneft will pay Eni USD 1.125 bn for the stake and include a pro quota reimbursement of past expenditures amounting to USD 450 mn, according to Eni’s statement, with Rosneft having the option to buy a further 5% stake under the same terms. Eni had diluted its holdings of Shorouk to 90% after selling 10% to BP and says the transaction with Rosneft confirms the success of its “‘dual exploration model’ which, in parallel with an accelerated development of the hydrocarbons reserves, aims at early monetization of the value through the dilution of the high participating interest owned in huge exploration discoveries.” The transaction is subject to the fulfillment of certain standard conditions, including regulatory approval in Egypt. First gas from Zohr is expected by the end of 2017. Ildar Davletshin, an oil and gas analyst at Renaissance Capital, told Bloomberg the price “is reasonable for big fields in an attractive location.”

Sharkawy & Sarhan Law Firm advised Eni on the sale to Rosneft as well as the earlier sale of a 10% stake in the Shorouk concession to BP.

Rosneft has also said President Abdel Fattah El Sisi “has offered to consider the company’s participation in development of other fields both on the shelf and on land,” Sputnik says, citing Rosneft CEO Igor Sechin. Sechin also he met El Sisi to deliver a message for Russian President Vladimir Putin on the development of trade and economic ties and implementation of a number of projects in the energy sector between our countries.

Does Qatar now hold an indirect stake in Zohr? Earlier during the week, Qatar Investment Authority (QIA) and commodities trader Glencore had signed an agreement to buy a 19.5% stake of Rosneft, Reuters reported. The transaction, which is expected to see some USD 11.37 bn flow into Russia’s state coffers, is expected to be closed by mid-December. Italian bank Intesa Sanpaolo is major creditor for the sale and will, along with a syndicate of four or five key banks, provide EU 7 bn in financing, with Intesa Sanpaolo covering “significantly over 50 percent” of it.

Roseneft’s purchase of the Zohr stake and the Glencore / QIA transaction suggests Rosneft appears to have some “spare money,” says Alexey Bulgakov, a fixed income analyst at Sberbank CIB. That means Rosneft will not have to finance a buyback of its own shares, Bulgakov says. Davletshin told Bloomberg “the Egyptian gas project could make sense for a Rosneft venture with Glencore and Qatar’s sovereign wealth fund due to their expertise in natural gas.”

In other offshore news this morning: The partners developing Israel’s offshore Leviathan gas field said they approved a development plan for it with a target production date for the end of 2019, according to Reuters. The plan’s first stage is to produce 12 bcm per year at a cost of USD 3.5-4 bn. A final investment decision will require approval from the field operator, Noble Energy, which has a 39.66% stake in Leviathan. The Leviathan partners have already signed an export agreement with Jordan sand are exploring the possibility of selling gas in Egypt, Turkey and Europe.

The Finance Ministry has approved a proposed law to reimburse government contractors and suppliers for losses incurred following the EGP flotation, Al Masry Al Youm reported. The law was proposed by the members of parliament to suggest a manner of repaying suppliers who were contracted to provide goods and services to the government prior to the float. The law aims to allows the executive branch of the government the ability to set up committees with the authority disburse special reimbursements.

No VAT awareness campaign for the time being? The Finance Ministry announced it has canceled the tender for a promotional campaign to increase awareness of the value-added tax, according to an official statement. The statement says the bidding period had expired.

Pharma-Health Ministry talks hit impasse again? Foreign pharma companies continue to push for price rises outside the Health Ministry’s comfort zone, Al Borsa reports. According to an unnamed source, international manufacturers have rejected the MoH’s “30/30” proposal, which would have allowed a 30% annual rise in the prices of 30% of all products. The manufacturers said the proposal would fail to make them whole after the float of the EGP, demanding instead a 60% across-the-board price increase. Health Minister Ahmed Rady has refused the demand. Meanwhile, the House of Representatives’ Health Affairs Committee has backtracked on its initial refusal of price hikes and is investigating a number of potential solutions, committee head Magdi Morshed said.

Meivo International for Pharma Industries is planning an IPO in 2017 and is reviewing its financial and corporate to assess compliance for listing regulations, company general manager Abdel Fattah Hassan tells Al Mal. The company would apparently use the proceeds to build a new plant and add production lines to its facility in Alexandria, he added. As of yet, no investment bank has been selected to manage the listing. Meivo, which was acquired last year by Saudi-based Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) in a transaction managed by Pharos Holding, joins industry peer DBK Pharma in mulling a listing.

MOVES- Former Egyptian Private Equity Association chief Hany Tawfik has joined the SME-focused private equity firm Union Capital as its new executive chairman, according to Al Borsa.

Former Portuguese PM António Guterres was sworn in as the UN’s new secretary-general last night and is expected to tap Nigeria’s Environment Minister, Amina Mohammed, as his deputy, Reuters reports. Guterres, who is set to take over from outgoing Sec-Gen Ban Ki-moon on 1 January, has vowed to promote gender equality, reform the UN, and “personally engage in conflict resolution” to bring an end to various disputes.

CORRECTION- Shell is reportedly going to halt the production of 40 mcf/d from the Rosetta concession by July 2017, according to Al Borsa, not 40 bcf/d as we incorrectly claimed on Monday. The piece has been corrected on our website to reflect that.

The bombing of a church in the Downtown Cairo compound of the Coptic Cathedral continues to dominate headlines this morning, with coverage dominated by news of President Abdel Fattah El Sisi’s speech. Also yesterday and overnight, the first pieces of political analysis have begun to appear, with the Economist’s Erasmus blog commented on the terrorist attack saying “the Copts of Egypt have the worst of both worlds. President Sisi presents himself as their ally and protector, so Islamist foes of the government bitterly resent them.”

Egypt’s “wish list” from the incoming US administration includes “a Sisi visit to Washington, a Trump visit to Cairo, increased military assistance, delivery of unspent economic assistance in cash, provision of several [USD bns] in loan guarantees, designation of the Muslim Brotherhood as a terrorist organization, and extradition of Egyptians wanted by the government from the United States,” Michelle Dunne writes for Carnegie Endowment’s Diwan blog. Dunne says portions of the list “will be free to dispense without asking the permission of any other parts of government,” but others would require more cooperation. She believes that “the fact that Trump apparently admires Sisi should not be taken to mean that Egypt can now do whatever it likes with no pushback from Washington.”

The Antiquities Ministry is taking action to prevent the sale of Egyptian relics internationally, George Mikhail writes for Al-Monitor. The Ministry is taking action internationally to check if missing artifacts are being auctioned internationally and to have them returned and requiring auction houses to provide documents proving its ownership of archaeological pieces that are being sold have been excavated illegally. Egypt is also signing bilateral agreements to restrict exporting relics and is working on getting the UNESCO 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property to include all relics that had been looted and stolen before that date.

Newton criticized the Western media’s “unsympathetic” and “unrepresentative” coverage of the explosion in St. Paul and St. Mark’s church in Cairo on Sunday. In his latest column on AMAY, Newton writes that “terrorist attacks have happened in many countries… we never saw the Western press accuse a regime of being a failure as a result of them,” referring to “overplayed” coverage that presented the explosion as proof of the government’s inability to protect minorities.

The three-year currency swap agreement with China was a move so positive, it changed Hany Aboul Fotouh’s opinion of the CBE’s performance, the banker says in a column penned for Al Borsa. The way he sees it, the agreement will yield four main positive results: boosting trade between Egypt and China and improving bilateral economic ties; easing USD demand in Egypt, and eventually driving down the exchange rate (particularly as 30% of Egypt’s imports are from China); gradually improving the state of Egypt’s foreign reserves; and creating a reserve of the Chinese Yuan, which the IMF included in its SDR basket last year.

Cornell College Professor of Classics Philip Venticinque recently published “Honor Among Thieves,” a book that looks at the Ancient Egyptian economy from the bottom-up. The book, which is based on nearly a decade of research, focuses on the lives of craftsmen, merchants, and members of various groups — both elite and otherwise — in Egypt during the first seven centuries AD. “Traditionally, much more attention has been paid to the habits and strategies of the elites, wearing the fancy clothes and using the fine goods, than to the craftsmen and merchants involved in their production and distribution,” Venticinque said. Check out the book on Amazon or its publisher’s website.

In a series titled simply “The Funeral,” Coptic twins Georges and Samuel show that while they may make their living as wedding photographers, they are photojournalists to the core. Their series of evocative black-and-white images from inside the cathedral, where photography was banned for the funerary rights, is simply stunning. Explore their images on tablet / laptop / desktop if possible — a smartphone won’t do justice to either the images or the pain of the families. See the full series here or by tapping on the photo above.

Iranian media pushing rapprochement with Egypt? “Yasser Othman, the head of Egypt’s Interests Section office in Tehran, met with Foreign Minister Mohammad Javad Zarif on Monday to discuss regional issues,” the state-backed Tehran Times reports in what we’re taking as the latest sign of rapprochement between Cairo and Tehran. The prominence of the story in a tightly controlled media outlet underscores to us (Iran neophytes though we may be) that appetite on the Iranian side for closer ties could be significant.

Trade and Industry Minister Tarek Kabil met with a delegation from the World Trade Organization (WTO) ahead of a periodic policy review, the first done with Egypt since January 2011, AMAY reported. Discussions will focus on Egypt’s trade policies over the past six years, and will undoubtedly include the much-antagonized exporters registry. Kabil assured the WTO that Egypt is compliant with all its trade agreements.

Representatives from the Egyptian Financial Supervisory Authority (EFSA) discussed Egypt’s current economic conditions and ways to promote foreign investments in Egypt during a two-day roundtable discussion for international financial institutions in New York City, hosted by the Rockefeller Foundation, Al Borsa reported.

EGAS has granted four unnamed companies preliminary approvals on their requests to import natural gas privately and pump it through the national pipeline network, sources told Al Borsa. EGAS is coordinating with the companies to fulfill all the necessary requirements to grant them the final approval once the natural gas act is enacted. The act is being reviewed by the House of Representatives currently.

An unidentified Omani company is planning on investing USD 1.8 bn in petrochemicals in Egypt, Al Mal reports, quoting Nancy Hadi, Managing Partner at International Business and Investment Services (IBIS). Hadi is accompanying a group of businessmen and company leaders currently in the Sultanate to meet with Omani companies on investing in Egypt.

The Egyptian German Electrical Manufacturing Company (EGEMAC) will sign a EGP 250 mn agreement with the Egyptian Electricity Transmission Company (EETC) to build a power transmission station in Borg El Arab, Al Borsa reported. The project will be complete within 10-12 months, according to company head Medhat Ramadan, who said that EGEMAC is also building a EGP 140 mn transmission station in October Gardens, as well as two others in Tanta and Sharqeya for a total EGP 160 mn. EGEMAC’s JV with China’s XD, XDEGEMAC, will also be launching four electrical power transmission stations in Benban in Aswan by February, which will connect feed-in tariff solar power plants there to the grid, according to Al Borsa.

Deeper reforms of education are in the pipeline, President Abdel Fattah El Sisi suggested in an address on Saturday. “Would Egyptians have accepted stopping everything and directing all resources towards fixing education, as was the case in other countries? I don’t think so,” the president said, adding that education reform has to be carefully studied “to prevent the creation of problems.” El Sisi’s remarks were to a follow-up session on the recent Sharm El Sheikh Youth conference, according to AMAY.

The Arab Academy for Science, Technology, & Maritime Transport (AASTMT) signed cooperation agreements with seven universities in the UK that will see AASTMT students benefit from master’s programs, research cooperation, and exchangeopportunities through the British schools, Al Mal reports. The British universities include the University of Leicester, University of Hull, and the Royal Institute of British Architects, among others.

Marsa Alam for Tourism Development reached an agreement to settle USD 2.6 mn in borrowing from National Bank of Egypt (NBE) at the pre-float rate of EGP 8.88 per USD 1, Al Borsa said. In total, the company will repay NBE EGP 20.2 mn, EGP 15 mn on signing, followed by EGP 5.2 mn over two stages. Marsa Alam said it had not anticipated the flotation or its impact on the company’s borrowings.

Fawry has apparently closed an agreement to collect mortgage payments from 25,000 clients of El Taamir for Mortgage Finance (Al Oula). It is the payment processor’s first such agreement, Al Borsa reports.

A delegation of 10 South Korean tourist companies arrived in Luxor yesterday to discuss renewed security fears in the wake of the church bombing and its impact on tourism from South Korea, Al Borsa reports. Tourist arrivals from Korea took a nosedive following the 2014 bus bombing incident in Taba that claimed the lives of four South Korean tourists, with only 75,000 of a total of 12 mn South Korean tourists traveling to Egypt.

Honda-Egypt is recalling 19k cars to replace faulty airbags, Al Mal reported. Sherif Mahmoud, head of Honda’s Egyptian retailer Nile Trading Engineering Company (NTEC), told Al Mal the company has already managed to recall 5,500 cars in partnership with the Consumer Protection Agency, to replace their airbags. Mahmoud says the company is keen on completing the recall and replacement process as quickly as possible to preserve its “status in the Egyptian market.” According to Al Mal, the models recalled are the 2004-2009 Accord, 2002-2010 and 2008-2013 City, 2002-2009 GR-V, 2002-2005 Jazz, and 2002 Stream. 2016 Honda Civics are not part of the recall. NTEC’s parent company, Al Futtaim Automotive, had announced the recall in October to replace the airbags.

National Bank of Egypt (NBE) has asked the Social Fund for Development (SFD) to provide it with an EGP 200 mn loan to finance microenterprises, a source told Al Mal. The source said the bank needs the funding to inject it to the “large number” of applicants.

Arabian Cement has decided to halt plans to open a cement manufacturing plant in Brazil due to what the company calls “Brazil’s less than ideal economic conditions,” Youm7 reports.

A group of 16 civil society organizations, including Human Rights Watch and Reporters Without Borders, penned an open letter (pdf) calling on EU leaders to “take immediate measures to address Egypt’s escalating repression.” The letter took note of a number of developments in Egypt, including the surprise drafting of the new NGO law, the arrest of prominent human rights lawyer Azza Soliman, and the freezing of NGO workers’ assets.

Alexandria Angels, an Alex-based venture capital firm, is set to launch around the middle of next year, Al Mal quoted Techne Summit founder Tarek El Kady as saying at the RiseUp Summit that took place over the weekend. The firm, which will cater to startups in its namesake coastal city and the Delta, is the product of cooperation between the network’s founders, the Techne Summit, and Germany’s international development agency, GIZ.

Meanwhile, the Federation of Egyptian Industries’ CIT division will be launching its digital media-focused incubator Ibda’ on 20 December, Al Mal reports.