Europe’s “night of terror” + IMF’s Lagarde won’t step down

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The well-regarded International Monetary Fund boss Christine Lagarde has been convicted of criminal negligence in a trial that some in France have dismissed as highly politicized. The prosecutor in the case described last week the evidence against Lagarde as “very weak.” Lagarde was found negligent for not having ordered the appeal of an arbitration award. For those of you who don’t follow French politics: the New York Times has the best summary we’ve seen in English of what landed Lagarde in hot water in the first place (scroll down about 2/3 of the way through the piece.)

Lagarde will not step down and will not face jail time, the Guardian adds, while the Financial Times explains that “Within hours, however, the former French finance minister won the support of her board, clearing the way for her to continue on at the head of the fund.” The IMF executive board’s short, blunt statement is here.

A “night of terror” in Europe: Yesterday evening is being dubbed by some Western media outlets as the “night of terror” after a quick succession of three terror attacks rocked major European capitals:

Russia’s ambassador to Turkey was assassinated at a photo exhibition in an Ankara art gallery in a terror attack last night. Andrey Karlov was shot by a 22-year-old off-duty policeman in an attack captured on video (watch, runtime: 0:45) who cameras later captured shouting “God is great” and “Don’t forget Aleppo, don’t forget Syria.” Turkish authorities say the gunman was “neutralized” in a shootout with other officers. Both Russian President Vladimir Putin and Turkish President Recep Tayyip Erdo_an decried the attack as an attempt to undermine Russian-Turkish relations and sabotage efforts for peace in Syria, according to the state-owned Sputnik.

At least 12 are believed dead after a suspected terrorist ran a truck into a crowded Christmas market in Berlin. One person in the truck was dead at the scene and a second, believed to be the driver, has been arrested. Police are calling the incident a “deliberate act.”

Three people were wounded in a shooting at a mosque in Zurich when a gunman “stormed in … and opened fire on people praying.” Police said early this morning that the male gunman was still at large and were investigating whether a body found nearby was related to the attack, which they have not characterized as a terror attack. Speculation on social media is that the shooting was the work of right-wing terrorists.

Egypt denounced the assassination of the Russian ambassador, while members of the Ikhwan have reportedly described the attack as “heroic” in a poll posted on affiliate news network Rassd’s Facebook page, according to Youm7. Network owner Amr Farrag also allegedly hailed the attack on his official Facebook page.

Central Bank Governor Tarek Amer will reportedly meet with members of the Egyptian Automotive Manufacturing Association (EAMA) today to discuss the industry’s challenges in light of the float of the EGP and inflation at an eight-year high, Al Borsa reported. On the agenda: pre-float LCs, limits on deposits and withdrawals and caps on monthly repayment installments. Among those reportedly set to attend are senior leaders from GB Auto, Nissan Egypt, General Motors Egypt, Brilliance, and AAV.

The World Bank’s board of directors will vote today to disburse the second tranche of a USD 3 bn loan to Egypt. The vote follows thesigning of the USD 500 mn second tranche of the USD 1.5 bnAfrican Development Bank (AfDB) funding agreement yesterday after it was approved by the AfDB board last week. International Cooperation Minister Sahar Nasr is expected to sign another agreement with the EU today for financing SMEs, Al Shorouk reports.

Oh, and the US Electoral College (the body that — in historical terms — was conceived to prevent yokels from the sticks from exerting too much influence on a presidential election) voted yesterday to make Donald Trump the nation’s forty-fifth president, ending the liberal fantasy that electors would reject him. As the New York Times reports: “Normally a political footnote, the electoral vote acquired an unexpected element of drama this winter after Mr. Trump’s upset of Hillary Clinton, who received 2.86 mn more popular votes but won in states that totaled only 232 electoral votes. The states Mr. Trump won held 306 electoral votes.”

The Ismail cabinet will decide on the new Investment Act on Sunday, 25 December, according to Investment Minister Dalia Khorshid, paving the way for it to be taken up in parliament as early as January. For all of the bellowing among some in the business community about what extra incentive should or should not be in the bill, you need look no further than the Supreme Investment Council’s policy statement of 2 November to know what to expect.

The Central Bank of Egypt’s Monetary Policy Committee will discuss interest rates for the last time this year on Thursday, 29 December

The talking heads were all about the assassination of Russia’s ambassador to Turkey in Ankara. Kol Youm’s Amr Adib discussed the aftermath of the assassination of Andrey Karlov (watch, runtime 3:36), saying the incident proves that nobody is safe from terrorism. He also covered an apparent terror attack in Berlin that saw a truck slam into a Christmas market, killing at least 12 yesterday evening. “We are now witnessing World War III,” he said the hyperbole-prone host (watch, runtime 1:14:51).

Adib then shifted the focus back to Egypt with a report about a Trade and Industry Ministry initiative to support SME development by streamlining the allocation of land and granting of permits necessary to open or expand food, pharma, and engineering-related factories (watch, runtime 2:25). Investors reserve land for EGP 10,000 and have two weeks to file paperwork for permits.

After coverage of events in Turkey, Yahduth Fi Masr’s Sherif Amer reported he had been informed that food prices at state-controlled retail outlets would be rising this week, except for ration card holders.

Hona Al Assema’s Lamees Al Hadidy interviewed Beltone Financial’s Head of Research Hany Genena to discuss the aftermath of the EGP float. “[Volatility] is normal in the first two months post-floatation,” Genena told the host. “The CBE hasn’t held any USD auctions since 3 November, so the banks are now under pressure to meet the needs of importers and foreign companies operating in Egypt” (watch, runtime 5:16).

El Hadidy then moved on to discuss the asset freeze imposed on Al Borsa / Daily News Egypt owner Business News last week by the committee investigating the Ikhwan’s assets. Chairman Mostafa Sakr said that he has yet to understand why this happened. “I met with a member of the committee and he promised to look into our case,” Sakr said (watch, runtime 10:36).

Furniture expo Le Marché hasn’t been cancelled and will go ahead as scheduled, co-organizer Mostafa Ismail told El Hadidy, who reported there had been concerns the expo would be pre-empted on security grounds. “We are very thankful that President Abdel Fattah El Sisi stepped in when he did and resolved this issue in time,” Ismail said (watch, runtime 2:34).

El Hadidy also announced that CBC and Al Nahar will be collaboratively launching a the 24-hour news channel Extra News at 6 PM on Tuesday (watch, runtime 1:56).

Qahera Wel Nas’ Ibrahim Eissa hosted author Omer Taher, who spoke about his new book “Sanay3eyet Masr” (Egypt’s Craftsmen), which surveys the life of some of Egypt’s creative geniuses (watch, runtime 6:27).

“The Egyptian government considers the contract [with Aramco] to be terminated,” a government source told Daily News Egypt. The company continues to keep Egypt in the dark as to why it unilaterally and abruptly cut shipments and has yet to reveal when it could turn the tap back on, the source added. In the meantime, the EGPC will issue a tender to replace the fuel shipments that would have arrived from Aramco in January and is seeing progress on talks with other regional countries to replace the shipments, the source said.

Take this with a grain of salt, but the domestic press is reporting that Novartis is considering suspending activities Egypt after incurring losses worth 50% of its capital due to the EGP flotation, company sources tell Al Mal. The company will hold an extraordinary general assembly on 5 January to vote on suspending its activities in Egypt, the source added. Other options to be explored could include halting the production of beauty products. Pharma is undoubtedly hurting on the margin front, but we’re inherently skeptical of stories based on anonymous sources — doubly so when the source is claiming that strategy is being sorted out at a general assembly meeting. So take this as “where there’s smoke, there’s fire”: The agreement on new retail pricing for meds allegedly reached earlier this week had better be real.

CBE’s new mobile payment regulations are credit positive -Moody’s: Ratings agency Moody’s said the CBE’s new mobile banking regulation will benefit banks, according to an emailed report. “The new regulation for mobile payment services is credit positive for Egyptian banks because it will enhance financial inclusion, support economic growth and create new business opportunities for Egyptian banks … Mobile banking offers banks significant growth potential in Egypt because mobile phone penetration exceeds 100%, and banks in Egypt have lagged those of other emerging markets in terms of deploying and offering services through branchless banking.”

No nuke agreement before 2017: Egypt will not be signing a commercial agreement with Russia’s Rosatom to construct the nuclear power station at Daba’a before the end of the year, a high-ranking source at the Electricity Ministry told Al Shorouk. The source noted that all the preparations and procedures for the agreement are in place, but the delay in signing was due to the tight schedules before the end of 2016. Ittihadiya is taking control of the agreement, the source added, saying they will manage the signing process entirely.

Will brokerages have greater access to mutual funds? The Egyptian Financial Supervisory Authority (EFSA) plans to hold meetings with asset managers to discuss a regulatory change, first mooted in August, which would allow brokerages a larger share of trading in mutual funds. The Al Borsa article does little to explain what the change might be, but our understanding is that brokerages cannot trade on open-end mutual funds, which investors can only access today through banks. Under current EFSA regulations, brokerage firms can trade closed-ended funds. EFSA will move forward with regulatory changes if there’s desire in the industry to meet half way, suggested EFSA chief Sherif Samy.

Delek says UFG will not export Eni’s gas, talks with Tamar still ongoing: Delek Group, which manages the operations of Israeli gas field Tamar, “rubbished” reports that Union Fenosa Gas (UFG) has reached an agreement with Eni to export gas extracted from the Zohr field via liquefaction plant in Damietta. “The report would apparently undermine the possibility that the Tamar partners would export gas to the liquefaction facility, Globes’ Nati Yefet suggested. Delek said the letter of intent it signed with UFG is still valid and “as for the media reports, the partners seek to clarify that contrary to the implications of these reports, and following clarifications received from UFG, the parties continue with ongoing negotiations aimed at reaching a binding agreement for natural gas supply from the Tamar project to UFG’s existing liquefaction facilities in Egypt."

MOVES- Egypt-focused independent oil and gas producer Apex International announced it has appointed David A. Pivnik as vice president of exploration and new ventures and Amr Diab as non-executive director. Pivnik was manager of subsurface specialties at Occidental Petroleum Corporation and served as an associate editor for the American Association of Petroleum Geologists since 2004. Amr Diab is a managing partner at Cailon Capital, a private investment vehicle, and an advisory director at Morgan Stanley International.

MOVES- The Abraaj Group appointed Hossam Radwan as Senior External Advisor. Prior to the appointment, Radwan had led Abraaj’s Saudi push and earlier led EFG-Hermes’ Saudi office.

Careem closes first tranche of USD 500 mn funding round: Ride-hailing app Careem announced a first close in its USD 500 mn funding round, securing an investment of USD 350 mn co-led by Japan’s Rakuten Inc and Saudi Telecom Company (STC), which announced this week it bought a 10% stake in Careem for USD 100 mn. According to a company release, “new and existing investors include Abraaj Group, Al Tayyar Group, Beco Capital, El Sewedy Investments, Endure Capital, Lumia Capital, SQM Frontier and Wamda Capital among others.” The fundraise was supported by Credit Suisse. Careem says the funds will scale up its “transport services in existing and new markets, accelerate innovation across its platform of high-frequency transactions,” and help it achieve the goal of creating one mn jobs regionally by 2018.

Some of the smartest Egyptians living and working abroad have some advice for us. We had the opportunity to attend last week’s “National Conference for Egyptian Expat Scientists and Experts” in Hurghada under the banner “Egypt Can.” It’s the type of event we would typically give a pass, but the guest list was impressive and the message running through some 30 presentations was clear: Egypt needs to build infrastructure and focus on manufacturing, exports and added value to grow out of the current bottleneck. Echoing a theme that at least one very high-profile CEO hammered with us in an interview for one of our year-end issues next week: The only way we can make this happen is by changing our perception of technical education and spending more on R&D. Tap here to read our Enterprise Conference Report in full.

CORRECTION- Gen. Mohamed Aly Fahmy was appointed Commander-in-Chief of the Air Defense Forces, not the Air Forces as mentioned incorrectly in yesterday’s email edition. We apologize for the error. The piece was updated and corrected on our website. H/t Marwan H. and the many other readers who brought this to our attention.

Setting the agenda on Egypt in the international press this morning is Roula Khalaf’s “Big Read” for the Financial Times (paywall), in which she argues that Egypt has returned to a security state under the administration of President Abdel Fattah El Sisi, and social and economic problems continue to deepen. Khalaf dissects the various facets of Egypt’s social and economic web, from the military’s involvement in the economy to soaring inflation rates and our human rights record. The administration’s preoccupation with keeping dissenters off the streets has also led it to re-empower security agencies, which “are said to be on permanent alert.” All of these factors, she says, has dented the president’s popularity and deflated “the personality cult promoted by a sycophantic media.”

The Antiquities Ministry is working to restore the three remaining three synagogues in Cairo’s old Jewish Quarter, Khalid Hassan writes in Al-Monitor. “Once the tourism sector picks up its momentum and returns to normal, we will go through with our plan to restore all synagogues after registering the Jewish holdings and collectibles they contain, as we did in the synagogues of Ben Ezra in Old Cairo and Ashkenazi in al-Ataba area,” Saeed Hilmi, the director of the Ministry of Antiquities’ Islamic, Christian and Jewish Heritage Department, said.

The terrorist attack on the Coptic Cathedral in Cairo “underscores long history of oppression of Christians,” Perry Chiaramonte writes for Fox News. He says “extremists have lashed out at Copts repeatedly.”

Other stories on or involving Egypt that are worth noting this morning, however briefly:

• Egypt, Vietnam and Pakistan “were singled out as the frontier markets that would perform the best in 2017” in a poll of 80 frontier market investors with USD 1.5 tn in AUM carried out by FIM Management, the Wall Street Journal notes in passing.
• Moxie Marlinspike’s Signal, which developed the encryption technology now baked into every WhatsApp conversation you start, claims that the Government of Egypt is blocking its super-encrypted chat app Signal, Vice’s Motherboard reports.
• The Art Newspaper cites Mohamed Abla’s show of new works in Cairo “amid a moment of prolonged political agony in the country” as “a bright spot in an otherwise darkened Egypt.” The show, titled On the Silk Road, runs through Wednesday, 28 December at the Ofok Gallery, Mohamed Mahmoud Khalil Museum, in Cairo.
• The Journal also reports that BP “has pulled off a string of [transactions] in recent weeks that signal the British oil giant is looking to grow again,” citing a USD 1 bn investment in an African offshore field, its acquisition of a stake in the Zohr concession in Egypt and new investments in both Indonesia and the Gulf of Mexico.
• A new security threat? Also-ran newswire UPI carries a piece claiming that Egyptian Daeshbags fleeing to Egypt following the terror group’s reversals in Syria and Iraq will pose a new security challenge.

Saudi officials paying a visit to the Grand Ethiopian Renaissance Dam on Friday was a deliberate move meant to antagonize Egypt, Abdel Latif El Menawy writes for Al Masry Al Youm. He says that Saudi Arabia is fully aware of the sensitivities surrounding the dam in Egypt. El Menawy denounces what he identifies as a passive aggressive move from Saudi in the midst of its ongoing rift with Egypt.

El Watan’s Emad El Din Adib feels the pain of Egyptian business leaders,who he suggests are unfairly demonized, overburdened by taxes and made the subject of unfair accusations of graft — all when “two-thirds of the country’s income” is from the private sector.

Wheat is the ball and chain hindering Egypt’s agricultural development, Newton writes in his latest column for Al Masry Al Youm. The anonymous columnist argues that there are mns of other crops that are better suited to Egypt’s environment and can also serve as a way into new export markets. He says that over the years, the agriculture ministry has done little to help the sector develop, and has instead watched it regress into the state it is in now. “What we need now is some sense in our agricultural strategy,” he says.

GoPro to the top of the Pyramids: We’ve all thought about it, but few among us have ever mustered the courage to climb the Great Pyramid of Giza (it being illegal and all). Thank heavens for dumb khawagas with GoPros who take risks so we don’t have to: This German tourist’s footage of him climbing the pyramid and the view at the top was definitely worth his probable arrest (watch, runtime: 2:13). Now if only he had uploaded it in HD…

Egypt will provide a “protection force” to help South Sudan restore peace, according to All Africa. The decision was reportedly welcomed by Uganda’s President Yoweri Museveni, saying that “unlike Uganda, the north Africans do not share close border ties with South Sudan and would, therefore, not be accused of bias in the situation.” He also called on Egypt “to discourage the United Nations Security Council’s policy of putting sanctions on South Sudan, saying that sanctions cause a vacuum in leadership.”

President Abdel Fattah El Sisi met with members of the American Jewish Committee, and reiterated the importance of international cooperation in the fight against terrorism, according to Al Ahram. El Sisi and Foreign Minister Sameh Shoukry also discussed terrorism with Tunisia’s foreign minister, and how to advance anti-terrorism cooperation, Al Ahram reports.

Orascom Construction (OC) is seeking USD 50 mn in funding to construct a 50 MW solar power plant in Benban, Aswan. Khaled El Degwy, concessions director at OC, told Al Mal the company is in talks with the EBRD, IFC, and another international institution he did not name. The funding OC is seeking would cover part of the total financing cost estimated at USD 70-75 mn. El Degwy says OC’s successful participation in the feed-in tariff’s second phase is contingent on securing the required funding for the project.

The Electricity Ministry has suspended talks with Siemens over a 2 GW wind farm due to the project’s high costs, Al Borsa reported. The Egyptian Electricity Transmission Company (EETC) had been looking to reprice the agreement it had made with Siemens during the Egypt Economic Development Conference and reduce the price per kWh down from its current USD 0.06, sources said. They added that EETC might halt negotiations for other projects for the same reason, especially since it has cheaper options already in the works.

The governor of Suez met with the Electricity Ministry to discuss moving forward with plans to establish a 2.4 GW hydro power plant that runs on treated wastewater. The USD 2.6 bn project, which will be funded with Chinese investments, was signed during President Abdel Fattah El Sisi’s trip to China in 2014, according to Al Borsa. The plant is expected to take six years to build.

The National Authority for Tunnels (NAT) has assigned the electromechanical works of the third phase of the third metro line to an alliance of Alstom, Colas Rail, Arab Contractors, and Orascom Construction. A source told Daily News Egypt the offer submitted by the alliance was the only bid for the tender. Separately, a source had suggested earlier in the week that agreements with Alstom could be nullified after charges of bribery.

Egypt Iron & Steel Company announced it will amend its selling prices to have them match international selling prices and the domestic market, according to a bourse statement. The company had moved on 5 December to sell its output at “below cost” for three months starting from January 2017, but cited increasing cost pressures and a challenging economic situation as the reasons behind its reversal, according to Al Mal.

The Food Industries Holding Company (FIHC) has raised the prices of sugar for industry and trade, Al Borsa reports. Traders will now purchase sugar at EGP 10,500 per tonne up from EGP 7,500, while factories will buy it at EGP 11,000 a tonne from EGP 10,000. Sugar prices for ration card holders will remain fixed at EGP 7 a kilogram, but government retail outlets and co-ops have been instructed to raise the price of non-subsidized sugar to EGP 10 a kilo. The FIHC had attempted to raise the price of sugar for industry last month, but was met with a backlash from producers, who have been suffering from ballooning costs and supply shortages.

The Agriculture Ministry is asking fertilizer companies to end their boycott and replenish its supply of fertilizers for the remainder of December so it can cover farmers’ needs, Al Borsa reported. Fertilizer producers had decided earlier this month to suspend their shipments to the ministry until the Ismail cabinet agrees to raise regulated fertilizer prices by EGP 500 per tonne to allow the companies to cope with the increase in natural gas prices after the EGP float. The government has so far rejected the demands.

The House of Representatives’ Agriculture Committee now wants the government to raise the price the government pays to farmers for this year’s wheat harvest to EGP 650 per ardib, MP Mahmoud Heba tells Al Mal. The reason offered leaves in utter sympathy for the government for having to deal with these people: the devaluation and rising global wheat prices. We assume MPs are not goldfish and have a memory that extends past one month when the government acquiesced to raising the price of wheat to EGP 450 per ardib from EGP 420. But that’s about all the memory they have, as they themselves repeatedly rejected proposals whereby farmers would be paid the global market price with a EGP 1,400 top-up. We would also like to ask them how domestically grown wheat, cultivated with subsidized and locally manufactured fertilizers, will be affected by the float.

Orascom Development Holding (ODH) is awaiting the decision of the dispute resolution committee over the land on which its Haram City project is being built, Chairman Samih Sawiris told Al Mal. The company will not accept any decision that ends up repricing the land as this would go against signed contrast, he added.

NTRA gives TE room for maneuver in talks with other network operators: Telecom Egypt (TE) continues to maneuver for advantage after the National Telecommunications Regulatory Authority (NTRA) gave it breathing room by extending the deadline for TE to sign agreements with the three mobile network operators (MNOs) to use their existing 2G and 3G network infrastructure until it completes its own 4G network. The NTRA’s initial deadline, issued after Telecom Egypt acquired its license to offer 4G mobile services, has been extended for two more months. Negotiations between TE and the MNOs reportedly center around technical aspects of the agreement, liability for service quality and maintenance costs. CEO Tamer Gadalla said TE is not bound to sign agreements with all three operators and will launch 4G services after inking a pact with any one of them. He also said TE objects to having the MNOs launch 4G services before his company, saying NTRA should guarantee that none of the competitors gets a first mover advantage.

In other TE news, the state monopoly won’t make a decision on the fate of its 45% stake in Vodafone Egypt until the former holds a general assembly in March, Al Mal reports, citing an unnamed source from TE. As we noted last month, CIT Minister Yasser El Kady had previously said one of the possible scenarios to end the “conflict of interest crisis” (which he downplayed in a recent interview) is having TE transfer its Vodafone stake to its subsidiary, TE Holding.

The Transportation Ministry maintained it won’t be backtracking on its decision to hike port fees, Al Borsa reported, after its abrupt announcement on Sunday irked Alexandria’s Chamber of Shipping, whose board of directors unanimously condemned the decision. Sources from the ministry said that the decision has been under discussion with the relevant parties for two years, and will not have a negative effect on shipping businesses’ profits.

Innoventures (which bills itself as an “innovation platform” — we’re neither intelligent nor hip enough to get what that means, but we’re presuming it’s hipster code for some kind of VC-related activity) announced it has launched a new EGP 30 mn fund for startup ventures. “In addition to growing their team of partners, Innoventures will also launch two new innovation spaces, besides their pre-existing Ideaspace in Heliopolis, to serve as hubs for young entrepreneurs.” The outfit has also welcomed Amr Sadek and Munaf Emam as partners.

The American Chamber of Commerce suggested that the General Organization for Export and Import establish a white-list of importing companies with a “good reputation” to avoid going through a full inspection for each shipment, Al Borsa reports. As we noted last month, the Customs Authority previously said it will be implementing a black- and white-list system and compiling a comprehensive database of importers and exporters once its new x-ray equipment comes online in early 2017.

House Speaker Ali Abdel Aal appears to be threatening to censor Al Qahera Wel Nas’ Ibrahim Eissa. Upset that the media was doing its job by suggesting the House might not be discharging its responsibilities, Abdel Aal derided the government for not investigating Eissa for comments the suspendered-one made that were critical of lawmakers, Al Ahram reports. Abdel Aal claims Eissa’s criticism — the speaker isn’t pointing to any one night in particular — were against the law, which last we checked reflected a constitutional guarantee of freedom of speech. Legal Affairs Minister Magdy Agaty promised that the government was going to look into it.

Tax Authority’s dispute resolution committee has received a total of 1,400 requests to resolve income and sales tax-related disputes since a law passed in September created a one-year window for dispute resolution, sources told Al Borsa.

Beyond the Cathedral bombing, Egypt’s security situation is getting deadlier, according to the Tahrir Institute for Middle East Policy’s Egypt Security Watch report for 3Q16 (pdf). While the number of attacks fell to 209 from 228 in 2Q16, the attacks have been doing the more damage, as 47 civilians were killed in the quarter, nearly double the number in the second quarter. 92 security personnel were killed, with 95% of the attacks taking place in North Sinai.

Pakistani navy ship Alamgir arrived at port of Alexandria in Egypt on a three-day goodwill visit, Radio Pakistan reported.

Shafik officially off no-fly list: Prosecutor General Nabil Sadek issued an order to remove the travel ban lodged against former presidential candidate Ahmed Shafik, taking his name off the no-fly list, according to Al Masry Al Youm. Sadek’s move followed the court order in November that ordered his name be removed from the no-fly list and cleared the way for him to return to Egypt. The case filed by Shafik’s lawyer to enforce the court order was dropped accordingly.