Good morning, everyone, and welcome to June. We know it’s a few days early, but if the calendar says June, it’s summer — the season of sun, the beach and travel. So happy summer, everyone.

THE BIG STORY HERE AT HOME is the prospect that government inspectors could be asking us all to hand over 1% of our net profits after a Supreme Court ruling paved the way for the Manpower Ministry to collect a 1% tithe. The levy on corporate profits had been on hold for years while it was the subject of the court challenge.

There’s a way out, though: The House of Representatives needs to get moving and pass the new labor act, which has been in the pipeline for ages now, but which appears to be stalled in committee. The new act would replace the 1% tithe on net profit with a much more modest fee capped at a maximum of EGP 50 per employee per month.

We’re hoping our elected representatives act quickly — that 1% of net income is flexibility that business owners need as their companies (and their staff) come under pressure from rising inflation.

^^ We have chapter and verse on that and a ton of other stories in this morning’s news well, below.

NEWS TRIGGERS you’ll want to keep an eye on as the new month gets underway:

• PMI: Purchasing managers’ index figures for May will be released on Sunday, 5 June. Saudi Arabia’s PMI will be out the same day, and the UAE data is released on Friday, 3 June;
• Foreign reserves figures for May should be announced sometime next week;
• Inflation figures for May are due out on Saturday, 9 June (from state statistics agency Capmas) and Sunday, 12 June (central bank figures);
• Capmas’ monthly bulletin covering the price of key building materials is due out on 5 June;
• The Central Bank of Egypt’s monetary policy committee meets next on Thursday, 23 June.

SIGN OF THE TIMES- Don’t expect a ton of output from RenCap for a while: Russian investment bank Renaissance Capital will close its offices in London, New York and Johannesburg and suspend all of its research coverage as Western sanctions hit the business, Bloomberg reported, citing people familiar with the move. The bank will lay off some of the employees in their New York office and the majority of 60 employees in London, with only a few remaining to wind down operations in the UK. Its Russian and Cypriot operations would not be affected, according to two of the people. We’re reaching out to friends at RenCap’s Cairo and Dubai offices to see what’s up there and will report back tomorrow.

MEANWHILE- The wait is finally over—Egypt has launched its official COP27 website. The site went live just a few weeks after it unveiled the logo for the upcoming conference, set to take place in Sharm El Sheikh in November.

WHAT’S HAPPENING TODAY-

EU Commissioner for Neighborhood and Enlargement Olivier Varhelyi is in town to discuss European investment in Egypt as well as efforts to overcome global food insecurity triggered by the Russian invasion of Ukraine, according to a statement from the European Commission. Varhelyi yesterday attended the signing ceremony for the project to expand the Helwan wastewater treatment plan, which is being backed with a EUR 78 mn loan from the European Investment Bank.

REMEMBER- The EU is providing Egypt with EUR 100 mn in support to help us tackle rising food prices amid the ongoing war in Ukraine, The funding, announced in early April, is part of a freshly announced EUR 225 mn Food and Resilience Facility for MENA countries.

The EU might step up its funding to Africa: The visit comes as the EU is studying a proposal to allocate EUR 500 mn to African countries struggling amid the record food prices and rising food shortages, Bloomberg reported, citing people familiar with the matter.

A drop in the ocean: The proposal, which might include both loans and grants, would be sufficient to purchase only 1.3 mn tons of wheat, a tiny amount compared to the 50 mn tons imported by the continent each year.

Africa isn’t happy about the sanctions on Russia: African Union head Macky Sall has criticized Western financial sanctions on Russia for making it harder for African nations to purchase Russian food. Speaking to EU leaders at a summit yesterday, the Senegalese president said that the banning of Russian banks from the Swift payment system makes it “complicated, if not impossible” for countries to purchase grain. The EU yesterday banned Russia’s biggest bank, Sberbank, from accessing Swift as part of a new round of sanctions targeting Moscow’s energy exports and financial system. The Wall Street Journal and the FT have the story.

HAPPENING IN THE REGION-

There’s a new sovereign wealth fund on the block: It only took eight years, but Israel's sovereign wealth fund will finally start operations today after regulators said this week that it has met the minimum revenue required by law, according to Bloomberg. The fund, which will invest tax revenues from the country’s offshore gas fields, was approved by parliament back in 2014 but low gas tax revenues have prevented it from launching.

Russian Foreign Minister Sergei Lavrov is in Saudi Arabia to meet with GCC ministers today, Reuters reports. Ministers from Saudi Arabia, the UAE, Oman, Kuwait, Bahrain (which Lavrov visited yesterday) and Qatar will hold talks with the Russian minister at the GCC headquarters in Riyadh, the sources said, without disclosing the subject of the discussions.

Likely to be on the agenda: Some OPEC members are considering exempting Russia from OPEC+ supply agreement as Western sanctions undermine the country’s ability to increase production, the Wall Street Journal reports. Under the agreement, producers are supposed to gradually ramp up output each month, but with Russian production forecast to fall 8% this year, it’s unlikely that it will be able to stick to the terms. Leaving Russia out of the agreement could allow other producers to significantly up supply and calm oil prices which have surged above USD 100 a barrel. The OPEC+ alliance is scheduled to meet on Thursday where it is expected to sign off on another 432k barrels a day increase in July.

MEANWHILE- The EU’s oil embargo is the big story globally this morning: Fresh off of pledging to block 90% of its oil imports from Russia by the end of the year, the EU yesterday agreed with the UK to block insurance on ships carrying Russian crude. The move means that tankers will be unable to access Lloyd’s of London, the most important insurance market for the shipping industry in the world.

Gazprom cuts more gas flows to Europe: The Russian gas giant will today cut supplies to Denmark and Germany after Danish supplier Ørsted and Shell refused to comply with its RUB-for-gas scheme. Though Germany relies on Russia to provide 55% of its gas imports, the impact on the country is expected to be limited given Shell only supplies a fraction of its annual consumption. This comes a day after Gazprom cut supplies to the Netherlands and a month after it suspended shipments to Poland and Bulgaria.

The energy markets have shrugged: Brent, US crude and natgas futures are marginally up in trading this morning following yesterday’s rally.

The tit-for-tat energy war is front page news in the global press: Bloomberg | FT | WSJ | Reuters | AP | BBC | CNN.

CIRCLE YOUR CALENDAR-

The Greek Campus is holding a workshop today headlined “Transitioning to e-mobility” that will look at the electric vehicle industry in Egypt (and worldwide). The workshop will run from 6-9pm and will be led by Ayman Mohamed and Ahmed El Hosseny, co-founders of local EV marketplace Electrified.

Conference season continues next week:

• Africa Health ExCon runs from Sunday-Tuesday, 5-7 June at Al Manara International Conference Center, Egypt International Exhibitions Center, and the St. Regis Almasa Hotel in the new administrative capital.
• Technology conference Tech Invest 4 will take place next Tuesday, 7 June at the Grand Nile Hotel in Cairo.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: As the PPP model for infrastructure models gains popularity, how is Egypt comparing to the MENA region and beyond? A new report by the World Bank maps out the landscape of committed PPP investments globally in the region, including a breakdown by sector and value. Enterprise crunched the numbers to see which infrastructure PPP trends are taking place in Egypt as well as where we’re lagging.