Until just two months ago, very few in Egypt remembered the drinks from Spiro Spathis, a local company founded in 1920 by a Greek immigrant of the same name that claims to be the first soft drink to be produced and marketed in the country, initially in a factory located on a popular street in the center of Cairo.
In recent weeks, however, the company claims to be experiencing something of a carom renaissance. A popular initiative to boycott products and brands that are in some way associated with Israel, launched in response to its military offensive on Gaza, is benefiting, in turn, some national brands such as Spiro Spathis. The boycott campaign, whose impact is difficult to determine, has left other unusual images on social networks and local media: deserted establishments of chains such as McDonald's and Starbucks, calls not to consume either Coca-Cola or Pepsi, and students of an elitist university from Cairo sabotaging the insurance company Axa during a job fair.
In a country where demonstrations are in practice prohibited, some have found in boycotting companies with ties to Israel a way to protest, as has happened, although with a very uneven scope, in other countries such as Jordan, Kuwait and Morocco. “When the idea of the boycott arose, with a few products like Pepsi and Coca-Cola, I started with all of them,” says Arwa, a young teacher from Cairo who prefers that only her first name be published. “Now I am more careful about what I buy and I think I have reduced my purchases and check more if it is Egyptian products,” she adds. “The boycott is the least we can do for the brave Palestinian people,” she slips.
There are those who believe, however, that the boycott, however limited, could represent an additional obstacle at a time when Egypt is suffering a crisis that has dented the purchasing power of the majority of Egyptians and has harmed sales of many companies. In this context, the Federation of Egyptian Chambers of Commerce (FEDCOC) called last November to suspend the campaign, alleging that the companies it targets are franchises with Egyptian workers and pay their taxes in Egypt.
One blow after another
For the Arab country, the Israeli offensive on Gaza came when it was still trying to assimilate the harsh setback represented by the economic turbulence caused by the pandemic and the Russian invasion of Ukraine, which showed the fragility of its economy and the unsustainability of the growth model. pursued by Cairo in recent years. This was based on the accumulation of debt and a high investment in large infrastructure projects of uncertain return, while a large trade deficit was neglected that attempted to be covered above all with remittances, tourism income and volatile speculative capital; a formula very vulnerable to external setbacks.
Despite being neighboring countries and maintaining diplomatic relations for more than 40 years, Israel represented less than 0.5% of Egyptian exports in 2022 and just 1.5% of its imports, especially fuel, according to the Center's calculations. of International Trade based on statistics from the UN Comtrade database.
Even so, the beginning of the offensive in Gaza generated alarm because it threatened to affect two of the main assets that Egypt still had: natural gas exports and tourism. But not only have the most catastrophic forecasts not come true, but for now Cairo is being able to navigate the storm skillfully while trying to capitalize on the moment to receive more help from abroad. “So far, the impact [económico] of the war in Egypt is minimal,” notes Alia Al Mahdi, former dean of the Faculty of Economics and Politics at Cairo University. “There has been no change in the performance of the economy, except in tourism,” she adds.
In the fiscal year
2022-2023, natural gas was Egypt's main export, thanks to Israeli gas imports that Cairo re-exports. When the crisis in Gaza erupted, Israel halted production at its second largest gas field and suspended exports to Egypt through one of the two gas pipelines connecting them, reducing the flow of gas to almost zero. Activity, however, resumed in early November and the volume of Israeli gas has returned to levels similar to those before the war. “Egypt has exported two shipments [de gas natural licuado] since November 21. But can you maintain it? I don't think so,” says Peter Stevenson, an Eastern Mediterranean expert at the Middle East Economic Survey, a publication specializing in the energy industry. “This is mainly due to the drop in production at the Zohr gas field. I think that in general the trend will be downwards year after year.”
In the case of tourism, organizations such as the IMF predicted that the war in Gaza could drive away potential visitors in neighboring countries. But the Egyptian Government assures that the impact on hotel reservations has been less than 10% and that the number of tourists in October and November was higher than during the same period of the previous year. “The only slightly affected areas are those in the Sinai, such as Taba, Dahab, Nuweiba and Sharm El Sheikh. However, they constitute less than 20% of total tourist reservations [del país], and most are not cancellations but postponements,” says Moataz Sedky, co-chair of the travel committee of the Egyptian American Chamber of Commerce. Some of these towns are especially popular tourist destinations among Israelis.
In recent weeks, Egypt has had to deal with another setback caused by the crisis in Gaza: the disruption of shipping in the Red Sea due to attacks by Yemen's Huthi movement against commercial ships and the consequent decline in traffic through the canal. Suez, which represents a key source of income for Cairo.
The number of ships transiting through the area has fallen by up to 40%, according to the naval monitoring platform Project44. But in recent days several shipping giants, including Maersk and CMA, have announced their intention to resume circulation after the US announced a greater military deployment, so the impact on Egyptian public arms remains to be seen.
At the same time, the crisis in Gaza and the specter of a possible contagion to Egypt that could deepen its critical economic situation and generate instability has led its main international allies to show signs of being willing to leave behind the reluctance they had expressed in the last year. to rescue Cairo again without conditions. Now, Gulf countries appear more inclined to lend a hand to Egypt in the form of new deposits in its central bank, support for the currency and new investments, as the IMF considers increasing a $3 billion loan signed in 2022.
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