JOINT REGIONAL DEVELOPMENT PROJECTS AND THEIR ROLE IN INTEGRATING INTERESTS AND ACHIEVING DEVELOPMENT

Introduction

Whether on the political or economic levels, the Arab region map is witnessing a change through establishing economic projects which have a political and security dimension. The Tripartite Partnership Project which starts with extending a pipeline from Basra port, south to Iraq, then to Aqaba port in Jordan, to reach Nuweiba in Egypt, will contribute in opening new markets for energy in the region, and it will change the map of this field, where it will create an alternative corridor to transport petroleum and gas from the Levant and the Arab Gulf to Europe instead of the strategic Strait of Hormuz. The project stipulates that Egypt and Jordan should import petroleum for $16 per barrel, and to supply Iraq with electricity in return, where the electrical connection between Jordan and Egypt on a hand, reaching Iraq on another hand, will work on supplying Iraq with 360 gigawatts of electric current. In return, Egypt would be able to refine a part of Iraq's petroleum, via benefiting from the massive capabilities of Jordan in the field of transportation.

Arab countries have hopes on the projects of electricity interconnection in order to achieve stability for energy and to afford electric power. For decades, huge efforts have emerged to execute many projects, the most significant of which are: the eight-partite electrical interconnection, the Gulf electrical interconnection, and the electrical interconnection between Egypt and Saudi Arabia. These efforts are within a major plan seeking to create a joint Arab market for electric power, which gathers the experiences of all Arab states, and provides all their needs.

Egypt and Saudi Arabia agreed on executing a project for electrical interconnection between the in order to exchange electrical power of 3000 megawatts. The project -followed by an integration in achieving the largest energy market included in the Arab Gas Pipeline- has great benefits, where the electrical supplies will be afforded to all states in more organized and efficient manner, especially that the electrical capabilities mixture depends on petroleum, gas, renewable energy, and the biological fuel for electricity production. 

1. The Tripartite Partnership: Economy Reality and Potentials  

Four summits were held between Egypt, Iraq, and Jordan since 2019 within the frame of the Tripartite Partnership Project, which is based on a set of understandings and interests, primarily the economic interests, with the EU paradigm as an idol, in order to facilitate capital and technology flow between these three states in more streamline manner, the matter which can be deemed as a new formulation in a troubled region that suffers the Iranian influence, besides Egypt's problems with Ethiopia related to al-Nahda Dam.

The three states, through the project, look forward to increase the scale of the economic cooperation and exchange, actively contribute in forwardness and economy progress, and achieve a reciprocal benefit, where such Project is deemed as an alliance based on the strategic partnership to reach an economic integration, which might be followed by political -or even security- coordination. The economic coordination leads to attracting the investment projects and working on increasing the trade exchange, which will participate in increasing the production, increase the economic growth for each state, and avail more job opportunities.

In addition, working on removing all obstacles between Egypt's and Jordan's seaports would facilitate transporting the Egyptian products to Jordan then to Iraq, and vise a versa. Through developing "The Arab Bridge company" owned by the three states, the foregoing would lead to opening new markets, offer services, and increase the cooperation in the fields of petroleum and gas, including establishing joint companies for chemical industries, the matter which will lead to maximizing the sources on income and increase the resources of such states. This Company is deemed a significant and strategic trade gate to link the Arab states in Africa and the Arab states in Asia, the matter which fostering the commerce and integration between such states is working on.

The economic and trade relations between Egypt and Iraq are characterized with their diverse fields, in the light of the two countries possessing abundant capabilities to be developed. This could have an impact in the future of relations in the Tripartite Partnership Project [1] which is -basically- established on economic cooperation with political dimensions. In the light of the geopolitical transformations the Middle East is experiencing, the Project aims to reproduce the pioneering role in the region, via benefiting from the economic revenues, then enhancing the investing and trade aspects, and activating the diplomatic mechanisms in order to solve the regional crises.

In fact, the Egyptian exports to Iraq reached around $421.75 million [2] in 2020. It is to be mentioned that the commercial exchange between the two countries started in a more organized and institutional form, through some agreements and protocols to establish a trade free zone between the two countries in 2011, reaching a record in 2018 with a sum of $1.65 billion.

In general, the trade exchange leads to strengthening the international economic relations, which may encourage the companies and factories to increase their level of productivity,  which will help in supporting and developing the economy for the two states, via creating new investment motivation, therefore, creating new and diverse job opportunities.

It becomes clear the trade relations between Egypt and Iraq experienced ups, downs, and recede stages. The figure above indicates that Egypt's exports to Iraq are still weak and unstable comparing to other states, in spite that Egypt has export opportunities that help in increasing accessing the Iraqi markets. According to the Export Council for Agricultural Products, Iraq imported 3% of the total Egyptian agricultural exports during the period as of September 2018 till the end of June 2019 [4], this reflects the big exporting opportunities of the Egyptian agricultural sector in the light of Egypt's weak agricultural production and related industries exportation to Iraq, as well as the growing need the Iraqi local market has to these products. In addition, there are opportunities in many sectors such as clothing, electrical appliances, furniture, ceramics, and others.

It is worthy to note that the Egyptian imports from Iraq during the period from (2010-2020) were also fluctuating, the matter which was reflected on the trade balance of the two countries. The trade balance between Egypt and Iraq did not permanently come to the favor either of them during the same period.

As for trade exchange between Egypt and Jordan during the period from January to September 2020, it amounted to approximately $514 million, according to a statement issued by the Jordanian Ministry of Industry, Trade and Supply, with a decrease of 23.5% when compared to the same period in 2019.

According to the United Nations International Trade Database, the most important Egyptian exports -among others- to the Jordanian market are food products, fruits, ceramics and rebar. While the most important goods of the Egyptian imports included medicines, agricultural enrichers, carpets and fertilizers.

Egypt is seeking to establish a political or an economic bloc with Jordan and Iraq. Jordan's presence in the Cairo-based East Mediterranean Gas Forum makes the two parties achieve mutual benefit, where Jordan needs various sources of energy, such as gas, from Egypt. In addition to Egypt's support for Jordan's desire to strengthen relations with petroleum-producing countries such as Iraq. Therefore, this project is a strategic alliance that constitutes the basis for the stability of this region, in light of the changes that some countries in the region are trying to bring about. Also, Iraq needs regional security stability in the light of the tensions and political vacuum that has affected it since 2003.

Thus, the Tripartite Partnership Project resembles a qualitative opportunity for the three states, where it is expected to enhance the regional role of the three states on the basis on their elements of power, and to employ such elements in a beneficial manner for all parties. Egypt s experiences in different fields, above and beyond its location over the Mediterranean and Red Sea, as well as having a huge human mass. Iraq has a tremendous petroleum resources. While Jordan has a distinguished strategic location in the middle of Asia, Europe, and Africa, in addition to some good economic characteristics. Therefore, such Project is deemed to be a significant step towards the integration of Arab resources and energies, the matter that promises to change the equations and scales in the region's conflicts. Political, economic, and security strategies would -perhaps- help in such regard.

Hence, the relationship between these countries will not only be within the framework of trade exchange and investments, but there will be strong strategic relations capable of facing the challenges of the region, and capable to face the dangers of the expansion of other non-Arab regional powers, which exploit the status of weakness and impotence in the Arab region, with the aim of creating a new reality in the region.

2. Prospects of Partnership for Development in the Electricity Interconnection and the Arab Gas Pipeline

The electric power is closely and directly related to the economic and social growth in modern societies, where providing electricity is a necessity at all levels, starting from the individual usage up to the production processes carried out by major economic entities, in addition to that the electricity represents the interconnection of networks between countries as an important tool of economic integration [5].

Therefore, Arab countries lately have been intensively seeking to implement electrical interconnection projects, this may spare permanent or even partial power outages in some countries, for the required energy is transferred directly, this results an added value to the economy. Perhaps, in the medium and long term, this will lead to the establishment of a common market in the field of energy, followed then by a joint market in other economic and commercial fields.

The main benefit of connecting several electrical networks is to reduce the spare capacity installed in each network, then reducing the necessary capital investments to meet the demand for capacity, without compromising the degree of safety and reliability in the connected networks. This is in addition to benefiting from the establishment of generation stations in the most economically-feasible locations, which are proportionate with the environmental requirements [6]. This is what the environment needs now in light of climatic changes. The following table presents basic data on the electricity sector in the Arab countries.

It is clear that the capacity of the Arab generation system grew rapidly during the period from 2004 to 2012, reaching an annual growth rate of 6.5%, which is considered a high rate, but it decreased by 5.3% during the period from 2012 to 2018.

Saudi Arabia and Egypt have the two largest electricity generation groups, with a generation capacity of 57.3 GW and 45.3 GW respectively, which represents 39.8% of the installed capacity in the Arab countries [7]

Therefore, when looking at the electrical interconnection project between Egypt and Saudi Arabia, which is deemed to be a core and a serious step towards the Joint Arab Market for Energy Transmission in general, we see that Saudi Arabia is linked to the Arab Gulf states through the Gulf Electrical Interconnection Authority, done by the Gulf Electricity Interconnection Authority. By interconnection Egypt and Saudi Arabia; The first will be linked to all the Gulf states, making the interests be in an overlapping one network. This may create a kind of unification towards various political and economic issues. Of course, this interconnection will lead to avoiding the costs of establishing new stations, reduce the cost of production, and achieve a surplus of electricity.

There is also an electrical interconnection between Egypt, Libya, Jordan and Sudan, which will be reflected in Saudi Arabia, which will become an electrical link with these countries as well, through the link with Egypt. In addition, Egypt's plan to interconnect electrically with Europe through the states of Cyprus and Greece. With this Egyptian-European link, the Gulf States will become connected to the European electric grid too.

The foregoing works on achieving an economically-integrated project. This electrical interconnection would be beneficial to the domestic product of states, enhance the movement of trade and energy exchange between them, and will also be a support and incentive for the continuity of joint projects in other sectors.

Countries benefited from the electrical interconnection project, but in different levels, as some countries were able to export part of their surpluses [8]. But the project stopped after the events of the so-called "Arab Spring" in 2011, as a result of political disputes between some countries, as well as the internal situation of some countries has become unstable at the political, security, and hence economic levels.

The octet electrical interconnection project was returned to, within the frame of the attempts to anchor stability in the region once again, with a more consistent manner with regional political and economic variables. We find that the electrical interconnection between Egypt and Jordan witnessed an agreement to raise the electrical capacity to 1000 megawatts or 2000 megawatts instead of 500 megawatts. This situation may extend between other countries in the region to interconnect them to each other. It is possible that the electrical interconnection will reach Europe, or to the African continent through Egypt [9] which helps to encourage and strengthen cooperation between Jordan and Egypt in various fields.

On the other hand, electricity will be transferred from Jordan to Syria to Lebanon via Egyptian gas. This is an important development. Since the pipeline will pass through Syria, Jordan has communicated with the United States to get exceptions to the sanctions on Syria, and to work to find a solution to the Syrian situation in which several parties are fighting in. Indeed, Jordan succeeded in playing a mediator role in extending gas to Lebanon.

Here, it can be said that the interest is of twofold, as Syria may witness a return to the Arab world in the traditional concept of the state, and curb some of the forces that struggle on its territory, and then open channels of communication at different levels with the Arab world and the United States of America. Syria will benefit from the stability in the region, preventing being dragged into the Iranian camp. Syria's stability, on the other hand, helps Jordan economically, and, of course, Lebanon will also benefit from electrical transmission to it, which contributes to address many of its crises.

In this context, Egypt, Syria, Jordan, and Lebanon agreed to develop a plan to supply Lebanon with Egyptian gas. The total length of the 1,200-kilometre pipeline is at a cost of $1.2 billion, and annually transports 10.3 billion cubic meters of gas.

The goal is not only economic, but also carries geopolitical goals, which may change the regional equation and anchor new balances, for this extension to Lebanon will limit the threat of the Iranian petroleum card. This agreement achieves economic benefits for all parties. Through its presence in this line, Syria for example will achieve an important step in a series of steps for its return to the League of Arab States, and it may later join the tripartite partnership project. Egypt benefits in the context of its transformation into a regional energy center, as it exports its gas surplus, which generates a hard currency and thus an increase in the cash reserve. Jordan, through these projects, in which it plays a pivotal role, will earn transit fees, and Syria will also generate revenues from transit fees.

This is in addition to the political gains that may accrue to it, as both Syria and Lebanon benefit permanently from the Egyptian gas surplus, especially in light of Egypt’s search for markets in neighboring countries in the first place. The foregoing may create a consensus over Arab and regional issues, after the past years' rifts, which is reflected in building economic foundations with strong ties under a political umbrella.

Conclusion

The Arab world is entering a new phase of alliances that may make it more integrated and unified in the future. The road map for Arab Electricity Union, in order to adopt strategies to enable Arab electricity institutions, including diversify, and invest more in the available energy sources from petroleum, gas, and the renewable sources of energy available in it. This will develop the connections between countries' electricity interconnection, and may develop it in the various productive sectors, besides that the transmission and distribution of electric power, will be an important step towards facing the economic and political challenges that the Arab countries are currently experiencing, as electric power plays a major role in moving the wheel of the economy, especially since the economies of Arab countries do not depend on the use of electricity in it. Alternative strategic energies, such as nuclear energy to produce electric power, and new and renewable energies, require huge investments and advanced operational qualifications that are not available in many Arab countries, in addition to the fact that the cooperation between the Arab Gas Pipeline countries will be an effective and an influential step in supporting strategic projects and promoting common interests that It would have a positive impact on economic and social development in these countries.

Finally, the tendency of Arab countries to establish these alliances, means trying to search for new strategies and open horizons, that help to maximize the political importance of these countries in light of the policy of regional axes. It is important that the political will be available to achieve these alliances, and that countries be able to avoid the attempts that the project is expected to face, from multiple forces through rational and rational political management.

References

[1] State Information Service: Egyptian-Iraqi Relations (Egypt: State Information Service, 2021).

https://www.sis.gov.eg/section/127/14654?lang=ar

[2] Egypt exports to Iraq: https://tradingeconomics.com/egypt/exports/iraq

[3] State Information Service: a previously mentioned reference.

[4] Agricultural Export Council. https://www.aecegypt.com

[5] Muhammad Farhat: “Renewable energy sources in the Arab world and their uses in electrical generation”, Journal of Oil and Arab Cooperation (Kuwait: Organization of Arab Petroleum Exporting Countries - General Secretariat, 2019), p. 90.

[6] Arab Fund for Economic and Social Development: Electricity Interconnection (Kuwait: Arab Fund for Economic and Social Development  , 2020). https://www.arabfund.org/

[7] Samir Qutb: "The Role of Arab Electricity Interconnection Networks in Maximizing the Exploitation of Generated Energy in Un-programmed Renewable Energy Units", Journal of Oil and Arab Cooperation (Kuwait: Organization of Arab Petroleum Exporting Countries - General Secretariat, 2019), p. 40.

[8]  Arab Fund for Economic and Social Development: “Arab Cooperation in the Field of Electricity Interconnection, an Analytical Perspective”, Journal of Oil and Arab Cooperation (Kuwait: Arab Fund for Economic and Social Development, 2010), p. 115.

[9] https://al-ain.com/article/jordan-egypt-agreement-strengthen-electrical

The opinions expressed in this study are those of the author. In no way does Strategiecs take responsibility for the views and positions of its author on security, economic, political, social, and other issues, and such views and/or positions do not reflect those of Strategiecs.