|Egypt Table of Contents
The revolutionary regime shifted Egypt not only politically but also economically toward the Soviet Union and Eastern Europe. Prior to 1952, Egypt's major trading partner was Britain. By 1970 the share of Egypt's exports to the Soviet Union and Eastern Europe had risen to about 60 percent of the total, climbing from about 20 percent in 1955. The share of imports from the Soviet Union and Eastern Europe during the same period increased from 7 percent to about 33 percent. Nevertheless, Western industrialized countries continued to be the major source of imports, especially of food, which Eastern Europe could not furnish. In general, trade with Eastern Europe showed a balance of payments surplus in favor of Egypt, but this surplus may have resulted partly from politically motivated subsidies.
Ending the concentration of trade with Eastern Europe was an integral element of Sadat's westward reorientation of the country. The consolidation of trade with the Organization of Economic Cooperation and Development (OECD) continued apace under Mubarak. The United States emerged as Egypt's largest source of imports, in part because its aid to Egypt was conditioned on Egypt's purchasing American goods and services. Between 1982 and 1986, Egypt obtained from the United States an average of 16 percent of its total imports. On the average, OECD nations supplied 46 percent of imports and purchased 55 percent of Egypt's exports by 1986.
Put differently, Egyptian foreign trade was concentrated with the industrialized countries. Third World and Arab nations were minor trading partners. Some analysts argued, however, that if Egypt wished to attract foreign industrial investment it would need to obtain new markets, especially in the Arab region. The Arab market had been closed to Egypt because of Egypt's 1979 peace treaty with Israel, but the reentry of Egypt into the Arab fold in the mid-1980s might further trade with the Arab nations. A regional economic Arab Cooperation Council including Egypt, Iraq, Jordan, and the Yemen Arab Republic (North Yemen) was formed in February 1989. It set modest goals, and in the early 1990s it was unclear how this accord would fare, given the failed record of Arab integration schemes and the politicized nature of the bloc, which, for example, excluded Syria, a natural partner in regional economic cooperation.
Source: U.S. Library of Congress