The vulnerability of Italy to revolutionary changes on the southern Mediterranean shore has been very high, if not the highest among its European colleagues. The initial shock of the massive influx of Tunisian migrants and refugees (specifically, the famous case of the 20,000 Tunisian refugees arriving to the 5,000-inhabitant Italian island of Lampedusa in early 2011), was followed by a gas disruption tragedy when Italy’s main gas supplier, Libya, started to live its own revolution. The revolution in Egypt was not less important to Italy than the previous two cases, since Egypt is one of Italy's main trade partners in North Africa and is home to many Italian investments, not to mention its enormous political and strategic importance.
Italy is generally the main trade partner of North African countries, especially Libya, Tunisia and Egypt. According to a recent report, Italy achieved in 2011 trading volumes of 57.7 billion Euros with Southern Mediterranean countries, ahead of many other important European states . Interestingly, Italy is Egypt's second trade partner after the United States; Italy ranks third to Egypt after the UK and Germany in terms of tourism; and Egypt is home to many Italian investments. Italy's leading cement producer, Italcementi, which owns the Suez Cement Group SCG, and Italy's famous bank, Intesa Sanpaolo, which owns 70% of Bank of Alexandria are two key examples.
Italian-Egyptian economic relations have been resisting two unstable years since the eruption of the protests in January 2011. Moreover, many examples do exist to prove that the two countries have even discussed further cooperation during these two years, such as the Italian-Egyptian green-trade project with the cost of 50 million Euros in November 2011 as well as Italy's Prime Minister Mario Monti's announcement in early 2012 that his country is ready to convert nearly one quarter – $100 million – of Egypt’s debt to Italy into grants targeting developmental and infrastructure projects . The significance of these important economic and trade ties have been reflected in the visit of the newly elected Egyptian President, Mohamed Morsi, to Italy as his first trip to a European country. This was also shared by Italy’s ambassador to Egypt, Claudio Pacifico, who stressed the importance of the visit on the level of bilateral trade, expecting it to boost in the coming period . Recently, after the deadly train accident of Manfalout in Upper Egypt on November 17, 2012, Egypt has held talks in Cairo with Italian officials and businessmen aiming at benefiting from the Italian expertise in restructuring Egypt’s railway system.
However, the continuous instability and lack of security in Egypt pose serious challenges to the future of Egyptian-Italian relations, especially on the level of investments. Italian investors have been complaining of the frequent change of ministers, which affects the stability of their businesses and creates more and more an environment of risk and uncertainty. Nino Cingolani, co-chairman of the Egyptian National Railways Transformation Programme, was quoted saying that investors “need political stability, as seven transport ministers have resigned since 2009” .
The recent announcements of the Egyptian Prime Minister, Hisham Qandiel, about the planned increases in gas and mazut prices were also viewed with much apprehension by Italcementi . The company, as announced by Bruno Carre’, the managing director of the SCG, continued to work in Egypt and was even planning to increase its investments in the Egyptian market, especially in the energy sector. This was to start with a project in Gabal al-Zaiat, Red Sea Governorate, with investments reaching nearly 140 million Euros . However, with the additional cost that would follow with the planned increase of gas and mazut prices, coupled with the continuous political instability, it might not be that unexpected that investors re-make their calculations.
The same goes for Intesa Sanpaolo, which owns 70% of Bank of Alexandria. It is no secret that European banks have been seeking to sell their shares in Egyptian banks to Gulf ones. France started the process when it sold Societe Generale and BNP Paribas in Egypt to Qatar National Bank and Dubai's Emirates NBD respectively in 2012 . With the current renewed violence in Egypt's streets and the impasse between the ruling Muslim Brotherhood and all other political powers, news started to spread again on how other European banks would follow in getting rid of their investments in Egypt. The names of France’s Credit Agricole, which holds a 61% stake in Credit Agricole Egypt, and Italy’s Intesa Sanpaolo, were topping the list . Even with the repeated assurances of the Intesa Sanpaolo's Chief Executive, Enrico Cucchiani, who numerously dis- missed speculations about the sale of Bank of Alexandria , the prospects for secure and durable foreign investment in Egypt are indeed diminishing as long as the current circumstances are persisting.