Egypt Requests $2 Billion Russian Loan as Mursi Meets Putin

Egypt requested a $2 billion loan from Russia during a meeting between President Mohamed Mursi and his counterpart, Vladimir Putin, Egyptian Industry and Trade Minister Hatem Saleh said.

The countries’ finance ministers will discuss the details, Putin’s foreign-policy adviser Yuri Ushakov told reporters after the meeting in the Russian Black Sea town of Sochi. Mursi earlier told Putin that he wants to forge a “real political union” between the two nations, calling him a “dear friend” and “brother” as they began their talks. The Russian leader said ties are being restored “at a full scale.”

Egypt, once a Cold War ally of the Soviet Union, has so far failed to secure an agreement with the International Monetary Fund for a $4.8 billion loan to stabilize its economy. An accord is within reach, Egypt Finance Minister El-Morsi El-Sayed Hegazi said in Washington today. Russia plans to restore strategic ties with Egypt, according to Alexei Pushkov, the head of the Russian parliament’s foreign-affairs committee.

“The Americans are aiding Egypt with around $2 billion per year,” Pushkov said by phone from Moscow today. “They understand the strategic role of this country in the Arab World. We should finance our foreign policy too.”

Russia is ready to consider any aid request from Egypt, Putin’s spokesman Dmitry Peskov told reporters yesterday. The North African country has invited Russia to build a nuclear power plant, Russian Energy Minister Alexander Novak said in Sochi today.

Reserves Plunge

The economy of the most-populous Arab country has struggled to recover from the 2011 uprising, growing at about 2 percent annually, compared with a 6.2 percent average in the five previous years.

The country obtained $5 billion in aid from Qatar and Libya last week to help replenish foreign reserves that have dropped by more than 60 percent since December 2010, reaching $13.4 billion last month, equivalent to less than three months of imports. Hegazi today urged the country’s political parties to united around an economic program attached to IMF aid.

“We are promised that this will be in a few weeks,” Hegazi said in a Bloomberg News interview yesterday in Washington when asked about the possible loan. “The IMF would like to see to what extent the political parties and the authorities are ready to have some prior actions” taken, such as a general sales tax, he said.

Nasser, Khrushchev

Egypt and the Soviet Union became allies from the 1950s under Egyptian President Gamal Abdel Nasser and Soviet leader Nikita Khrushchev. Egypt received Soviet military assistance, including during the 1973 Arab-Israeli war, and the USSR financed key facilities such as the Aswan High Dam -- a project to irrigate arable land and supply electricity.

The ties lapsed after Nasser’s death in 1970, when the Arab nationalist was succeeded by Anwar Sadat, who set the regional powerhouse on a new pro-U.S. track that accelerated under Mubarak.

To contact the reporters on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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