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. Last Updated: 07/27/2016

Russian Zone in Egypt Unveiled

ST. PETERSBURG -- Plans for a Russian economic zone in Egypt moved a step closer Friday as the Economic Development and Trade Ministry named the first wave of companies setting up shop there, including Gaz Group, MiG, Soyuzmedprom and St. Petersburg Aviation.

The ministry handed over the list of companies to visiting Egyptian Trade and Industry Minister Rachid Mohamed Rachid, who was in St. Petersburg for the city's international economic forum, which starts Saturday.

Carmaker AvtoVAZ was conspicuously absent from the list, despite widespread speculation that it would lead the way.

In a memorandum of understanding penned in April, Egypt is providing these firms with land in the so-called Russian Industrial Zone, in a small town near the port of Alexandria, as well as 80 percent of the cost of training workers there.

Cairo's basket of preferential trade agreements would also allow these firms to export duty free to Europe, Africa and the Middle East any products made in Egypt. By 2012, Rachid expects them to bring in some $700 million in export revenues, saving up to 30 percent on manufacturing and labor costs.

Rachid said he was attending the St. Petersburg forum to "get to know these companies better," and hammer out the logistics of their move into Borg El Arab, the site of the industrial zone.

The Russian firms are expected to set up operations in the zone over the next 12 to 18 months, Rachid said.

The deal is part of burgeoning ties with Egypt as Russia seeks to diversify its export markets.

The main hurdle to Russian exports is the delay in a final multilateral deal on Russia joining the World Trade Organization, Rachid said.

"That is why we are pursuing these other projects ... like the [Russian Industrial Zone]," Rachid said. "We are still having negotiations, but we cannot move ahead with a bilateral free trade agreement with Russia until it joins the WTO."

As the leader of the WTO faction representing Africa and the Arab states, he has been one of the main lobbyists for Russia's accession. He said the chances of Russia joining this year were "quite high."

Russia's partnerships with Egypt have not always been welcomed in the West. During a visit to Egypt in April, Industry and Energy Minister Viktor Khristenko discussed the idea of a gas equivalent to the Organization of Petroleum Exporting Countries.

Russia also looks to be a top contender for building four nuclear reactors in Egypt. The idea of nuclear proliferation in the volatile Middle East, even on a civilian level, has aroused concern in the West.

Rachid said a deal was being finalized that would allow Russia to take part in the tender for Egypt's turnkey reactor project.