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20% Milestone Reached in Egypt-Saudi Electrical Link Project

Technicians lay a submarine cable. (Reuters)
Technicians lay a submarine cable. (Reuters)
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20% Milestone Reached in Egypt-Saudi Electrical Link Project

Technicians lay a submarine cable. (Reuters)
Technicians lay a submarine cable. (Reuters)

Dr. Ahmed Mohina, the First Undersecretary at Egypt’s Ministry of Electricity, revealed that the progress on the Egypt-Saudi Arabia electrical connection project has crossed the 20% mark.

The project aims to kick off operations by the second half of 2026 and is poised to lay the groundwork for a shared electricity market among Arab nations.

The collaboration between Egypt and Saudi Arabia on this project, initiated in 2012 is worth $1.8 billion, with Egypt contributing $600 million.

Funding comes from sources like the Kuwaiti Fund for Arab Economic Development, the Arab Fund for Economic and Social Development, the Islamic Development Bank, and Egypt's own resources.

Mohina assured that there are no financial obstacles, with each party funding its share. He highlighted ongoing work, including specialized studies for the submarine cable route.

This initiative represents a milestone for high-voltage power exchange in the Middle East and North Africa, linking Badr City in Egypt to Madinah via Tabuk in Saudi Arabia.

Mohina explained that Egypt’s peak power demand occurs at night, while Saudi Arabia’s peaks during the day. By connecting the two, they can exchange up to 3,000 megawatts, potentially extending the linkage to other Gulf countries.

The project involves building three high-voltage conversion stations and connecting them with overhead transmission lines and submarine cables in the Gulf of Aqaba.

According to the Egyptian government, the project promises a return on investment of over 13%, with an 8-year cost recovery period for participating in electricity generation reserves.

However, using the connection for energy exchange during peak periods could yield a return of around 20%, with additional benefits like facilitating electricity trade, especially during winter, enabling surplus electricity export from Saudi Arabia to Egypt.

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Will Tariffs Accelerate Free Trade Deals?

Container cargo ships docked at Bangkok port (Reuters)
Container cargo ships docked at Bangkok port (Reuters)
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Will Tariffs Accelerate Free Trade Deals?

Container cargo ships docked at Bangkok port (Reuters)
Container cargo ships docked at Bangkok port (Reuters)

More than 70 countries are waiting for their turn to sit at the negotiating table with US officials, as they scramble to avoid a wave of new tariffs imposed by President Donald Trump’s administration under a policy the White House has described as a “global trade rebalancing.”

As diplomatic and trade delegations rush to arrange urgent meetings in Washington, key questions are emerging over what options these nations have in order to avert a trade escalation — and whether they can secure exemptions from the new duties.

As some countries consider leveraging trade pressure or economic alliances in response, analysts warn that what the US administration calls a “preventive trade war” could trigger sweeping changes in the structure of global commerce.

In the Gulf region, however, analysts believe the impact of Washington’s decisions remains limited. They say Gulf states have enough flexibility to reposition themselves and mitigate the fallout from the new US measures.

Saudi economist Dr. Ihsan A. Buhulaiga says it is too early to speak of a final framework for global trade flows, arguing that Trump’s tariff decisions appear more like negotiating tactics than irreversible policy shifts.

“These moves seem more like bargaining positions than fixed policies,” A. Buhulaiga told Asharq Al-Awsat.

“Many countries and blocs, including the European Union, are watching closely before reacting in ways that might provoke President Trump — as was the case with China.”

A. Buhulaiga said Trump’s tariff hikes have eroded trust between the United States and its key trading partners — China, Mexico, Canada, and the EU.

“Trump’s approach is focused on generating revenue for the US Treasury from imports, with little regard for the broader consequences,” he said.

“That stance has already triggered sharp volatility — not just in equity markets, but also in bonds, especially US government debt.”

While the impact of US tariffs on Gulf states is expected to be limited, economists say the ongoing trade war is unlikely to accelerate free trade agreements between the Gulf Cooperation Council (GCC) and major economic blocs.

“For Gulf countries, including the region’s two largest economies — Saudi Arabia and the UAE — the effect of US tariffs is minimal,” said A. Buhulaiga.

“But pursuing free trade agreements with other blocs now would be risky, especially if that includes China, given the current tensions between Beijing and Washington,” he added.

A. Buhulaiga noted that tariff increases are primarily aimed at China, and pointed out that efforts to strike trade deals between the GCC and other economic alliances have taken decades with little progress.

“There’s no sign on the horizon that any agreements will be signed soon,” he said.

Meanwhile, Saudi global trade expert Dr. Fawaz Alamy explained that when the World Trade Organization (WTO) was founded, member states agreed to divide countries seeking accession into three developmental tiers.

He said advanced economies — including the United States, Canada, the European Union, and Japan — committed to fully adopting WTO rules without exceptions.

Developing nations such as China, Türkiye, Saudi Arabia, and most Arab and Islamic countries were allowed limited exemptions, while least-developed countries, particularly in Africa, were granted broader leniency.

“To promote globalization, WTO members agreed to open their markets, lock in tariff rates at agreed levels, and avoid technical barriers to imports,” Alamy told Asharq Al-Awsat.