The US Senate’s Foreign Aid Appropriations Committee approved withholding militaryand economic aid to Egypt in FY2018, according to a copy of the bill published on the committee’s website (pdf). (The meat starts on page 185.) The bill stipulates withholding 25% of the USD 1 bn in military assistance given to Egypt and would see the aid withheld “until the Secretary of State certifies and reports … that [Egypt] is taking effective steps to advance democracy and human rights in Egypt … [and] implement reforms that protect freedoms of expression.”

The committee spells out in quite some detail what it wants, including the release of political prisoners, holding security officers accountable for alleged rights violations, investigating extrajudicial killings and forced disappearances (including that of Italian PhD student Giulio Regeni), and granting US officials access to monitor where the aid is directed.

Funds for border security, counterterrorism and non-proliferation programs would not be impacted by the freeze, if it were to come into effect.

The bill also requires the US Secretary of State to withhold economic aid — for which it appropriates USD 75 mn — until the conviction handed down by the Cairo Criminal Court in the 2012 “Foreign Funding Case” for NGOs are quashed or set aside. The focus on civil society is not surprising considering the criticism three Republican Senators — including Senator Lindsey Graham, who presented the appropriations bill to the Senate — leveled at the NGOs law ratified earlier this year.

Get out of jail free card: As is in previous years, Secretary of State Rex Tillerson has the right to waive the certification requirement if he demonstrates and justifies that “to do so is important to the national security interest of the United States.”

Foreign Ministry spokesman Ahmed Abu Zeid issued a statement on Thursday stressing that Congress has yet to reach a final decision on the appropriations, and that the bill is still being negotiated internally between the Senate and the House of Representatives. According to Abu Zeid, the House of Representatives passed its version of the FY2018 appropriations bill without reducing aid to Egypt. The story is receiving reasonably wide coverage in the international press.

Egypt blocks HRW website: Egypt added the website for Human Rights Watch to its growing list of blocked websites on Friday, one day after the organization issued a report about “systematic torture in the country’s jails,” Reuters reports. Egypt’s Foreign Ministry responded to the report, which claims torture is widespread and could be classified as a “crime against humanity,” accusing HRW of being biased and failing to understand the situation in Egypt. The number of blocked websites in Egypt has reached 424, the wire service notes, citing data from the Association for Freedom of Thought and Expression. The website was still inaccessible at dispatch time.

INVESTMENT WATCH- The fruits of President Abdel Fattah El Sisi’s China trip continue with the announcement of multiple new investments by Chinese corporations. These largely came on the back of Trade and Industry Minister Tarek Kabil staying put for talks after El Sisi left China for Vietnam last week after signing a number of multi-bn USD agreements.

First off, the auto industry: Chinese automaker FAW Group will be building a minibus and pickup truck assembly factory in 10 Ramadan City with its Egyptian partner, Geyushi Motors, Kabil announced on Saturday. The plant, which will serve the local market and export to neighboring countries, is expected to begin production by March 2018, Kabil said after a meeting with FAW’s vice chairman in Beijing yesterday. The minister also met with SAIC Motor’s vice chairman to discuss the company’s efforts to find a local partner to begin manufacturing cars in Egypt. The minister said that Egypt is looking to attract new investments of around USD 5 bn to the auto industry to help it achieve its vision of increasing car exports to USD 3 bn a year and produce 500k cars a year by 2022, according to African Independent.

Next up, Chinese spinning and weaving companies TIDA and Shoon Dong Roy are planning to invest USD 800 mn in a new ready-made garment factory in Egypt, sources tell Youm7. The factory is part of the company’s plan to expand its presence in Africa, the sources add, explaining that negotiations are currently ongoing with the Egyptian side. Al Borsa said that a delegation of Chinese textile manufacturers is also planning to visit Egypt soon to explore potential investment what might be done here.

China’s fibreglass maker Goshi Giken signed an agreement with the Suez Canal Economic Zone that will see it spend USD 60 mn to expand its operations in Ain Sokhna, Al Masry Al Youm said on Thursday.

Kabil also met with officials from SKG China, which is currently conducting studies for a potential home appliances plant it wants to build in Egypt, AMAY reports.

The China Development Bank is planning to facilitate funding for Chinese industrial projects in Egypt under the Belt and Road initiative, Kabil also said. The minister said that China and Egypt have agreed on 12 main projects that will receive funding priority, including ones in electricity, transport, housing, industry, and communications. This came after Egypt inked five MoUs with China on Thursday that will see both countries cooperate on agricultural exports, IT, automaking, and fibreglass.

A little bit of context: China is now the largest foreign investor in African greenfields as measured by capex volume (at USD 36.1 bn this year), followed by the UAE at USD 11 bn. The United States remains the largest by number of projects backed.

Vietnamese investors coming, too? Over in Hanoi, President Abdel Fattah El Sisi discussed cooperation with Vietnamese Prime Minister Nguyen Xuan Phuc (pdf), who noted that Vietnam is interested in importing chemicals, meds, and cotton from Egypt and is looking to cooperate on agriculture, transport, education, and tourism. Vietnam’s foreign minister told a business forum attended by El Sisi that investors from his country are primarily interested in the petroleum, agriculture, and textile industries, according to a statement from Ittihadiya (pdf). Investment Minister Sahar Nasr also spoke at the forum. El Sisi also sat down for a talk with his Vietnamese counterpart Tran Dai Quang and signed six MoUs (pdf) that covered cooperation in trade, fishing and fish farming, media, tourism, culture and sports.

Is the Mercosur FTA bad news for the domestic auto industry? Egypt’s trade liberalization agreement with Mercosur countries — which lifts customs on car parts by up to 60% — coupled with the lack of a government strategy to develop the auto sector will “destroy” Egypt’s chance at developing an car manufacturing industry, Deputy President of the Federation of Egyptian Industry’s transport division Samir Allam tells Al Borsa. The agreement will put locally produced parts in direct competition with those imported from manufacturing giants such as Brazil, which will offer lower prices for better quality, and discourage auto manufacturers from investing in Egypt, Allam says.

The agreement also allegedly creates a loophole that would allow auto importers in Egypt customs-free imports of European or American cars from Mercosur countries, unnamed sources tell the newspaper. On the flipside, Egyptian Automobile Manufacturers Association CEO Hussein Soliman says Mercosur actually opens doors. He says Egypt’s FTA with the European Union didn’t push down the prices of European cars enough to make them significantly more attractive than their locally assembled counterparts.

Pharos Holding is looking to close transactions worth EGP 7.5 bn over the next 18 months as it moves into non-banking sectors, CEO Elwy Taymour told Reuters in an interview (here for Arabic). He says the transactions range from M&As to IPOs and capital increases for companies “operating in the food, retail, healthcare and chemical industries.” Pharos is targeting increasing its financial portfolio of around EGP 4 bn by up to EGP 2 bn in 2018, with Taymour saying “we got two licences in financial leasing and microfinance from the Financial Supervisory Authority in February and we have already established two companies, but we haven’t started the operation yet.” He also says Pharos has begun operating in Dubai after obtaining a license in May and is also looking into setting up shop in the UK. Domestically, Taymour says Pharos is working on expanding its brokerage services to retail clients, as it retains its corporate business, with an aim to expand electronic trading starting from next year. Taymour believes that the stamp tax applied on EGX transactions has affected the market negatively and drove trading volumes down. He tells Reuters the stamp tax policy needs to be revisited because the market is not doing well.

Russian airlines need a month to resume flights to Egypt once the ban is lifted, Russian Transport Minister Maxim Sokolov tells Sputnik. Sources also tell the news website Egypt is expected to hold a new round of talks with Russia over “the next few days” to set dates for the return of air travel to Cairo. Meanwhile, experts will “hold consultations” on the resumption of flights with Hurghada and Sharm El Sheikh — a clear sign that the brass ring his being held back. An Egyptian parliament representative from the Tourism Committee suggested that the government temporarily lift entry visa requirements for Russian tourists as a way of encouraging them to travel to Egypt.

This comes as Rosatom says it expects to sign a contract to build the Dabaa nuclear power plant this year, company head Alexey Likhachev tells Sputnik, confirming that everything is going according to plan. The Ismail cabinet had said the contracts have been finalized and approved, and are being reviewed by the Council of State.

The hotel market in Red Sea cities is still reeling from the effect of travel bans from European countries, and “demand has not shown any signs of recovery,” says Colliers International’s latest MENA Hotel Forecasts report (pdf) for August-October 2017. “Although travel advisories from most traditional source markets have eased, [Hurghada] continues to suffer from a negative security perception impacting tourist arrivals,” according to the report. The report forecasts c. 40% occupancy in Sharm El Sheikh and Hurghada over the coming year — and a roughly 40% decline in average revenue per room.

Nonetheless, Egyptian destinations are taking steps to return as hotspots for UK tourists seeking winter sun, Tom Parry writes for TTG. Despite the Sharm ban, Thomas Cook is “intent on continuing a healthy programme to Egypt for the UK market, and from November is heading further south down the Red Sea coast to the resort of Marsa Alam. It is also adding capacity to Hurghada.” Philip Breckner, director of operator Discover Egypt, says Thomas Cook’s move is “very encouraging” and “sends a strong message that Egypt is open … The country has suffered from a misconception that it’s ‘off limits’ but that’s not at all true. Cairo, Luxor and the Nile Valley are all very much open for business.”

De ja vu — Are GASC’s other, non-ergot related policies alienating foreign driving away exporters including the Ukraine? The General Authority for Supply Commodities’ (GASC) decision earlier this year to raise its requirement for the protein content in wheat imports to 12.5% from 11.5% may cause Ukraine to “tumble out of the Egyptian market,” Ukraine’s Agriculture Minister Maksim Martyniuk tells Reuters. Martyniuk says there is speculation that the decision is meant to favor Russian wheat, and that Ukraine’s hands are tied “because we have no such volumes and specifications that we could supply to Egypt.” A GASC source tells Al Mal that the decision is not meant to target a specific country, and was “entirely technical.”

This comes as the Agriculture Quarantine Authority rejected a 59,000 tonne shipment of French wheat after testing indicated the shipment contained poppy seeds, Al Masry Al Youm reports. A sample from the shipment has been sent to the Agriculture Ministry for confirmation. This is the second time in less than one month that the authority has turned away wheat for containing poppy seeds, after a 63k tonne shipment from Romania was rejected last month.

All the while the government looks set to expand domestic production, with plans to increase the area for wheat cultivation by 500k feddans next year through incentives, Agriculture Ministry spokesperson Hamed Abdel Dayem tells Reuters.

Doha agrees to go to negotiation table after Trump’s mediation efforts, but Saudi says it is suspending all dialogue after botched call: Kuwait’s Emir Jaber al-Ahmad al-Sabah reportedly received a letter from Doha “agreeing to sit down and discuss the list of 13 demands” made by the Saudi-led quartet, Reuters says. This comes as the newswire also reports that Saudi Arabia suspended all dialogue with Qatar after a reported phone call between Saudi Crown Prince Mohammad bin Salman and Qatar’s Emir Sheikh Tamim bin Hamad al-Thani the day before. Reuters notes that the call — “the first publicly reported contact between the two leaders since the start of the crisis” in June — was coordinated by US President Donald Trump, who spoke to both leaders separately on Friday. Trump later told the press the US would be willing to mediate and that resolution would “come quickly.”