Anisraeli and Egyptian Firm Sign First Commercial Agreement

The first commercial agreement between Israel and Egypt leading to trade between the two counties that could begin in a month was announced here. The agreement, signed between Koortrade, the international marketing division of Israel’s giant Koor Industries and an as yet unnamed Egyptian firm, calls for the dispatch of a Koor representative to Egypt within a short time and the opening of an office in Israel by the Egyptian company.

Naftali Blumenthal, director general of Koor, revealed yesterday that two of its executives recently spent a week in Egypt in negotiations that culminated in the signing of a memorandum of cooperation. The two men, Benny Goor of Koortrade and Gavriel Nevo of Alda, a Koor marketing affiliate, reported that they had been warmly received by Egyptian officials, local industrialists and leading commercial figures.

According to Gaon, trade will begin in about a month on a small scale. Initially, the goods will have to be transshipped via a European port but later they will move directly by way of EI Arish, Goon said. Payment will be made in U.S. dollars or other international currencies and the Israeli goods will have to be packed in accordance with the buyers’ wishes, meaning that the Israeli trade names would be removed and the items will be marketed under the trade name of the Egyptian purchaser.

Goon said the Egyptians were interested in agricultural items such as drip irrigation systems, pesticides, equipment for chicken farms, solar energy units and such house finishing items as sanitary plumbing, and aluminum window frames. He also mentioned oil refining equipment. Egypt is offering to sell Israel cotton and possibly other agricultural products.

WORDS OF CAUTION

The announcement, though greeted enthusiastically, brought words of caution from the Israeli principals involved and from local industrialists and financial experts familiar with the Egyptian market and Egyptian market and Egyptian business methods. Most experts stressed that what Egypt is interested in primarily at this stage is Israeli know-how. Goon and Nevo said the Egyptians are aware of Israel’s industrial capabilities, their products and the costs and therefore what is feasible for them to buy.

Yitzhak Matza, an Egyptian-born Israeli industrialist who produces solar energy equipment, warned against too high hopes for a large-scale market in Egypt for Israeli goods. He said the Egyptian buyer must be treated carefully: the Egyptians don’t like to be rushed in making deals, they don’t like to be pressed by outsiders or have anything “pushed down their throats.”

Matza said he would seek an understanding with the Egyptian firm rather than try to flood the Egyptian market with Israeli equipment. He observed that while Egypt enjoys a great deal of sunshine, it is not very advanced in solar energy usage. Matza advised his fellow Israeli industrialists not to seek markets for manufactured products but to try instead to sell their cooperation, to make partnerships and to finish goods in Egypt. Above all, he advised them to establish personal friendships with their Egyptian counterparts because the Egyptians do business only with friends.

Matza said that Israel’s geographic proximity to Egypt is an important advantage that could lead to an industrial boom in the area based on Israeli Egyptian technical and industrial cooperation. But it will take time, he said.

WILL TAKE TIME TO ADOPT

Dr: Solomon Segal, an associate director general of Bank Leumi, Israel’s largest bank, noted that Israeli industry in general is very much European oriented and it will take time to adopt to the Oriental style of doing business.

Segal estimated that when the borders are opened for trade, Israel could export up to $150 million worth of goods to Egypt in the first three years, not a large amount. He saw the initial stages of industrial cooperation as mainly one of selling know how and establishing joint ventures based mainly on agriculture. The Bank Leumi, which, as the Anglo Palestine Bank before Israel’s independence had branches in Arab countries, is now studying the possibility of opening a branch in Cairo, Segal said. A special team was set up to study Egyptian monetary laws and regulations.

Koor Industries, owned by Histadrut, operates 100 factories in industrial areas–metal and steel, chemicals and pharmaceuticals pesticides, cement and glass, food products, detergents, shoes and electronics. Its Koortrade subsidiary, with outlets in 40 countries, had a turnover of $480 million last year.