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THE REPUBLIC OF FINLAND MINISTRY FOR FOREIGN AFFAIRS OF FINLAND Department for Africa and Middle East

AN ANALYSIS OF CO-OPERATION IN THE ENVIRONMENT SECTOR BETWEEN

FINLAND AND EGYPT

REPORT May 2004

LARCON Ltd

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 2 SECTOR BETWEEN FINLAND AND EGYPT Contents of the Draft Final Report Acronyms ................................................................................................................................................. 5 1. Executive summary .............................................................................................................................. 7 2. Introduction .......................................................................................................................................... 9 3. Relevant environmental issues, policies, regulations and institutional framework in Egypt ............. 11

3.1 General institutional framework.................................................................................................. 11 3.2 Major environmental challenges of Egypt .................................................................................. 12

3.2.1 Industrial pollution control............................................................................................. 12

3.2.2 Sanitation and municipal wastewater management ....................................................... 12

3.2.3 Municipal solid waste management ............................................................................... 13

3.2.4 Hazardous waste management ....................................................................................... 13

3.2.5 Coastal zone management.............................................................................................. 14

3.2.6 Desertification................................................................................................................ 15

3.2.7 Implementation on the UNFCCC and the Kyoto Protocol ............................................ 15

3.2.8 Nile Basin management ................................................................................................. 16

3.3 Environmental financing ............................................................................................................. 16 3.4 The role of NGOs........................................................................................................................ 17

4. Previous and current environmental development co-operation between Egypt and Finland............ 18

4.1 Bilateral Governmental Development Co-operation Projects ..................................................... 18 4.1.1 Egyptian Pollution Abatement Project (EPAP) ............................................................. 19

4.1.2 Hazardous Waste Management Project in Alexandria (1999-2006).............................. 22

4.1.3 Water supply, sanitation and municipal waste management projects ............................ 23

4.1.4 Egyptian Antiquities Information System Project (2000-2005)..................................... 26

4.2 Regional and multilateral development co-operation.................................................................. 26 4.2.1 Coastal Zone Management Support Project, COMAS (1997-2000).............................. 27

4.2.2 Support to METAP IV (2001-2005) .............................................................................. 27

4.2.3 Support to Nile Basin Initiative (2000-2005)................................................................. 28

4.2.4 Support to the Basel Convention Regional Centre of the Arab Countries (2004-2006) 29

4.3 Development co-operation projects of Finnish and Egyptian NGOs .......................................... 30 4.4 Projects supported with the Fund for Local Development .......................................................... 30 4.5 Other environmental sector co-operation .................................................................................... 31

5. Environmental activities of other major donor agencies in Egypt .................................................... 32

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 3 SECTOR BETWEEN FINLAND AND EGYPT

5.1 Co-operation strategies................................................................................................................ 32 5.2 Major projects ............................................................................................................................ 32 5.3 Co-operation between Egypt and the European Commission ..................................................... 35

5.3.1 Regional Euro-Mediterranean Programme for the Environment ................................... 36 6. Previous private sector co-operation between Egypt and Finland...................................................... 37

6.1 Trade 1990 - 2003 ....................................................................................................................... 37 6.2 Tourism ....................................................................................................................................... 38 6.3 Foreign direct investments .......................................................................................................... 39 6.4 Instruments for trade and investment promotion......................................................................... 39 6.5 Finnish enterprise views on Egypt .............................................................................................. 40

7. Co-operation scenarios beyond the transition period 2008- .............................................................. 42

7.1 Scenarios for development co-operation of the public sector and NGOs ................................... 42 7.2 Private sector co-operation scenarios .......................................................................................... 44 7.3 Other environmental co-operation............................................................................................... 46

8. Proposals for the transition period (2004-2007)................................................................................. 47

8.1 Development co-operation of the public sector and NGOs........................................................ 47 8.1.1 Bilateral "Thematic" co-operation ................................................................................. 47

8.1.2 Multilateral and regional co-operation........................................................................... 49

8.1.3 Co-operation trough the EU........................................................................................... 50

8.1.4. Support to international/regional non-governmental organisations (INGOs) ............... 51

8.1.5. Support to environmental activities of Egyptian NGOs................................................ 52

8.1.6 Support to co-operation of local authorities................................................................... 53

8.2 Private co-operation; Egypt Private Sector Environmental Transition Facility (EPSETF) ........ 54 8.3 Other co-operation....................................................................................................................... 55 8.4 Proposals of Egyptian stakeholders............................................................................................. 56

8.4.1. Other proposals Presented by EEAA ............................................................................ 56

8.4.2 Regional Industrial Pollution Abatement Project for Arab Countries (RIPAPAC)....... 57

8.4.3 Other proposals presented to the study team.................................................................. 58 9. Next steps ........................................................................................................................................... 60

9.1. Next steps related to development co-operation of the public sector and NGOs....................... 60 9.2 Next steps related to commercial collaboration: ......................................................................... 61


Annexes Annex 1. Final Agenda of the Mission Annex 2. EIB Lending to Egypt by Sector, 1995 - 2003 Annex 3. Environmental Business Opportunities in Egypt Annex 4. Major Egyptian environmental NGOs Annex 5. Source Material Annex 6. List of persons interviewed

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 5 SECTOR BETWEEN FINLAND AND EGYPT Acronyms APE Association for the Protection of the Environment BCRC Basel Convention Regional Centre (of the Arab Countries) BLACD Better Life Association for Comprehensive Development CEA Country Environmental Analysis CDM Clean Development Mechanism CEDARE Centre for Environment and Development for the Arab Region and Europe CIDA Canadian International Development Agency COMAS Coastal Zone Management Support Programme Danida Danish International Development Agency DFID Department for International Development of the United Kingdom EAIS Egyptian Antiquities Information System EEAA Egyptian Environmental Affairs Agency EEIF Egyptian Environment Initiatives Fund EEPP Egyptian Environmental Policy Program EGA Economic General Authority for Potable Water and Sewerage EIA Environmental Impact Assessment EIB European Investment Bank EMP Euro-Mediterranean Partnership EMU Environmental Management Unit of Governorate ENSAP Eastern Nile Subsidiary Action Programme ENTRO Eastern Nile Technical Regional Office EPF Environmental Protection Fund ESP Environmental Sector Programme EPSETF Egypt Private Sector Environmental Transition Facility EU European Union FEI Federation of Egyptian Industries GEAP Governorate Environmental Action Plan GEF Global Environment Facility GHG Green House Gas GIS Geographical Information System GOE Government of Egypt HW Hazardous Waste HWMU Hazardous Waste Management Unit ICARDA International Centre for Agricultural Research in the Dry Areas ICCON International Consortium for Co-operation on the Nile ICZM Integrated Coastal Zone Management IDEN Integrated Development of Eastern Nile IMP Industrial Modernisation Programme INGO International or regional NGO JI Joint Implementation MAP/UNEP Mediterranean Action Plan / United Nations Environment Program MEDA the principal financial instrument of the European Union for the implementation of the Euro-Mediterranean Partnership METAP Mediterranean Technical Assistance Programme MFA Ministry for Foreign Affairs of Finland MLD Ministry of Local Development MSEA Ministry of State of Environmental Affairs NAP National Action Plan (to implement the UNCCD) NBI Nile Basin Initiative NGO Non-Governmental Organisations

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 6 SECTOR BETWEEN FINLAND AND EGYPT NIB Nordic Investment Bank NEAP National Environmental Action Plan NOPEF Nordic Project Export Fund NOPWASD National Organisation for Potable Water and Sewerage ODA Official Development Assistance PAP/RAC Priority Actions Program / Regional Activity Center RAED Arab Network for Environment and Development RBO Regional Branch Office RCSWMP Regional Community Solid Waste Management Programme RIPAPAC Regional Industrial Pollution Abatement Project for Arab Countries RWSP Regional Sanitation and Municipal Waste Management Project SAP Subsidiary Action Programme SEAM Support for Environmental Assessments and Management SCA Supreme Council for Antiquities SMAP Short and Medium-Term Priority Environmental Action Programme SME Small and Medium Enterprises SVP Shared Vision Program TA Technical assistance UK United Kingdom UNCCD United Nations Convention to Combat Desertification UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change USAID United States Agency for International Development WSSD World Summit on Sustainable Development

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 7 SECTOR BETWEEN FINLAND AND EGYPT 1. Executive summary In 2001, the government of Finland made a policy decision to shift the emphasis from bilateral government-to-government development co-operation projects to other forms of co-operation with Egypt by the year 2007. The environmental sector was identified as one of the potential fields for the diversified future co-operation. The policy decision of 2001 was further deepened and particularised in the Finnish Government 2004 White Paper on Development policy. The aim of this study is to provide practical proposals for the transition period (2004-2007) and beyond in order to ensure that the shift in environmental co-operation will take place in a sustainable way. In accordance with the principles agreed upon in the inter-governmental negotiations of Egypt and Finland in March 2002, the environmental co-operation with diversified instruments beyond 2007 shall be based and built upon the results and experiences achieved in the previous and current environmental co-operation. It shall primarily be focused on issues that are prioritised in the environmental policies of both the government of Egypt and the Ministry for Foreign Affairs of Finland (MFA). These include the abatement of pollution caused by industries and energy production; municipal wastewater and solid waste management; decentralised environmental administration; implementation of international environmental conventions on climate change, desertification, hazardous waste and the management of international waters and coastal zones. The Finnish-Egyptian co-operation in the field of environment started already in late 1980's with water sector projects. The emphasis shifted towards industrial pollution prevention and (hazardous) waste management in the late 1990's. Since 1993 the average annual support for bilateral environmental projects has been MEUR 2,33 and the "lifecycle" of projects has been some 7-10 years. In addition to the bilateral projects, Finland has supported a number of regional and multilateral programmes and projects covering Egypt. Other forms of co-operation have been relatively marginal. For example, only five Finnish NGO's have had co-operation with Egypt and only one of them in the field of environment during the past ten years. As to trade, Egypt it is among the four most important trade partners of Finland in Africa and Middle east. However, the volumes have been relative low: during 1990-2002 Finland's imports from Egypt have fluctuated between MEUR 1-12 and respectively Finnish exports to Egypt have fluctuated between MEUR 70-200. It is not possible to specify how much of these volumes could be classified as environmental sector trade as there are only negligible traces of environment sector activity in the trade relations. The environment sector has been salient in development co-operation, not in trade. In order to illustrate alternative states of bilateral development environmental co-operation and the "Finnish presence in the scene" beyond 2007 some scenarios have been prepared. The key variable in the scenarios is the volume and form of development aid. The scenarios describe what could be seen as results after the transition period up till 2007, i.e. what Finland wants to be achieved in the environmental sector in Egypt in the long perspective. The development co-operation scenarios cover NGO cooperation as it is often closely linked to public sector cooperation. The scenarios of development co-operation 2007 and beyond are:

1. Survival of the fittest 2. Diversification 3. Bilateral "thematic" co-operation

The private sector scenarios, which illustrate possible future state of affairs in this business relationship 2007 and beyond are

1. Business as usual – no environmental trade or investments 2. Possibility of sporadic environmental projects by 2010 3. Likelihood of several environmental projects and partnerships by 2010

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 8 SECTOR BETWEEN FINLAND AND EGYPT The study recommends that the MFA actively strives towards the third scenarios through pro-active approach and measures. Without them the contents of thematic co-operation may remain marginal as well as the likelihood to increase volume of trade.

In the field of development co-operation the study team recommends that the MFA will continue environmental “thematic co-operation” with Egypt during the transition period and beyond by participating actively in the preparation and implementation of the “Egyptian Pollution Abatement Project Follow-Up” in close co-operation with the Egyptian Environmental Affairs Agency (EEAA), the Governorate of Alexandria, other Egyptian stakeholders, the World Bank and possible other co-financiers. Finland’s participation in the technical assistance component of the project would enhance the sustainability of the results of the previous co-operation with regard to the functions of the newly established Industry Unit of the EEAA, environmental management of the most polluting Egyptian industries, the capacity of the Environmental Management Unit of the Governorate of Alexandria, and environmental NGO activities in Alexandria region. It could also help to identify further opportunities for co-operation between public, private and non-governmental organisations. The budgetary vision of the MFA would allow an annual allocation of MEUR 0,6 - 0,8 for the project. There are good opportunities to utilise increasingly other development co-operation instruments in order to diversify co-operation during the transition period and beyond. The instruments include: multilateral and regional co-operation programmes and initiatives supported by Finland, support to international and regional NGOs, support of the Embassy of Finland (Fund for Local Co-operation), Siemenpuu Foundation to Egyptian NGOs, the North-South Local Authority Co-operation Programme managed by the Association of Finnish Local and Regional Authorities and the new North-South Higher Education Network Programme. The proposed participation of Finland in regional co-operation involving Egypt relate to: combat against desertification (Programme of Catalytic Support to Implement the UN Convention to Combat Desertification in West Asia and North Africa and the Initiative for Dryland Management), integrated coastal zone management (METAP, if continued after 2005), international water resources management (Nile Basin Initiative, ENTRO-project if continued after 2005). It is also proposed that the MFA would appraise possible proposals of the Arab Network for Environment and Development (RAED) taking into consideration both its own strategies for supporting international NGOs and the objectives of the transition strategy for the co-operation between Finland and Egypt. It is also advisable that the strategies and actions of the Embassy of Finland in Cairo and the Siemenpuu Foundation, with regard to supporting environmental activities of Egyptian NGOs, would be strengthened and co-ordinated. In the preparation of the next phase of the Finnish North-South Local Authority Co-operation Programme, the possibility to include Egypt in the potential partner countries and the mechanisms to encourage Finnish-Egyptian co-operation would need to be considered. In order to promote private sector co-operation, it is recommended that the MFA would establish a new “Egypt Private Sector Environmental Transition Facility” (EPSETF), the management of which would be outsourced. It would focus on the preparation of commercial projects through grant financing (EUR 1 million for 2004-2007). It is assumed that this would create and ensure promising new environmental business opportunities, not only in Egypt, but also in other Arab countries. Finally, a number of concrete measures have been identified that are a prerequisite for further preparation and implementation of the above proposals and to otherwise boost the transition period with the aim of diversified co-operation. The measures identified as next steps prepare the parties involved for the bilateral negotiations between the Government of Finland and the Government of Egypt scheduled for September 2004.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 9 SECTOR BETWEEN FINLAND AND EGYPT 2. Introduction The Arab Republic of Egypt is one of Finland’s long-term development co-operation partners already since the mid 1970’s. Environmental protection has been one of the five distinctive “sectors” of this co-operation since the mid 1990’s. In 2001, the government of Finland made a policy decision to shift the emphasis from bilateral government-to-government development co-operation projects to other forms of co-operation with Egypt by the year 2007. This policy decision was deepened in the Finnish Government 2004 White Paper on Development Policy. In the inter-governmental negotiations in March 2002, Egypt and Finland agreed that a “Strategy for Transition” would be prepared towards this objective. The environmental sector was identified as one of the potential fields for the diversified future co-operation. The purpose of this study was to provide an analysis of the potential and opportunities for future environmental co-operation and a set of practical proposals for the transition period (2004-2007) in order to ensure that the shift will take place in a sustainable way. The study was to focus on environmental co-operation of organisations representing both public and private sectors and the civil societies of Egypt and Finland. In accordance with the principles agreed upon in the inter-governmental negotiations of Finland and Egypt in March 2002, the environmental co-operation with diversified instruments beyond 2007 shall be based and built upon the results and experiences achieved in the previous and current environmental co-operation. It shall primarily be focused on issues that are prioritised in the environmental policies of both the government of Egypt and the Ministry for Foreign Affairs of Finland (MFA). Accordingly, the study focused on the following environmental issues: the abatement of pollution caused by industry and energy production; municipal wastewater and solid waste management; decentralised environmental administration; implementation of international environmental conventions on climate change, desertification and hazardous waste; and the management of international waters and coastal zones. A number of crosscutting issues were also considered in the study, such as environmental research, education and training; environmental monitoring, data and information management systems (including GIS); public participation and awareness raising; and related institutional capacity development. The study was announced for tendering in late October 2003. In December, the assignment was awarded to a consortium led by the Finnish Environment Institute SYKE (Mr. Alec Estlander, Ms. Tea Törnroos), in co-operation with Diskurssi Ltd (Mr. Pekka Salminen) and LarCon Ltd (Mr. Martti Lariola) and EcoConServ Ltd (Dr. Tarek Genena,Dr. Noha Gaber and Ms Mariam Draz) as an Egyptian partner. The study was carried out through a mission to Egypt on 16-29 January 2004 (see Annex 1), complemented with the necessary desk studies and interviews in Finland, including interviews of several Finnish private companies and a representative of the World Bank visiting Finland (see Annexes 5 and 6). About 40 meetings and interviews were carried out in Egypt. All proposals obtained and ideas raised were compiled for further analysis and formulation of a consolidated proposal. A debriefing meeting was held at both the Embassy of Finland and the Egyptian Environmental Affairs Agency (EEAA) at the end of the mission. The first draft report was presented to the MFA in mid-February 2004. In this final report, first the relevant environmental issues, policies, regulations and institutional frameworks in Egypt are analysed (Chapter 3). This is followed by an analysis of the relevant previous and current environmental co-operation (Chapters 4, 5 and 6). Subsequently, visions for the

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 10 SECTOR BETWEEN FINLAND AND EGYPT environmental co-operation beyond the transition period are presented (Chapter 7), and finally proposals are made for the activities to be carried out during the transition period (Chapters 8 and 9).

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 11 SECTOR BETWEEN FINLAND AND EGYPT 3. Relevant environmental issues, policies, regulations and institutional framework in Egypt In this study we have concentrated on those sectors of the environment that urgently need strengthening and action. The selection of these priority sectors is based primarily on the recommendations of the National Environmental Action Plan 2002-2007 (NEAP, 2002) and on the preliminary findings of the Country Environmental Analysis (Draft CEA, May 2003). 3.1 General institutional framework The legal and institutional framework of environmental administration in Egypt is relatively complex. Although the responsibility of environmental protection rests with the Ministry of State for Environmental Affairs and its executive agency, the Egyptian Environmental Affairs Agency (EEAA), environmental issues cut across the activities of many ministries and institutions. Consequently, EEAA is mandated to act as a coordinating body and to mainstream environmental considerations into the policies of the line ministries at the national and local levels. Among the most important ministries are: the Ministry of Health and Population, the Ministry of Water Resources and Irrigation, the Ministry of Agriculture and Land Reclamation and the Ministry of Housing, Utilities and Urban Communities. The Egyptian law of the environment (Law 4 of 1994) and its executive regulations (1995) define the roles and responsibilities of EEAA, which include regulation of air pollution, control of hazardous substances and management of hazardous waste. The law also gives EEAA an array of tools with which to implement and enforce these provisions. There is a strong policy direction away from centralised environmental management activities towards decentralisation at the regional and governorate levels. EEAA has set up 5 regional branch offices (RBOs) covering Greater Cairo, West Delta, East Delta, Central Delta, the Suez Canal and Sinai. Several initiatives have taken place to develop the capacities of these RBOs as well as the Environmental Management Units (EMUs) in each of the 26 Governorates. Administratively, EMUs are a part of each Governorate's structure and thus under supervision of the Ministry of Local Development, yet, operationally, they follow EEAA. The Ministry of Local Development (MLD) and the Ministry of State of Environmental Affairs (MSEA) officially approved this in June 2003 when they agreed upon a “Protocol of Understanding concerning Governorate Environmental Management Units”. In the Protocol, the MSEA/EEAA made a challenging commitment to provide the governorates’ EMUs with offices, equipment, technical support and training opportunities. According to the Protocol, technical support of the MSEA will first be focused on the governorates of Aswan, Beni Suef, Qualiobeya and Red Sea and is to be extended to other governorates that have technical and financial support from international donor agencies. The division of legal mandates and responsibilities between RBOs and EMUs is still not fully clarified. In 2001, the Chief Executive Officer of the EEAA issued decree number 17/2001 that defined the tasks of the RBOs. Guidelines for dividing mandates between RBOs and EMUs are already prepared by the EEAA, but their implementation has still to be worked out through practical experience. In December 2003, the Minister of Administrative Development issued decree no. 956/2003 for the EMU of the Red Sea Governorate to be a General Department, including the qualifications for the different employees. This governorate will be used for testing the decree before extending it to all governorates. Environmental units are also established in almost all districts and markazes in Egypt. The units will significantly complement the human resources of the EMUs in complaint investigation, particularly in

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 12 SECTOR BETWEEN FINLAND AND EGYPT industrialised governorates such as Alexandria and Cairo. According to the labour law 12/2003, the environmental units are to be members of the licensing committees with the task to ensure that environmental requirements are fulfilled. 3.2 Major environmental challenges of Egypt

3.2.1 Industrial pollution control Although industry is a major contributor to the economy of Egypt, it is also a major source of pollution to land, water and air. Observed evidence suggests that the public sector industry is responsible for more than 60% of industrial pollution. Most of these industries have little or no pollution control. Old technology and production processes also result in inefficient utilisation of natural resources and raw materials and further exacerbating pollution problems. An estimated 387 million cubic meters of industrial effluents, containing non-biodegradable organic and inorganic compounds, are discharged to the Nile, its canals and drains per year. In Greater Cairo and Alexandria, large industrial sources of air pollution include the metallurgical, chemicals and cement industries. Furthermore medium and small size industrial activities (such as foundries, secondary smelters, etc.) are major sources of air pollution and pose serious health risks on the inhabitants of adjacent areas. Monitoring and enforcement responsibilities are fragmented among many regulatory institutions. To build on the success and experience of EPAP project, approval has been given for the creation of an Industrial Unit within the Environmental Management Sector of EEAA. Proposed roles of the Unit would include developing a nation-wide pollution inventory, preparing technical guidelines and policy proposals related to cleaner production or industrial inspection and regulation and acting as a matchmaker between the needs of the industries and the available funding mechanisms. Experience gained through EPAP project has shown that end of pipe environmental solutions are generally difficult to justify under the current adverse economic situation and given the weakness in the enforcement of environmental laws. Thus the concept of cleaner production, with its associated economic benefits arising from better resource management and resulting in lower production and maintenance costs has been shown to be a stronger driver for in-process improvements, which lead to environmental benefits by minimising or eliminating wastes or emissions at the source. A process is underway to develop a national cleaner production strategy. A national committee has been established to collate the efforts and clarify the roles of the relevant ministries.

3.2.2 Sanitation and municipal wastewater management Improving sanitation and municipal wastewater treatment is directly linked with public health and living conditions. An estimated 10 million m3 of domestic wastewater is produced per day. Access to sewerage systems is predominantly available in urban areas, with about 77% of the population of Cairo connected to sewage collection networks. In rural areas, where about half of the population reside (35 million persons), 95% of the people have no access to sewer systems or wastewater treatment facilities. Septic tanks are mostly used to collect and partially digest the wastewater. In the rural Nile Delta, where high population densities exist along with high groundwater table, serious health risk arise from this practice, as the partially digested wastewater seeps into the ground and pollutes the groundwater. Raw sewage is also discharged into the agricultural drains and in Upper Egypt, all drains flow back into the Nile. In areas, where wastewater treatment facilities exist, the flows of municipal wastewaters greatly exceed the design capacity of the plants and this overload results in a poor effluent. This in turn further degrades the water quality in the agricultural drains. As such, mixing drainage water with

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 13 SECTOR BETWEEN FINLAND AND EGYPT the freshwater for irrigation purposes makes the use of this water risky for public health. The main pollutants in wastewater are pathogens, nutrients and oxygen demanding compounds. Additionally, as many of the wastewater collection networks in urban areas (especially Cairo) also serve industries and commercial activities, high levels of potentially toxic substances, such as heavy metals and organic pollutants may also exist. These elements become concentrated in the sewage sludge, which also produces a problem for the safe disposal and/ or reuse of this sludge.

3.2.3 Municipal solid waste management Municipal solid waste collection and disposal is considered one of the most pressing environmental problems in Egypt. Of the 60 million tons of waste generated annually, municipal solid waste accounts for 15 million tons. The remaining quantities include agricultural waste, construction and demolition wastes, industrial waste, wastewater sludge and waste from clearing of waterways. The quantity and composition of municipal solid waste varies from one area to another. Average per capita waste generation is higher in urban areas (1.0 kg/person/day) than in rural areas (0.3 kg/person/day). In lower income areas, organic content of the waste can reach 60%. Waste efficiency varies greatly from one area to another. In high income areas, collection efficiency can reach 90% in contrast to a 10% collection efficiency in rural low-income areas. With the exception of Alexandria and City of Beni Suef, there are currently no sanitary landfills in Egypt. As a result, wastes are generally dumped in open dumpsites, where it putrefies and self-ignites. In rural areas, waste is also sometimes dumped into agricultural drains and irrigation canals, thus significantly degrading water quality. In most of the large cities, where there is collection of municipal solid waste, three systems may operate: • Municipal system: Operated by municipalities, this is normally limited to street cleaning activities

and collection of waste from communal containers. Almost all of the waste collected by municipalities is dumped without any segregation in open dumpsites.

• Zaballeen System: This is an informal private system operating mainly in above-average income areas and offering door to door waste collection for a small fee from individual households. The Zaballeen transport the waste to their homes and segregate it in preparation for recycling.

• Private sector system: Working under the supervision of municipalities, local private companies operate in several larger cities. The waste collected by these companies is either delivered to the Zaballeen communities or directly to disposal sites. Municipal solid waste services in Greater Cairo, Alexandria, Gharbyia, Luxor, Aswan, Red Sea and South Sinai have been privatised to international service providers.

A number of donor agencies have been supporting solid waste management initiatives:

- USAID/ Cairo, Qalubiya and Alexandria; - KfW/Qena and/or Kafr El-Sheikh; - Government of the Netherlands/Fayoum; - DFID/ Sohag, Qena, Damietta and Dakehleya; - EU LIFE Programme/ Identifying possible landfill sites in Governorates and; - Finland through the Beni Suef project.

A national strategy addressing solid waste management in the period of 2000-2010 has been developed.

3.2.4 Hazardous waste management Handling of hazardous substances in Egypt is regulated by Law 4/1994 for the environment. The regulations stipulate that handling of hazardous substances can only be carried out after a permit is issued by the concerned authorities, which are six line ministries (Agriculture, Industry, Health, Interior, Petroleum, Electricity) each in its field of competence. An Egyptian Hazardous Substances Information and Management System has been developed. It provides basic guidelines and

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 14 SECTOR BETWEEN FINLAND AND EGYPT information to ensure safe handling of hazardous substances and aids in the dissemination of such information through an information network. The system and guidelines are based on international ones, adapted to suit Egyptian needs and conditions. The system would allow the exchange of information between EEAA and the six line ministries involved in the permitting procedures, with a view to developing a common format for permit issuing. Building on the success of the hazardous substances system, it is proposed that an information system be developed for hazardous waste management. It is proposed that the system will be able to track the handling of hazardous wastes, based on the principles of life cycle assessment. According to the NEAP, Egyptian industries produce an estimated 4 to 4.5 million tons of solid wastes per year. Of this amount, hazardous industrial wastes form an estimated 100-150 thousand tons per year. Therefore, effective control of the generation, storage, treatment and disposal of these wastes is highly important. The competent authorities involved in hazardous waste control and licensing include EEAA and its RBOs, six line ministries, and the Governorate EMUs. There is an immense need to promote awareness between hazardous waste producers as to the classification of hazardous waste and how to manage it. A successful project has been implemented for hazardous waste management in Alexandria.

3.2.5 Coastal zone management The total coastline of Egypt is about 3700 km. The hazards threatening coastlines along the two seas vary both in character, and in nature and magnitude of activities (e.g. agriculture, industry, fishing, shipping and ports, tourism, and oil and gas exploration). Oil and gas exploration mainly takes place in the Gulf of Suez and refining activities concentrate in Alexandria. The Red Sea coastline, being more sensitive and diverse in terms of natural resources, is exposed to numerous threats arising from the conflict in the use of its resources, the shipping activities, the non-point sources of pollution and the sporadic development of its shoreline. Major pressures on the coastal areas arise from land based sources (e.g. poorly treated wastewater and improper disposal of desalination brine), tourist activities (e.g. unsustainable diving and fishing practices) and marine based pollution arising from maritime activities (e.g. shipping and oil exploration and transportation). These pressures not only constitute threats to the natural environment and resources, but may also jeopardize the prospects for growth of the tourism industry, which relies on the beauty and unspoilt nature of the marine and desert environments and exceptional coral reef formations. To address these threats, integrated coastal zone management (ICZM) and planning activities need to be strengthened and a greater consistency between the policies, plans and management strategies of relevant national and local institutions needs to be ensured. Since mid 1990s several attempts have taken place to promote ICZM; The Framework Programme for Development of a National Integrated Coastal Zone Management (ICZM) Plan for Egypt was prepared in 1996 and a committee for the National Integrated Coastal Zone Management issues was established by a Ministerial Decree in 1998. An ICZM Plan for the Egyptian Red Sea Coastal and Marine Resources was developed through a project financed by GEF and carried out in coordination between EEAA, the Tourism Development Agency and the Red Sea Governorate. The update of National Oil Spill Contingency Plan was another important project achieved in 1998. An Integrated Coastal Area management Plan was also developed for one stretch in the Mediterranean Sea coastline, Fuka – Matrouh area, in cooperation between EEAA and PAP/RAC of the MAP/UNEP (1992 – 1998). Further, the Environmental Information and Monitoring Programme (Danida) has a component to developing the capacity of EEAA to obtain and manage information about the pollution of the coastal waters of Egypt (39 stations in the Red Sea region and 45 monitoring stations in the Mediterranean Sea measuring 15 water quality parameters). Despite the above attempts, many of the (institutional) challenges related to wide-spread policy reforms still remain and actions to promote ICZM at national and local level are urgently needed.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 15 SECTOR BETWEEN FINLAND AND EGYPT 3.2.6 Desertification Adopted in 1994, the United Nations Convention to Combat Desertification (UNCCD) entered into force in 1996. Egypt was the fourth country to ratify the Convention. The focal point of UNCCD in Egypt is the Desert Research Centre under the Ministry of Agriculture and Land Reclamation. A National Co-ordinating Committee was established in response to the adoption of UNCCD requirements. Establishing the link between combating desertification and poverty reduction is an urgent priority for countries suffering from desertification, such as Egypt. Desertification in Egypt is exacerbated by many factors such as unsustainable agricultural practices (leading to erosion of the surface layer of the soil), unregulated urbanisation and building on agricultural land and degradation of agricultural land from pollution by irrigation using low quality water and the over-use of chemical fertilisers and pesticides. Given the different factors contributing to desertification and their impacts and the different climatic zones in Egypt, it would be necessary to formulate different plans and actions to address each one. The UNCCD calls upon affected countries to establish National Action Plans (NAP) as the key frameworks for implementing the Convention. The NAP of Egypt is currently being prepared and is expected to be finalised by the end of 2004, and subsequently introduced to the donor community. It includes:

- identification of stakeholders and increasing awareness; and - initiating a system of communication for data exchange between stakeholders and integrate the

current projects being implemented with the mainstream objectives and action of the NAP. The national strategy to combat desertification stipulates some of the following policies:

- increasing the efficiency of using the available water resources; - conserving fertile land resources, reclaiming degraded land to restore its production and

placing more land in the production system; and - supporting agricultural research.

Projects relating to combating desertification include measures to modernise agricultural practices, increase the efficiency of water use through enhanced public awareness and participation, sustainable management and stabilisation of sand dunes, development of afforestation projects, which aim to prevent erosion, provide raw materials, improve microclimate conditions and aid in the sequestration of CO2. Financing of projects represents a major hindrance to the implementation of national programmes to combat desertification. Moreover, regional co-operation remains ineffective in identifying long-term solutions and a range of alternatives that can be locally adapted.

3.2.7 Implementation on the UNFCCC and the Kyoto Protocol While not a major contributor to the world's total emissions of Green House Gases (GHG), Egypt is vulnerable to the potential effects of global climate change such as rising sea levels and changed patterns of rainfall in the Nile Basin. Therefore, Egypt has joined the cooperative global efforts to confront the threats of climate change by ratifying the United Nations Framework Convention on Climate Change in 1994 and by signing the Kyoto Protocol in 1999. EEAA plays a leading role in coordinating national efforts for the reduction of GHG emissions, through a National Committee on Climate Change. A National Strategy on Clean Development Mechanism, within the context of the United Nations Framework Convention on Climate Change and the Kyoto Protocol, has been prepared to explore the option of introducing market based instruments for reducing green house gas emissions through the application of cleaner technologies.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 16 SECTOR BETWEEN FINLAND AND EGYPT A GEF-assisted capacity building project aimed at institutionalising climate change issues on a national level has been implemented. As a continuation of this project, a second phase focuses on assessing technology needs to alleviate the negative effects of climate change. Technological and market based initiatives such as the promotion of renewable energy for electricity generation and use of alternative fuels for transportation will also be studied.

3.2.8 Nile Basin management Launched in 1999, the Nile Basin Initiative (NBI) provides a framework to fight poverty and promote economic development in the region under the shared vision of "achieving sustainable socio-economic development through the equitable utilisation of, and benefit from, the common Nile Basin water resources”. The initial cooperation partners involved in the NBI were the World Bank, UNDP and CIDA. However, other international donors, including Finland, have joined in. The NBI comprises seven Shared Vision Programs (SVP) and two Subsidiary Action Programs (SAP). One of the SVPs is the Transboundary Environmental Action Project, which aims to provide a strategic framework for environmentally sustainable development of the Nile River Basin. A Transboundary Environmental Analysis has been published in 2001 and includes a collective synthesis of the environmental trends, threats and priorities. In Egypt, the focal point for coordination of the Transboundary Environmental Action Projects is the Egyptian Environmental Affairs Agency. The basin-wide project management units of the SVPs have been set-up and the projects for each SVP are in the process of preparation and planning. Outside of the NBI, there has been bilateral cooperation between Egypt and some of the Nile Basin countries in the past. For example, Egypt has provided funding and technical assistance to Kenya for the digging of wells in rural areas and to combat water weed infestations in Uganda. While these projects have been successful, they require further funding to continue and it has been suggested that a form of trilateral cooperation mechanism may provide a means of building on the success of such projects. 3.3 Environmental financing The GoE has established an Environmental Protection Fund (EPF) in order to stimulate investments in environmental sector in Egypt to support the environmental, social and economic policies in the pursuit of sustainable development. The EPF was established in 1994 under Law 4/1994 within the Egyptian Environmental Affairs Agency (EEAA) yet it was operationalised only in June 2000. The financial resources of the EPF include revenues from the national protectorates entrance fees, and fines on environmental violations. Its goal is to stimulate investment in the environmental sector in Egypt to support the government’s environmental, social and economic policies. To realise this goal, the EPF provides financial assistance (grants or loan subsidies) on a competitive basis for projects that benefit the environment. This financial assistance is given to NGO's, universities for applied research, private and public sector companies and municipalities (for medical waste incinerators). In addition, the EPF seeks to foster partnerships between the financial community and both the public and private business sectors to increase investment in environmental initiatives. To date, the financing of pollution abatement projects has not been implemented as the financial system involving commercial banks has not been finalised. However, the use of the EPF instruments has been undermined due to the limited capacity of the EPF staff and the consumption of the funds for the salaries of the staff of the EEAA. Donor funds are still the main source of financing for environmental investments in Egypt. The foreign exchange risk is a major constraint for both the banks and the industries to finance environmental investments with

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 17 SECTOR BETWEEN FINLAND AND EGYPT foreign loans. Besides the EPF, the Social Fund for Development has a mandate to finance environmentally oriented projects by soft loans, grants or a combination of the two. 3.4 The role of NGOs High political support is provided to the participation of NGOs in local development and environmental enhancement. This is evident also in the requirement of Law 4/ 1994 for the participation of three representatives from the NGO community on the board of EEAA. The establishment of the NGO unit in EEAA seeks to promote the participation of NGOs in the implementation of the National Environmental Action Plan (NEAP) by providing a channel for communication and collaboration between environmental NGOs and the government. It is difficult to put an exact number of "environmental" NGOs, as many NGOs have environmentally-related activities. However, one recent estimate puts the number of NGOs working in the environmental field at 120. Their work addresses a variety of issues, ranging from public awareness and environmental education to waste collection. The problems faced by environmental NGOs in Egypt include: lack of financial and material resources, poor managerial and technical capacities and lack of sustainability for projects implemented. Support is especially needed to empower NGOs and provide them with the tools necessary to ensure successful public participation (e.g. in the EIA process). Several donor agencies have provided financial support to environmental NGO activities in Egypt. Prime examples include the Local Grant Authority of the Embassy of Denmark, the Danida supported Environmental Sector Programme, the CIDA supported Egyptian Environmental Initiatives Fund (in co-operation with the Environmental Protection Fund), the Canada Fund for Local Initiatives, support of the USAID through the NGO Service Centre, the Small Grants Programme of the GEF managed by the UNDP, and the MFA supported EPAP (with four partner NGOs). The recent evaluation of the public information, awareness and NGO activities of EPAP (Environmental Quality International 2004) concluded that while there is a continued need to develop further the public environmental information, awareness and NGO activity in Egypt, the socio-economic and political situation in Egypt is very challenging to such activities. While positive democratic changes have taken place in Egypt, remnants of a less democratic past continue to linger, and the transition is fraught with complications. For example, the Emergency Law has been in place almost continuously since 1981. The Egyptian NGO Law forbids NGOs to participate in political issues, further, it stipulates that all international financial support to Egyptian NGOs is subject to government approval. NGOs that are considered too radical are usually not invited to official environmental events. These are constraints for Egyptian environmental NGOs and signs of a strong government control. In addition, the culture of public disclosure of information and openness to critique is often weak in the administration. Another constraint is the lack of institutionalised mechanisms for meaningful direct public participation in environmental planning, decision-making and law enforcement. Moreover, the wide illiteracy and poverty impede efforts to enhance public environmental awareness and NGO activity.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 18 SECTOR BETWEEN FINLAND AND EGYPT 4. Previous and current environmental development co-operation between Egypt and Finland This chapter provides a review on development co-operation activities in the field of environment during the past years. The emphasis of co-operation has clearly been on bilateral development co-operation projects. Next to them, there has been four regional and multilateral environmental programmes/projects which have concerned Egypt. Other development co-operation instruments available for co-operation have been relatively underutilised and there are very few indications of other environmental sector co-operation. 4.1 Bilateral Governmental Development Co-operation Projects The first collaboration projects in the field of water supply and sanitation were initiated already in the late 1980's. During the past ten years the emphasis of the environmental projects have shifted gradually from water supply to industrial pollution control and waste management. Since 1993 the average annual support for bilateral environmental projects has been some EUR 2,33 million. The "lifecycle" of environmental projects has been relatively long being 7-10 years.

Finnish support to bilateral environmental projects

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

mill

ion

eur

EPAP

Hazardous waste managementIIHazardous waste managementIEAIS II

EAIS I

Cairo Waste collectors

BENI SUEF, Water Supply andSanitationBENI SUEF, Water Supply andSanitationBENI SUEF, Water Supply

Desalination

RAS EL BAR Waste watertreatmentBADR CITY Water Supply andSewerageEnv.sect. preparation

In the following chapters we give an overview of all the bilateral environmental projects and provide some conclusions related to the need for further Finnish action and for sustainability.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 19 SECTOR BETWEEN FINLAND AND EGYPT 4.1.1 Egyptian Pollution Abatement Project (EPAP) Technical and Institutional Support Component (1997-2004) The Technical and Institutional Support Component of EPAP, supported by the government of Finland, was commenced in January 1997. Its overall objective was to contribute to the reduction of industrial environmental pollution through increased compliance by the industries with the environmental laws and regulations. The purpose of the component was to ensure that “appropriate mechanisms and measures for industrial environmental compliance and enforcement are developed, tested and institutionalised”. It was linked to the investment component (“Pollution Abatement Fund”) of EPAP that is based on the loan agreement between the government of Egypt and the World Bank, ratified by the Egyptian People’s Assembly in January 1999. The investment component consisted of the loans of USD 35 million of the World Bank and EUR 15 million of the European Investment Bank. The original Finnish contribution to the technical and institutional support component was FIM 26 million (about EUR 4,37 million). An additional grant of FIM 5,5 million (EUR 930 000) was approved in 2001 and another EUR 950 000 was granted for the one-year extension phase that is to be completed by the end of May 2004. A consortium of Soil and Water Ltd and the Finnish Environment Institute provide the support services to the project. The Technical and Institutional Support Component comprised originally seven sub-components that were later merged into the following three main components: 1) institutional development; 2) industrial pollution abatement and environmental management; and 3) public information, awareness and participation. The main results, sustainability issues and needs for further co-operation are analysed below by each main component. Institutional Development Component The institutional development component aimed at strengthening the capacities of the participating units of the EEAA, the three Regional Branch Offices (RBO) of the EEAA (Greater Cairo, West Delta and Suez Canal) and the Environmental Management Units (EMU) of governorates of Cairo, Qualiobeya, Alexandria and Suez. The goal was to strengthen their capacity to carry out their legal responsibilities related to industrial pollution control. Another expected result was that these organisations continue the training and dissemination of information materials that were developed and tested by the project. As an achievement of the project, the capacities of the EEAA’s inspection department, the RBOs and the EMUs to plan and undertake industrial environmental inspections in a more co-ordinated, systematic and professional manner has been significantly improved. The produced sixteen inspection manuals have also raised interest in other Arab speaking countries, and their dissemination in the Arab League is underway. Further six general and/or “cross-cutting manuals for industries have been produced. Some of the participating entities geared towards reconciliatory instruments for non-compliance response, which is necessary in order to achieve a realistic enforcement with better co-operation by the regulated community. EPAP piloted a concept of “negotiated agreements” between the environmental authorities and the industrial establishments. However, further efforts are needed in order to institutionalise the co-operation of the various authorities in the industrial environmental inspections and the step-wise compliance concept. The development of an integrated environmental permitting system based on this concept also remains a challenge. More work “on the ground” is needed to develop everyday practices and methods for enforcement follow-up activities of the EMUs. The inspection and enforcement procedures should be practiced using real cases and on-the-job-training in pilot governorates, for example in Alexandria. The sustainability of the training systems will need to be

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 20 SECTOR BETWEEN FINLAND AND EGYPT assured. A lot of training for the environmental units of districts and markazes, co-ordinated by EMUs, will also be needed. One of the principles of EPAP’s technical and institutional support component was that the industrial environmental administration activities performed by EPAP at the central level should be rooted to the permanent structures and functions of EEAA. This has not yet been fully achieved. EPAP conducted a study on the establishment of a “focal point” to be responsible for industry-related activities in the EEAA. In the study, proposals were made concerning the tasks, configuration, institutional location and staffing of the focal point. In January 2004, the Chief Executive Officer of the EEAA approved the temporary establishment of an Industrial Unit in the EEAA. It is expected that the Unit will be later assimilated permanently into the EEAA structure (as a General Department or Department). Although the foundations of the Unit (competent and motivated staff) are strong, the new Unit is likely to need further support in certain tasks, such as the monitoring of industrial pollution and improving policies, executive regulations and technical guidelines. EPAP has also been successful in establishing emission inventories and thereby baseline reports on industrial pollution. In addition to this it has succeeded in designing the framework for a national monitoring system for industrial pollution and compliance. Much work is still needed to develop a system that can provide credible statistics on the real emissions from industry and the impact of environmental policy actions on the emissions and environmental quality. In addition, a monitoring system for following the efficiency of enforcement actions, including the judiciary system, needs to be developed. Industrial Pollution Abatement and Environmental Management Component The “industrial component” of EPAP aimed at reducing industrial environmental pollution of major polluters through environmental investments and improved environmental management. The purpose of the component was to assist the participating industrial establishments to prepare environmental investments that would help them to progress towards compliance with the environmental laws and regulations, and additionally to develop sustainable financing mechanisms for supporting such environmental investments in Egypt. As a result, 25 environmental investment projects of 19 companies have been implemented, 23 financed by the World Bank and two by the EIB. These projects consumed the whole financing package of the World Bank but only 30 percent of the EIB package. A functional self-monitoring system has been verified in all the 19 companies. In addition, technical assistance has been provided to another 30-40 companies, some of which have implemented projects with financing from other sources. Further, eleven sector-specific self-monitoring manuals have been produced and disseminated widely. “Pan-Arabic” versions of some of the manuals have also been prepared for the use in other Arab countries. Information on industrial pollution abatement is being disseminated through the “Pollution Prevention Gateway” under the website of the EEAA. The creation of comprehensive and sustainable financing mechanisms for supporting environmental investments still remains a challenge, into which the experiences gained EPAP can contribute. The sustainability of the training for industries is partly uncertain and would, therefore, need further strengthening. Public Information, Awareness and Participation Component The purpose of the "NGO component" is to support the activities of environmental NGOs working in the field of industrial pollution abatement in the participating Egyptian governorates (Cairo, Alexandria, Qualioubeya and Suez). The specific focus of this initiative was to expand the activities and strengthen the capacities of NGOs in lobbying and advocacy. Several NGOs were invited to present project proposals of which the following four NGOs were selected as partners for EPAP:

- Association for Health and Environmental Development (Greater Cairo);


- Friends of the Environment in Alexandria (Alexandria); - Egyptian Society for Industry and Environment (Suez); - Nile Guards and Environment Protectors Association (Cairo).

The supported activities of these NGOs included e.g. provision of training and capacity building to other NGOs, industries (management as well as workers and their families), banks and university graduates; organisation of public hearings, seminars and site visits to industrial establishments; and production of TV programmes and newsletters. The "media and awareness component" aimed at increasing the activity of media and public awareness in industrial environmental issues in Egypt through 1) by improving the capacity of the media to acquire environmental information and publish it, and 2) by disseminating information on EPAP activities. The component included a variety of activities, such as media training sessions, distribution of printed information materials, production of TV programmes and films, and organising a media contest and a study tour to Finland. According to the recent evaluation of the public information, awareness and NGO activities of the EPAP (Environmental Quality International 2004), the positive impact of both the NGO and media/awareness components of EPAP has been significant. Successful awareness campaigns have been convened, skills and networks strengthened and lobbying activities improved by the NGOs. The quality of articles has been improved, and journalists have succeeded in influencing policies and in shedding light on very critical issues. A weakness in terms of sustainability was that none of the NGOs clearly attempted to create a mechanism to sustain their respective programmes independently of external financing. Gaps were also identified with regard to applying participatory methodology in some of their projects. With regard to providing financial support to NGO activities, EPAP did not include any major activities to create sustainable mechanisms, but the Environmental Protection Fund of EEAA is expected to offer a more sustainable solution in the future. The evaluators suggested that EEAA should continuously encourage the co-operation of its RBOs and the EMUs of the governorates with local NGOs. Both the environmental authorities and NGOs are likely to need further strengthening of their capacities in order to develop and utilise meaningful mechanisms for public (or NGO) participation in the environmental planning, decision-making and law enforcement procedures. The continuity of the impact of the media activities will depend on e.g. overcoming a number of impediments, such as insufficient disclosure and sources of environmental information. The evaluation report strongly recommended that EEAA should develop a mechanism for arranging public consultations to discuss Environmental Impact Assessments (EIAs) of new industrial establishments and extensions of existing ones; disclose information regarding the results of environmental monitoring and emission inventories, major EIA reports, environmental permits and compliance and make them available and accessible to the public; and secure a regular, reliable and specialised information source to journalists. This would obviously be more important in the future than, for example, providing training to journalists on industrial environmental issues. Conclusions: The Technical and Institutional Support Component of EPAP has according to the internal evaluation been successful to a great extent, although there have been some deficiencies in efficiency. The new Industrial Unit of EEAA would need further support to become sustainable. Particularly, the following aspects would require further attention:

1) integrated environmental permitting system, based on realistic compliance procedures; 2) institutionalisation of environmental inspection and law enforcement practices at the local level; 3) monitoring of industrial environmental pollution; 4) sustainable mechanisms for providing financial support to environmental investments;


5) creating an enabling environment for NGOs and media to be active in environmental affairs (e.g. disclosure of information on industrial pollution).

The project has not resulted in much commercial co-operation between Egypt and Finland. However, the co-operation of Finnish and Egyptian consulting companies in EPAP has most likely resulted in a first joint project in Libya.

4.1.2 Hazardous Waste Management Project in Alexandria (1999-2006) The Hazardous Waste Management Project in Alexandria started in the autumn of 1999, and has just embarked upon its second phase, to last until 2006. One of the major reasons for focusing on Alexandria was the fact that it hosts 40 percent of the Egyptian industries. The project is intended to stand as a model for further development of hazardous waste management systems in other Governorates. Its expected results are:

- establishment of a permanent Hazardous Waste Management Unit (HWMU); - licensed and safe services for the collection and transport of hazardous waste HW; - establishment of a physical-chemical treatment facility for inorganic industrial waste; - establishment of a safe landfill for final disposal of industrial HW; - preparation of a plan for extending the services to all main categories of HW generators.

The first phase of the project was to last for three years. The original Finnish contribution was FIM 10 million and the Egyptian contribution was EUR 0,5 million. The grant from Finland was increased to FIM 13 million (EUR 2,19 million). The project is implemented by the Governorate of Alexandria and supervised by EEAA and its RBO in Alexandria. During the first period its main activities were:

- establishment of the HWMU and training of its staff; - a hazardous waste survey in Alexandria, and a computer data base covering some 150

industries; - construction of a secure HW landfill for inorganic waste in a remote area; - construction of an evaporation pond at the landfill; - construction of the infrastructure at the landfill site, including the office facilities; - awareness and capacity building for the EMU, RBO and local industry.

The Project Document for the second phase of three years, with a proposed budget of some EUR 1,5 million from Finland and EUR 0,4 million as the Egyptian contribution, lists six components as the main areas of activity:

- HW minimisation and handling at source; - HW administration, i.e. a permanent solution for the HWMU; - HW recycling, treatment and disposal facilities; - HW collection and transport systems, including permitting and financial systems; - laboratory services to analyse HW batches; - dissemination of the results and experiences of the project.

The most significant project risks relate to the institutional and financial frameworks of the hazardous waste management. Therefore, it was agreed as a precondition for the support of the Government of Finland in the second phase that during the bridging phase in 2003, the Governorate of Alexandria will make the necessary plans and decisions on the following issues:

- the roles of the private and public sectors in the hazardous waste management systems, such as the waste collection, transportation, treatment and disposal, licensing and monitoring, including the contracting of a private operator for the HW landfill, through a competitive transparent procedure in the selection of the operator;

- sustainable financing of the hazardous waste management systems, including tariffs and fee collection systems, based on a gradual application of the "polluter/waste producer pays" principle, minimising the need for public subsidies.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 23 SECTOR BETWEEN FINLAND AND EGYPT These activities have proceeded slower than planned. However, after discussions between the two parties concerned it was agreed that the second phase could be commenced in October 2003. The project will continue supporting the Governorate towards the successful completion of the issues listed above. As the project will last for another three years it is difficult to predict to what extent the objectives will be achieved and how sustainable will the results be. It seems that there are good chances for the project to succeed in establishing an example of efficient environmental management of industrial hazardous wastes, benefiting from Finnish experience. Conclusions: In spite of the difficulties in the beginning, the first phase of the HWMP was a success in many ways and it forms a solid basis for the implementation of the on-going second phase. Possible needs for extension cannot be predicted at this stage. The most critical sustainability issues are related to the financial sustainability and privatization of the HW management systems. However,the HWMP would certainly benefit from other activities intended to stronger environmental management of industry in Alexandria.

4.1.3 Water supply, sanitation and municipal waste management projects Beni Suef Water Supply, Regional Sanitation and Municipal Waste Management Project (RWSP, 1993-2003) The RSWP has been the longest environmental related project of MFA in Egypt. The project was implemented in the Governorate of Beni Suef in two main phases by the Economic General Authority for Potable Water Supply and Sewerage (EGA) by a consortium of Plancenter Ltd. (Finland) and Chemonics Ltd. (Egypt). The total financing of the project was 12,4 MEUR of which 6,4 MEUR was covered by the MFA. The purpose of the project was to improve water supply, sanitation and solid waste services for the population of the area in a cost efficient way. The objective of the 1st Phase was to produce an outline for the development of the EGA of Beni Suef and its branch offices. The outline was to include administration, management, investments, operations and maintenance (O&M) and human resources development. The main achievements of the 1st Phase were: the rehabilitation of Sumusta City water supply network, rehabilitation of 2 compact units in Sumusta, a ground water production borehole on site of Sumusta old elevated tank and the establishment of a field laboratory. According to an assessment of sustainability (Project Completion Report, Plancenter 12/2003) the best results were gained in the field of water supply. Collaboration with USAID programmes were also established already during the 1st Phase (organisational reforms, revenue collection, water loss reduction planning etc). The sustainability of activities related to solid waste management and grey waste water were hampered e.g. by weak local planning and management procedures. The 2nd Phase had two main components (a) water supply and sewerage and (b) environmental health. The expected results of the Component A were an effective management of EGA (incl. finance, administration and customer relations), increased water supply and sewerage coverage, improved water quality and successful HR development in EGA. Respectively the Component B were aimed at: improved management and coverage of sanitary facilities, improved sorting and collection of solid waste in El-Fashn and establishment of a similar system in Beba, further increased public awareness on environmental health issues.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 24 SECTOR BETWEEN FINLAND AND EGYPT The project has achieved good results according to the recent Planning Mission (October 2003), the mandate of which was to study the success factors and sustainability risks of the RWSP. The mission recommended however, that additional technical and mentoring support should be submitted for Beni Suef EGA for additional two years in order to assure smooth withdrawal of the project. The identified needs for future support include the following: (1) technical assistance to ensure sustainability of the technical solutions (e.g. water treatment methods and information systems), (2) twinning activities between Beni Suef EGA and some relevant Finnish water supply and sewerage organization and (3) development of support services for village-level sanitation, solid waste collection and community development (capacitating the NGO's and CBOs). Developing water supply and sanitation in rural areas is ranked high in national environmental priorities in Egypt (see 3.2.2). There may also be some commercial potential in this sector as the project had some innovative pilot projects like the establishment of the second sanitary landfill in Egypt. In case national and foreign investments would be targeted to rural areas, there could be notable commercial potential to several Finnish companies in building the basic infrastructure of villages. The decision to provide resources for further technical assistance and mentoring would thus serve two purposes; (a) spread out the successful models and approaches developed in the projects and (b) provide several Finnish companies (consulting and construction companies and suppliers of equipment) some market potential in Egypt. Badr City Water Supply and Sewerage Project (1989-1996) The MFA supported the implementation of the electro-mechanical component of the Badr City Water Supply and Sewerage Project with the total grant of FIM 64 313 000 (EUR 10,8 million). The Egyptian authorities were responsible for the civil work contracts, and a Finnish company Vesihydro Ltd was selected to provide technical assistance and supervision services. The project was divided into two contracts which were awarded to two Finnish contractors: YIT Corporation (raw and treated water pumping station extensions) and Lemminkäinen Construction Ltd (extension of water treatment plant, new booster stations, sewage pumping stations and a sewage recycling station for sewage ponds). The delivery and installation of the equipment was otherwise implemented as planned but the delays in the civil works delayed the whole process. The project also suffered from several pump motor problems. All the planned skill development follow-up procedures were not executed because of technical and manpower problems. The electro-mechanical installation works were finally completed about two years behind the original schedule. At the completion of the project, some of the civil works (e.g. pipes to pumping stations) remained to be implemented which prevented the full utilisation of the electro-mechanical works. (Vesihydro Consulting Engineers 1996.) In the evaluation of the Finnish water sector development co-operation (Skyttä et al. 2001), the plant was found to be managed and operated satisfactorily. According to the evaluation report, the training in operation and maintenance produced successful results, and the revenues covered the costs of the operation and maintenance and a portion of the capital costs as well. The sustainability was, however, rated as "uncertain". Ras El Bar Waste Water Treatment Project (1988-1995) The government of Finland financed the supply and installation of the mechanical and electrical components of the sewage treatment plant of the city of Ras El Bar (Damietta governorate) with a grant of about FIM 45 million (EUR 7,6 million). The National Organisation for Potable Water and Sanitary Drainage (NOPWASD) awarded the civil work contract to an Egyptian contractor in 1988 and the electro-mechanical contract to a Finnish contractor YIT Corporation in 1989. The plant was constructed in the first phase, the completion of which was delayed about 2,5 years. The second phase

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 25 SECTOR BETWEEN FINLAND AND EGYPT (1993-1995) included the development of the operation and maintenance procedures, human resources development and training, and assistance in the procurement of equipment and spare parts. The delays in the civil works and the great variation of the waste water flow caused problems to the implementation of the project. The development of an adequate cost-recovery system was another challenge. According to the evaluation of the Finnish water sector development co-operation (Skyttä et al. 2001) the environmental benefits of the project were significant. The overall outcome and the financial performance of the project were rated as "moderately satisfactory" and the sustainability as "uncertain". The revenues only covered the operation and maintenance costs.

After the extended training period, the NOPWASD awarded a 5-year management contract to YIT Corporation. The assignment was completed at the end of the year 2003 and the company has closed its office in Egypt. No information was made available for the study team on the current situation of the treatment plant. El Annania Waste Water Treatment Project (2004-2006) The latest bilateral development co-operation project between the governments of Finland and Egypt, El Annania Waste Water Treatment Project, aims at improving the efficiency and sustainability of the waste water treatment plant in El Annania (Damietta City). The plant which was constructed in 1998 is in the need of finalisation and rehabilitation of electro-mechanical equipment. In addition, the skills of the plant staff are not adequate to operate the plant efficiently. The purpose of the project is to transform the Damietta Water and Wastewater Company into a financially self-sufficient and well managed organisation. The Finnish contribution includes rehabilitation of the existing electro-mechanical components, installation of such components for the necessary process units, and institutional support to the development of the strategic planning as well as of the operation and maintenance. The financial share of the government of Finland is planned to be about EUR 1,3 million. In January 2004, the MFA selected a consortium of Soil and Water, Lemminkäinen and Chemonics as a consultant to provide support services for the project Conclusions: Finland has gained considerable experience in environmental development co-operation with Egypt in the fields of sanitation, wastewater management and municipal waste management. One of the projects is in the very beginning (El Annania), and a continuation for two years has been proposed to another (Beni Suef) in order to achieve sustainability. As a part of the possible continuation of the project in Beni Suef, it would be advisable to actively identify opportunities for future co-operation of Egyptian and Finnish cities/municipalities and NGOs in order to promote the shift from bilateral governmental projects to other forms of co-operation. The two urban waste water management projects (Badr City and Ras El Bar), which were completed about eight years ago, have been evaluated as "uncertain" in terms of sustainability, but there is not much that Finland could do about them at this stage. In the project in El Annania, it might only be possible to emphasise the importance of the planned institutional reform in the water supply and waste water management sectors and encourage the Egyptian authorities to implement it efficiently which is one of the keys to sustainability. Development co-operation in these sectors has not yet resulted in commercial co-operation beyond the already completed management contract of the YIT Corporation in Ras El Bar. However, this experience may contribute to the development of public-private co-operation if promoted as will be proposed below (see 8.2).

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 26 SECTOR BETWEEN FINLAND AND EGYPT 4.1.4 Egyptian Antiquities Information System Project (2000-2005) The MFA is currently supporting the 2nd Phase of EAIS project, which deals with preservation and management of cultural heritage of Egypt. Despite the fact that EAIS is classified as cultural project by the MFA, the project has clear linkages to environmental sector operations. The objective of EAIS project is to support the SCA in protecting cultural heritage and this mandatory task of SCA is considered to be part of Egyptian environmental legislation (Law 117 on Cultural Heritage). In addition to this, the protection of cultural heritage is included as one of key environmental issues in the NEAP. The purpose of the project is to provide the Supreme Council of Antiquities (SCA) with sophisticated tools and capacities for improved site protection and management. The majority of Egypt's cultural heritage sites are being damaged by one or several of the following "environmental" problems: sprawl of human settlements, air pollution, rising water table, industrial and vehicular vibrations, garbage pollution. In order to protect the sites against these risks an efficient information system and skilled personnel is urgently needed. During the 1st Phase the project developed the basic infrastructure for the information system (GIS and database) in close collaboration with planning, mapping and research stakeholders. The geographical focus of the project was in the governorate of Sharqiyyah. In the 2nd Phase the system is further developed and populated to cover new governorates, further the sustainability of the EAIS Center (as SCA information service unit) is to be established and collaboration with stakeholders in data exchange and dissemination is to be consolidated. The problems and constraints encountered in developing a GIS and database on antiquities and other historical sites are general in Egypt (e.g. access and quality of public data, small number of computers, IT is not used in administration). The possibilities to integrate environmental data with data on historical sites will be preliminarily tested in EAIS project. EAIS project has also actively participated in discussions on national data harmonization (collection and storage) which is important in developing Environmental Information Management Systems as well. Support services for the project have been provided by the Finnish Environment Institute (SYKE) in collaboration with an Egyptian consulting company called North South Consultants Exchange (NSCE). The total budget of the project is 2,2 MEUR. Conclusions: The need to extend the Finnish support has already been raised by the beneficiary. However, the specific justifications for continued support can be estimated only after the results have been reviewed (mid-term review is scheduled for spring 2004). The possibilities to enhance the horizontal co-operation with environment sector at national or local level should be explored more in detail before closing the 2nd Phase. 4.2 Regional and multilateral development co-operation Since 1997 Finland has initiated and supported one regional project and three multilateral programmes covering Egypt. Thematically emphasis has been on capacity building related to coastal zone management and water resources management. The activity related to hazardous wastes has not yet been launched though the decisions to provide support have been done some four years ago.


4.2.1 Coastal Zone Management Support Project, COMAS (1997-2000) The MFA has financed one small scale (EUR 420 000) regional integrated coastal zone management (ICZM) project covering Egypt, Lebanon, Syria and Tunisia. The actual project phase (1997-2000) was followed by a bringing phase (2000-03) but the second phase is still pending. The project was implemented by the Finnish Environment Institute and EIA Ltd. The Egyptian partners of the project were Department of Oceanography and Department of Environmental Sciences of the University of Alexandria. The project provided practical coastal management and problem solving support for the Mediterranean developing countries. The long term objective of the project was improved regional capacity in protecting and ameliorating coastal waters, erosion control, fisheries and aquaculture management, oil spill drift forecasting and planning of environmental investments. The means to reach this objective were (1) building a network between key institutions and experts in the field, (2) providing on-the-job training and other capacity building and (3) conducting pilot measurement campaigns and modelling applications for local problem solving (development of existing models of El-Mex Bay, Abu Kir and Egyptian Red Sea). According to the articles published by the project, COMAS objectives can be reached only by long term cooperation efforts and therefore a preliminary proposal for second phase was prepared already at the end of the project. Communication and collaboration within the created network has continued uninterrupted since the end of the project and all parties involved have expressed their wish to continue the activities in order to sustain the results and to link the modelling activities closer to local planning and decision making. A draft Project Document has been prepared and presented to MFA and METAP secretariat, yet no decisions to continue support has been made. According to a recent analysis on sustainability of ICZM in Egypt the need of ICZM is widely recognized in the scientific community and in some economic sectors like tourism. The Finnish experiences from COMAS project strongly support this conclusion and in the preparation of 2nd Phase the need to increase collaboration between the scientific community and authorities responsible for ICZM has been raised e.g. in Governorate of Alexandria. During the bridging phase possibilities to move the scope towards planning applications used in monitoring of land based pollution loads, EAI procedures, management of coastal lakes etc. have been studied and found feasible. Conclusions In January 2004 the COMAS project was introduced to METAP secretariat in the purpose to explore the possibilities to integrate it into the Finnish funded programme component on ICZM. This option ought to be followed up by MFA. In case METAP cannot take over the project, alternative ways to support the created network should be explored in collaboration with the project team (e.g. EU funding for institutional and scientific collaboration, regional environmental initiatives). Both the above proposals are valid with the prerequisite that MFA supports a continuation for the project.

4.2.2 Support to METAP IV (2001-2005) Finland has been supporting the Mediterranean Environmental Technical Assistance Programme (METAP) in the field of ICZM since 2001. METAP, initiated already in 1990, is a partnership between the WB, EIB, EC, UNDP and the Governments of Finland and Switzerland. The objective of METAP is to strengthen the capacity of the 15 beneficiary countries in North-Africa (incl. Egypt), in the Middle-East and in the Balkans to address common environmental issues.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 28 SECTOR BETWEEN FINLAND AND EGYPT The ongoing 4th Phase of METAP (2001-05) has three pillars of activities;

- water, wastewater and integrated coastal zone management, - municipal and hazardous waste management and - policy and legislation tools.

Finland has made a decision in principle to finance ICZM activities of METAP till the end of 4th Phase, which is estimated to last till June 2005. The Finnish support has been allocated for one long term advisor in METAP secretariat in Washington and to individual ICZM project activities like workshops, training events, studies and demonstration projects. The Finnish funding was managed through a Single Purpose Trust Fund financed by Finland, however, the WB reformed its trust funds and relinquished this arrangement during 2003. These administrative arrangements have resulted in some delays in implementing the planned ICZM activities. So far METAP has not funded any ICZM activities in Egypt. A special sustainability analysis on the theme is underway and according the preliminary information available, the problems related to ICZM in Egypt are vast and would require much more national and international resources and commitment than is available now. The analysis recommends e.g. institutional strengthening of ICZM Commission, support to enforcement of ICZM provisions in the Environmental Law, support to development of economic policy instruments and support to the use of EAI and SEA in land use planning processes. As to the other components of METAP there have been projects and activities covering Egypt. In the field of waste management METAP is currently implementing a SMAP/EC funded Regional Solid Waste Management project (see 8.1.4) and a Swiss funded Regional Hazardous Waste Management Initiative. An Urban Waste Management Programme was recently finalised in which a Citizens Call Centre was established in Alexandria to assist the Governorate in monitoring the SWM contracts with the private sector. In addition to these, a number of activities and studies related to the other components of METAP have been carried out in Egypt during the past few years (e.g. study on Knowledge Management, Strengthening of Environmental Assessment, study on costs on environmental degradation, Environment and Trade). Conclusions In the METAP partner meeting (in January 2004, Helsinki) a preliminary decision was brought in to carry out an evaluation on activities of the 4th phase prior closing it. In this assessment the need to continue support to some pillars or themes will be analysed. Currently there are no policy decisions to close down the programme in June 2005 nor to continue it.

4.2.3 Support to Nile Basin Initiative (2000-2005) The need to increase co-operation between the ten riparian countries of the Nile River Basin has been acknowledged for long. Through a number of milestones the co-operation was officially named as the Nile Basin Initiative (NBI) in 1999. The Council of Ministers of Water Affairs of the Nile Basin States have agreed on policy guidelines for the NBI in the Shared Vision Program, further, two sub-basin action programmes geared to physical investments have been prepared. The Eastern Nile Subsidiary Action Program (ENSAP) covers Egypt, Ethiopia and Sudan and the goal of countries is to develop and guide the use of water resources in a sustainable and equitable way with special emphasis on transboundary implications. Under ENSAP there are a number of sub-programmes, like the Integrated Development of the Eastern Nile (IDEN). Projects under IDEN "umbrella" are partly prepared and implemented by the responsible sector agencies in each country and partly by the Eastern Nile Technical Regional Office (ENTRO), financing to these projects will be identified during the process.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 29 SECTOR BETWEEN FINLAND AND EGYPT In 2001 an International Consortium for Cooperation on the Nile (ICCON) was founded to support the NBI activities and Finland has been a member from the start. Already in the first meeting Finland was requested for support. The MFA commissioned a consultant study to identify forms for the Finnish support in 2001 and it was complemented by an identification mission in 2003. As a result Finland decided to launch a project to support ENTRO which was established in 2002. ENTRO is located in Ethiopia but it serves all the three ENSAP countries, which have also nominated national secretaries and assistants to ENTRO. A consortium of Finnconsult Ltd and Soil and Water Ltd was commissioned to implement the three-year project in July 2003. The purpose of the project is to provide technical assistance to the ENTRO in programme administration and project preparation. The total allocation of EUR 2 million includes also direct support for ENTRO. Conclusions The project is in an early state and therefore it is difficult to assess the future impact or potential for Finnish-Egyptian co-operation in the field of environment. Currently the links are marginal and active efforts (like informing parties of the transition strategy) are needed in order to strengthen the co-operation.

4.2.4 Support to the Basel Convention Regional Centre of the Arab Countries (2004-2006) The article 14 of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, adopted in 1989, provides for the establishment of regional centres for training and technology transfer regarding the management of hazardous wastes and other wastes and the minimisation of their generation. 1n 1995, by Decision III/19 of the third COP meeting of the Convention, Egypt was selected as the host country for the Sub-Regional Centre of the Arab Countries. In 1999, the Secretariat of the Convention submitted an application for supporting the Centre to the Finnish Ministry of the Environment. The Finnish support was approved by the MFA in December 2000 but the implementation has not yet been started due to the long delay in the finalisation of the Project Document and the agreement between UNEP and the government of Egypt. The draft agreement was accepted by the competent authorities of Egypt in January 2004 but the official approval process is still on-going. The planned Finnish contribution to the first 3-years' work programme of the Centre is about EUR 1 million. The main tasks of the Centre include:

- collection, management and dissemination of information on waste generation, management and disposal in the region (best practices);

- technical assistance and advisory services and training to enforcement officials, waste producers and waste managers on e.g. legal and institutional matters, preparation of national waste inventories and data management systems, techniques for waste minimisation and management, mobilisation of financial and human resources, etc.;

- promotion and public awareness; - conducting special projects and studies, including e.g. a regional inventory (database) of

hazardous wastes and waste generating activities and a study of main hazardous waste streams in the region.

Conclusions: The co-operation must be started as soon as possible. It will be very important to emphasise the need for ownership and contribution of the countries served by the Centre to the activities and financing of the Centre. The opportunities for fruitful co-operation between the Centre and the Hazardous Waste Management Project in Alexandria should be utilised effectively.


4.3 Development co-operation projects of Finnish and Egyptian NGOs According to the "Evaluation of the Development Co-operation Programme between Egypt and Finland" (Tervo et al. 2001), the development co-operation of Finnish NGOs, supported by the MFA, has been rather modest in Egypt. In the 1990s, there were five Finnish NGOs involved. Only the 4-year co-operation of the Mikkeli Fair Trade Association (Mikkelin kehitysmaayhdistys), Mikkeli Polytechnic, MineRePlast company, the Association for the Protection of the Environment (APE) and the Ain Shams University (1999-2002) has clearly focused on environmental issues. The co-operation started with a health care project in order to improve the hygienic living conditions, health and social status of the Zaballeens, a community of garbage collectors in Cairo. The co-operation was diversified in the year 2000 by commencing a plastic brick project and in 2001 with the start of a hepatitis B and C prevention project. According to the annual project reports, the project(s) contributed significantly to the improvement of the health of the community. The production of bricks made of recycled plastic required further development, which was supported by the Embassy of Finland in Cairo (Fund for Local Co-operation) in 2003. Danida provided additional funding for the hepatitis project since July 2002, and the project will continue until the end of the year 2004 with 100 percent financing by Danida. The Mikkeli Fair Trade Association and Mikkeli Polytechnic have no plans to continue their co-operation with the APE and the Ain Shams University in the near future. The most significant threat to the sustainability of the efforts made and to the livelihood of the Zaballeen community is the recent change in the municipal waste management policy of Cairo. The municipal waste management is being privatised to large international companies without much attention to the role of the Zaballeens. Conclusions: Until now, only one joint environmental project of Egyptian and Finnish NGOs, supported by the MFA, has been implemented. The project was relatively successful and resulted in a continued support from the Fund for Local Co-operation of the Embassy of Finland in Cairo and Danida. The Mikkeli Fair Trade Association and Mikkeli Polytechnic have no plans to continue the co-operation with their Egyptian partner(s) due to the scarcity of their human and financial resources.

4.4 Projects supported with the Fund for Local Development The Fund for Local Co-operation was the first time allocated to the Embassy of Finland for the year 2003. The size of the Fund was EUR 100 000. Out of the four supported projects, two had environmental objectives:

- Association for the Protection of the Environment (APE): Production of bricks from sand and plastic wastes (support from the Fund: EUR 11 600 for one year);

- Better Life Association for Comprehensive Development (BLACD) in co-operation with Dorcas Aid International: Water and sanitation in El Hawarta (support from the Fund: EUR 25000 for two years).

The final report of the project of the APE was not available during the study. According to the first annual report of BLACD, its project has resulted in 405 families having been provided with water taps, 466 families with latrines, 16 women health visitors trained, 160 children educated in environmental health issues, and the village being cleaner and safer. Another success factor mentioned in the report is

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 31 SECTOR BETWEEN FINLAND AND EGYPT empowering the local community to demand from and push the local government to connect the water network to the sub-areas of the community. For the year 2004, the Embassy will double the size of the Fund. One of the five proposed projects has an environmental focus, namely the EU Environment Group: Policy engagement on solid waste management. The EU Environment Group is a network of representatives of the European Commission and the Member States that participate in environmental co-operation in Egypt. Their proposal includes the preparation of a policy report on municipal solid waste management and a series of meetings and two 2-day national workshops with various Egyptian authorities. The Group is proposing that the total cost of the project be shared between six partners (EC / Member States), with approximately EUR 10 000 each. The Embassy is proposing Finland's participation. No particular role of the civil society can be seen in the proposal and it is, therefore, questionable whether the project would qualify to be supported from the Fund for Local Co-operation (see the MFA norm 11/2003, HEL1038-62 / 16.12.2003). The resources of the Embassy for the management of the Fund have been modest. Therefore, information on the Fund has not been actively disseminated to Egyptian NGOs. The selection of supported partners has been based on previous experiences of the Embassy in co-operating with them. Conclusions: The Embassy of Finland has allocated a considerable portion of the Fund for Local Co-operation to environmental activities. Two environmental projects were supported in 2003. One of them is continuing and a new one is being proposed for 2004. There are no signs of continuing the completed project of the Association for the Protection of the Environment. The Embassy has proposed to gradually increase the size of the Fund significantly, the environment remaining one of the major supported sectors. The increasing Fund is an opportunity for Egyptian environmental NGOs but it will require more administrative resources and strategic planning in the future.

4.5 Other environmental sector co-operation During this study we were able to identify only some sporadic other forms of co-operation between Finnish and Egyptian institutes and other organisations. Therefore it is very difficult to assess what has been the actual contents or volume of environmental co-operation that has not been financed by the earlier described instruments or linked to bilateral projects. The Academy of Finland has actively sought collaboration partner from Egypt and in this process the Academy of Scientific Research and Technology of Egypt has been identified. The level of scientific research in Egypt is widely acknowledged and the potential future co-operation agreement between the academies could facilitate establishment of scientific co-operation projects and exchange of academics also in the field of environment. Most of the bilateral environmental projects have had links with some Egyptian Universities and research institutes and thus there is some potential and networks for future co-operation. The EU-funded programme TEMPUS programme was extended to cover Egypt in 2002 but so far no Finnish-Egyptian joint projects have been implemented. TEMPUS programme allows for establishment of joint consortia to implement projects for academic and non-academic institutions, NGOs, business companies, industries and public authorities. Further, it allows for mobility grants to individuals in higher education institutions. During the past few years the number of Egyptian students in Finland has been marginal being less than five students per year. The level of Finnish students in Egypt has been approximately on the same level. In all the number of Finnish universities that have collaborated with Egypt is very small. A positive exception to this rule has been the Rantasalmi Institute of Environmental Education, an independent institute owned and maintained by the Finnish Foundation for Environmental Education,

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 32 SECTOR BETWEEN FINLAND AND EGYPT which have through its own direct contacts provided training on environmental awareness to a great number of affiliates of the National Democratic Party of Egypt. The Finnish media has also shown a growing interest towards Egypt during the past few years. Some individual journalists have highlighted the environmental challenges of Egypt, potential push for this has been the activities and links of the media component of EPAP project. Additionally a big group of scientific journalists visited Egypt last year. 5. Environmental activities of other major donor agencies in Egypt According to the CEA, the Technical Co-operation Office for the Environment of EEAA coordinated the total amount of LE 2,4 billion of official development assistance to the field of environment in 1991-2001. Multilateral financing covered 25% and bilateral respectively 75% of the allocated resources. Some 91% was in the form of grants while only 9% was loans. The resources were, and partly still are being used to raise the capacity of EEAA and to implement the actions and investments identified in the first NEAP of Egypt (in all some 51 projects and programmes). The biggest bilateral donors were USA, Denmark, Germany, Canada, UK and Japan, whereas Finland was ranked 8. The bulk of the assistance was allocated to policy support (43%) followed by industrial pollution abatement and air pollution abatement (together 26% ). The least supported sector was the solid and hazardous waste management (>2%). 5.1 Co-operation strategies During the mission it was revealed that many donors are in a transition stage vis-à-vis the policy towards Egypt and not only in the environmental field. The reason behind is the fact that Egypt is today considered to be a middle income country and donor countries want to focus on low income receivers. Some examples on how this is reflected on environmental cooperation are:

- DFID is totally pulling out of Egyptian environmental cooperation by 2005; - USAID is pulling out from environmental sector during 2004 and it will cut the overall volume

of development aid and change emphasis towards creation of new jobs and generation of income and improving living conditions;

- Danida is in a long transition stage (declared to end 2009) and is currently reshaping all its ongoing environmental activities;

- Canada is gradually pulling out. From the currently active countries in the environmental scene Italy, Germany and Japan will continue to support the environmental sector. Conclusion: These coinciding transition phases raise the question whether they could not be planned more in unison. A strong combined planning of at least the Finnish and Danish, and possibly also some other countries, transition strategies would have a better chance to produce coordinated efforts and sustainable solutions. This is a possibility to combine forces and thereby achieve a stronger result than if every donor would work alone. The proposal is to liaise foremost with Danida.. 5.2 Major projects

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 33 SECTOR BETWEEN FINLAND AND EGYPT In the following we provide a brief review on the current major environmental projects with distinct synergies with the Finnish bilateral projects and/or contribution to overcome the major environmental challenges of Egypt presented in Chapter 3 and 4. 5.2.1. Environmental Sector Programme, ESP (Denmark/Danida) The Environmental Sector Programme (ESP), supported by Danida with a total budget of DKK 367 million, started officially in March 2001 and became operational in January 2002. The overall objective of the ESP is to contribute to the efforts of the Egyptian government to improve environmental conditions, develop environmental management capacity of institutions and provide frameworks for compliance with environmental regulations. The main components of the ESP include:

- strengthening of EEAA’s (Central Department of Branches Affairs) capacity for decentralised environmental management and supporting Regional Branch Offices (RBOs) of EEAA in Greater Cairo and Fayoum;

- supporting the development of the Environmental Management Units (EMUs) and the preparation of the Governmental Environmental Action Plans (GEAPs) in Beni Suef and Aswan;

- dissemination of environmental information; - raising awareness and supporting the use of cleaner production in the Egyptian industry

through the Environmental Compliance Office at the Federation of Egyptian Industries (FEI) and the Environmental Protection Fund;

- prevention an control of pollution from the KIMA fertiliser and ferrosilicon plants in Aswan; - development of environmental monitoring and information systems; - technical assistance to the Shore Protection Authority on integrated coastal zone management.

The government of Denmark has recently made a decision to withdraw from the co-operation between Denmark and Egypt at the end of the current ESP (2009). The ESP is now being reshaped to sustain the results and to reflect to the recent decentralisation developments of the environmental administration. The aim is to join more closely with the efforts of other donors so that a sector wide approach to decentralisation of environmental management could be adopted under a stronger and more coherent Egyptian management structure and guided by a harmonised strategy and investment plan. The ESP will also include an additional component to support the 18 EMUs that are not supported by other projects, the immediate objective being that “EMUs function according to their mandate, including effective collaboration with other sector agencies and stakeholders at local level”. The financial support to EMUs will be channelled through the Environmental Protection Fund and the training through the Training Department of EEAA. Technical assistance will be provided to and through the General Department for EMUs in EEAA. (Buhl-Nielsen et al. 2004.) 5.2.2. Support for Environmental Assessment and Management, SEAM (UK/DFID) The Support for Environmental Assessment and Management (SEAM) is a major environmental programme implemented by EEAA, Entec UK Ltd and Environmental Resources Management Ltd with support from the UK Department for International Development (DFID). The SEAM was started in 1994 and should be completed by the end of 2004. The SEAM includes a variety of activities, such as:

- development of participatory Governorate Environmental Action Plans (GEAPs) in Sohag, Dakahleya, Qena and Damietta;

- improving solid waste management in the four governorates; - implementing cleaner production in textile, soap and food industries to enhance

competitiveness and reduce pollution; - development of Environmental Impact Assessment capacity in the areas of tourism, industry

and infrastructure;


- delivery of community environmental projects that benefit the poor (e.g. water supply, village sanitation, solid waste management, natural resource management, sustainable agriculture, environmental education and awareness) and strengthening of the capacity of NGOs and Community Development Associations.

While the SEAM is being completed, the DFID is now looking for opportunities to utilise the experiences in a regional context. The DFID also co-operates with the European Commission in the preparation and implementation of the South Sinai Environmental Action Plan and co-ordinates the Solid Waste Management Programme under the METAP IV ( see 4.2.2). 5.2.3. Egyptian Environmental Policy Program, EEPP (USAID) The $170 million Egyptian Environmental Policy Program ($110 million cash transfer and $60 million technical assistance), initiated in 1999, has supported activities in the following areas: improving air quality, conservation and sustainable use of the Red Sea land and marine resources, promotion of economic instruments for improved environmental management, solid and hazardous waste management, decentralization of environmental management responsibilities, inspection and voluntary compliance, strategic environmental planning, environmental disaster preparedness, energy efficiency, and promotion of domestic gas use. The assistance has already resulted in:

- development of a monitoring system for sensitive coral and mangrove areas in the Red Sea; - completion of the first Environmental Protection Fund (EPF) cycle and initiation of the second

including launching of a communication campaign to strengthen EPF's outreach in the investment market;

- approval and publication of a national solid waste strategy; - privatisation of solid waste management system in Alexandria; - creation of an inter-ministerial working group on hazardous waste; - initiation of actions to develop a national energy efficiency strategy; - increased use of environmental impact analysis in the development of tourism projects in the

Red Sea; - creation of an environment fund by 10th of Ramadan City Board of Trustees Environment

Committee; - initiation of actions by 38 companies to adopt ISO 14001 environmental management systems

in 10th of Ramadan after participating in USAID-funded preparatory program; - environmental management system being implemented in selected Red Sea tourism properties

leading to environmental improvements; and - environmental awareness campaigns in support of these efforts.

The EEPP will be completed by September 2004 and a new Livelihoods, Income and Environmental Services (LIFE) programme is in a contracting phase. The three technical areas of the programme are:

- abatement of pollution caused by lead smelters, including site remediation in five pilot smelters and management models for waste management;

- Red Sea sustainable tourism and conservation; - integrated water resources management, including water user programme and water quality

monitoring components. 5.2.4. Egyptian Environment Initiatives Fund, EEIF (Canada/CIDA) The Egyptian Environment Initiatives Fund (EEIF), financed by the CIDA, aims at encouraging small and medium enterprises (SMEs), non-governmental organizations (NGOs) and entrepreneurs in implementing environmental projects which help preserve Egypt's natural resources, especially soil and water. EEIF provides both technical and financial assistance. The Fund has three components

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 35 SECTOR BETWEEN FINLAND AND EGYPT supported by environmental awareness and promotion efforts: (1) Environmental Management and Technology; (2) Community Participation; and (3) Green Enterprise. According to the Canadian embassy in Cairo, the NGO component has been the most successful components of the EEIF. In the future, it will be managed in partnership with the Environmental Protection Fund, starting in February 2004. 5.3 Co-operation between Egypt and the European Commission Economic co-operation has been the core of co-operation between Egypt and the EU for long. The bilateral relations between Egypt and the EU have been governed by a Co-operation Agreement since 1977 and the financial support was based on Financial Protocols (1977-96). Under provisions of the Agreement, Egypt enjoys free market access for its industrial exports to the EU, while the EU exports of industrial products enjoy the Most Favoured Nation treatment. On agriculture, Egypt has enjoyed preferential treatment on access to the EU market by means of tariff quotas and export calendars for its traditional flows since the 1987 Protocol.

A major milestone in the relations was the signing of the Barcelona Declaration in 1995, which defined three major pillars for the Euro-Mediterranean Partnership (EMP): (1) promotion of peace and stability, (2) economic co-operation and (3) social and cultural co-operation. Environment is considered to be one of the priorities of economic co-operation. The main financial instrument of EMP is the MEDA programme (MEDA I 1995-99 and MEDA II 2000-06). The "collective" aspect of the EMP has been complemented by comprehensive individual Euro-Mediterranean Association Agreements governing bilateral relations between each of the Mediterranean 9 non-candidate partners and the EU as a whole.

Negotiations for the conclusion of the EU-Egypt Association Agreement started already in 1995 and after a long preparation period they were finalised in June 2001. This was followed by the ratification by the Egyptian People’s Assembly in April 2003. On the EU side, almost all EU Member States have ratified the Agreement, Finland ratified it in February 2003. The Agreement, once entered into force, will cover political dialog, respect for human rights and democracy, establishment of WTO-compatible free trade over a transitional period up to 15 years, economic co-operation in a wide range of sectors including environment, co-operation related to social affairs as well as cultural co-operation. From the EU perspective the Mediterranean is considered to be environmentally one single region with common problems which often relate to water scarcity and pollution, population growth, rapid urbanisation and growth of tourism. Additionally the countries lack of institutional, technical and financial capacity to deal with environmental pressures and environmental integration concept is relatively weak as well as the role of civil society in environmental issues. Therefore the EU emphasises regional approach for environmental problems in the Mediterranean area. There are, however a number of bilateral environmental projects ongoing with EU funding in Egypt and some 16% of the MEDA II allocation for 2001-04 in Egypt was targeted to environmental projects. Some of the currently ongoing EU-funded environmental projects stem from the old Financial Protocols from early 1990's including Oil pollution combating centre at the Gulf of Aqaba, St Katherine Protectorate Development Project and Gulf of Aqaba development programme. Under MEDA I two major programmes were launched with links to environmental sector. The Industrial Modernisation Programme (IMP), with a major allocation of MEUR 250, was launched in 2001 to promote the GDP growth and competitiveness of the private sector with special emphasis on SMEs. IMP is managed by the Industrial Modernisation Centre and seven Business Resource Centres have been established in Governorates to support implementation of the programme. Environmental objectives have not been integrated into the objectives of IMP, which has made it difficult to coordinate with other programmes supporting environmental management and industrial modernisation in Egypt. The Social Fund for Development (MEUR 155) has provided support to small scale environmental projects since 1998. Under MEDA II there is only one new environmental project,

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 36 SECTOR BETWEEN FINLAND AND EGYPT Integrated Local Development Programme for South Sinai (MEUR 64). The programme promotes sustainable, diversified and environmentally sensitive activities in South Sinai within a decentralised framework.

5.3.1 Regional Euro-Mediterranean Programme for the Environment The regional environmental co-operation within EMP builds strongly upon existing programmes like the Barcelona Convention/Mediterranean Action Plan coordinated by UNEP, METAP coordinated by the World Bank and the Life 3rd Countries programme of the EU. The environmental component of EMP has been defined in the Short and Medium-term Priority Environmental Action Programme (SMAP). The elaboration of SMAP has been a joint effort of the Euro-Med partners, related international organisations and major NGOs active in the region. The SMAP Declaration was approved in November 1997 in the Euro-Mediterranean Ministerial Conference on the Environment in Helsinki. SMAP is a framework for policy and funding orientation at both regional and national levels. SMAP focuses on activities and projects in five priority fields:

- integrated water management; - integrated waste management; - hot spots (incl. polluted areas and areas of sensitive biodiversity); - integrated coastal zone management; - combating desertification.

Within the SMAP framework there is a Network of SMAP correspondents. It was established from the national representatives of the respective Environment Ministries of each Euro-Med Partner with the purpose of increased exchange of information, consultation and coordination. Further there is an NGO Steering Committee to support the active participation of NGOs in the programme. The Regional Euro-Mediterranean Programme for the Environment supports projects that meet the above priorities. The total allocation for SMAP 1 (call for proposals 1998-99) was MEUR 5,5 and for SMAP 2 (call for proposals 2000) MEUR 23,3. Out of the 15 selected regional projects three have concerned or are still operational in Egypt: Regional Community Solid Waste Management Programme (co-ordinated by RAED/Egypt), Mediterranean Urban Waste Management Programme (co-ordinated by UNEP) and Regional Solid Waste Management Project in METAP Mashreq and Maghreb Countries (co-ordinated by the WB). All the projects are implemented by consortia consisting of " non-candidate partners" from the Mediterranean Area and EU- member state's partners (institutes, NGO's, international organisations etc.). So far there hasn't been any Finnish partners in the SMAP projects yet Finland has been active within the SMAP framework from the start. The Finnish SMAP correspondent has participated in the Correspondents' Network and an Italian-Finnish consortium (Agency for Environmental Protection and Technical Services from Italy & Finnish Environment Institute) has been contracted to provide regional management support for the SMAP projects and correspondents network through the Regional Management and Support Unit located in Rome since February 2003.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 37 SECTOR BETWEEN FINLAND AND EGYPT 6. Previous private sector co-operation between Egypt and Finland 6.1 Trade 1990 - 2003 Finland’s imports from Egypt since 1990 have fluctuated between 1 MEUR and 12 MEUR. In 2000 – 2003 the level of imports has been in the range of 7 – 9 MEUR. The value of imports represent less than 0.1 % of Finland’s total imports, and Egypt is not among the 80 biggest countries of origin. Egypt represents about one quarter of Finnish imports from North Africa (Algeria, Egypt, Libya, Morocco, Tunisia). Table 1: Finnish imports from Egypt 1990 – 2003, million euro

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

mill

ion

euro

Imports from Egypt, MEUR

The structure of the products imported to Finland consists mainly of traditional primary products (fruits and vegetables) or low value-added industrial products (textile yarn, clothing), and occasionally aluminium (the Finnish company Kemira has a minority shareholding in Aluminium Sulphate Company of Egypt). The specific products may vary from year to year, but the overall structure remains the same. In 2002 the import share of transportation equipment was 55 %. Exports from Finland to Egypt have grown from the level of 70 – 120 MEUR in 1990 – 1996 to the level of 150 – 200 MEUR in 1997 – 2002. In spite of this growing trend, Egypt’s share of Finland’s total exports has slightly declined. The latest trade statistics point to a significant drop in Finnish exports to Egypt to 111,6 MEUR in 2003.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 38 SECTOR BETWEEN FINLAND AND EGYPT Table 2: Finnish exports to Egypt 1990 – 2003, million euro

0,0

50,0

100,0

150,0

200,0

250,0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

mill

ion

euro

Exports to Egypt, MEUR

Forest industry products have dominated Finnish exports to Egypt, and they still represent over 50 % of Finnish exports. The structure of exports is changing with the modernisation of Egyptian telecommunication systems. In 2002, telecommunication devices (primarily mobile phones and network accessories) represented 29 % of Finnish exports. In 2003 the share of telecommunication devices dropped substantially which may reflect sourcing of Finnish products from factories in other countries than Finland. Further, in 2003 the value of forest industry products dropped also notably (timber –21%, paper and carton –35%) whereas there was a substantial increases in machines (+188%) and industrial appliances (+58%) both or which, however, constitute less than 5% of the total volume. A crucial factor which has reflected to the total decrease in trade has been the appreciating value of euro. The environment-related trade between Finland and Egypt has been marginal. Sweden’s and Denmark’s trade pattern with Egypt closely resembles that of Finland in terms of trade volume and vast export surplus. 6.2 Tourism Tourism is a very important source of foreign exchange for the Egyptian economy. Revenues from tourism help to balance the wide trade deficit in the current account. Overall tourism has doubled in the past 10 years and reached the level of 5 million arrivals in 2000 – 2003. Events beyond Egypt’s control (September 11, Iraq war etc.) have caused fluctuations in tourist trade. In 2002, about 18000 tourist trips were recorded from Finland to Egypt. The average number of overnight stays was 8.3, and the average expenditure per day was 130 EUR. The total expenditure of Finnish tourist trips to Egypt in 2002 was 19,4 million EUR. This sum includes all the expenses (flights, accommodation and local expenditures), and it is not fully comparable with revenues from trade. However, tourism from Finland to Egypt has become a more important source of foreign exchange to the Egyptian economy than traditional exports.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 39 SECTOR BETWEEN FINLAND AND EGYPT The outlook for tourism growth from Finland to Egypt is favourable, barring unexpected upheavals in international politics, particularly in the Middle East. Tourism from Egypt to Finland will remain marginal. 6.3 Foreign direct investments Foreign direct investment to Egypt has on average remained under one billion euro/year in the 1990’s and early 2000’s. The sluggish development is likely to continue, reflecting the poor investment climate in general, and over-regulation, heavy administrative structures and irregular business practices in particular. Finnish companies have three productive investments in Egypt:

• Kemira’s minority participation in the Aluminium Sulphate Company of Egypt, • Kone’s minority shareholding (49 %) of Marryat & Scott Egypt S.A.E., and • Sanitec’s joint venture (50 %) with Lecico (ceramic products)

A few Finnish companies have representative offices in Egypt. Some Finnish consulting companies have temporary offices in development cooperation projects. There are no private sector environmental investments from Finland to Egypt, or from Egypt to Finland. 6.4 Instruments for trade and investment promotion Equity and loans for joint ventures - Finnfund Finnfund provides direct funding (equity and loans) for Finnish joint ventures in developing countries, and indirect funding for development projects through investment funds located in the developing countries. Majority of Finnfund’s investment are in Asia. In Africa, Finnfund has three investment projects in Ghana and Tanzania in its portfolio (two very small hand pump projects, and a teak plantation), and four fund investments. Investments in Egypt are eligible for Finnfund financing, but Finnfund does not have investments in Egypt in its portfolio. There have been some initiatives, and one project is currently under preparation, but no investment decisions have been made yet. Guarantees - Finnvera Finnvera classifies Egypt in the intermediate risk category 4 in its country classification scale of 1 (very low risks) to 7 (very high risks). This applies for both short-term and long-term transactions. For short-term transactions Finnvera recommends an irrevocable letter of credit. For medium and long-term transactions Finnvera recommends a guarantee by Ministry of Finance, Central Bank or an international bank. Concessional Credits – Ministry for Foreign Affairs, commercial banks Finnish concessional credits are commercial loans with a grant element of about 35 % in the form of a subsidized interest rate (close to zero) and about 10-year maturity. They are intended for investment projects with low financial rate of return, but high economic rate of return, primarily in the environmental and social sectors. China has been the dominant recipient of Finnish concessional credits in the 1990s and early 2000s. Since 1992, Egypt has not received concessional credits from Finland.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 40 SECTOR BETWEEN FINLAND AND EGYPT Grants for project preparation (EIT) – Ministry for Foreign Affairs The Ministry for Foreign Affairs operates a grant facility to support economic, industrial and technological cooperation co-operation projects of Finnish companies in developing countries. The budget allocation in 2002 – 2004 has been 2.0 – 2.2 million euro. The funds have been under-utilised, i.e. the disbursements have remained essentially smaller than the budgeted amounts. For Egypt, 11 projects have received 482,000 EUR support since 1986. In 2000 –2003 there has been one EIT-funded project in Egypt. Information about the actual outcome of projects in Egypt is not available. Grants and credit for the promotion of Nordic project exports – Nordic Project Export Fund (NOPEF) NOPEF provides loan/grant support to Nordic companies for their feasibility expenses for project export or internationalisation projects. The project must be located outside the EU and EFTA countries. Egypt would be eligible NOPEF funding, but no proposals have been received up to now. Soft credits - Nordic Development Fund (NDF) NDF primarily grants soft credits on IDA-terms to poor developing countries. In Africa, NDF has financed projects in Benin, Burkina Faso, Ethiopia, Ghana, Kenya, Malawi, Mozambique, Rwanda, Senegal, Tanzania, Uganda and Zambia. In principle, NDF could grant credits to Egypt, but it has focused on the low-income countries South of Sahara. Developmental credits - Nordic Investment Bank (NIB) In 2002 NIB granted a loan to Assuit Cement Factory in Egypt. The amount was 13,4 million EUR and its purpose was the modernisation of the factory. This was the only NIB loan to Egypt during the last 5 years. Developmental credits - European investment bank (EIB) EIB is a major lender to Egypt. Since 1995, it has lent a total of 1.8 billion euro to 37 investment projects (see Annex 2). This includes 175 million euro to four wastewater treatment projects. 6.5 Finnish enterprise views on Egypt The Finnish business community interest in investing in Egypt has been very small in recent years. No environment-related investment projects have been implemented, or even considered. The opening market in Iraq may offer possibilities for Egypt as a “gateway” to the Iraq market. In exports, Egypt is an interesting country because of its big population. Goods and equipment producers Internationally operating Finnish companies will consider projects on a case-by-case basis. Few companies consider Egypt as their target market. Finnish potential is primarily in technologically advanced products that do not compete with local production. Construction companies Two leading Finnish construction companies have been present in Egypt in Finnish development cooperation projects, notably wastewater treatment plant projects. One of them has recently closed its local representative office. The other one has been selected for the implementation of the El Annania project. Its presence in Egypt is likely to end with that project.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 41 SECTOR BETWEEN FINLAND AND EGYPT Consulting companies and other service providers The Finnish engineering consultants have had project personnel in Egypt in the various development cooperation projects. The consulting companies will continue to bid for foreign-funded projects in Egypt, normally in consortium with other European and Egyptian consulting companies. Egypt could also become a gateway to other regional markets, particularly to Libya. Several Finnish engineering consultants have solid references in specific locations, and in specialized services.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 42 SECTOR BETWEEN FINLAND AND EGYPT 7. Co-operation scenarios beyond the transition period 2008- The government of Finland has made a decision to significantly reduce grant-based bilateral development co-operation with the government of Egypt by the year 2007. If no efforts are made to prepare or promote any new environmental co-operation, the environmental development co-operation between Egypt and Finland is likely to vanish gradually by the end of the year 2006 when the current bilateral and regional projects will come to an end and the growth prospects of private sector co-operation remain limited. However, the Unit for the Middle East and North Africa of the MFA has envisioned that the volume of the bilateral "thematic co-operation" with Egypt could possibly be in the order of EUR 1,5 million annually beyond the year 2007, "the environment" being one of the major potential themes for co-operation. The intended volumes of the various themes are not yet known but it can be assumed at this stage that, for example, about 2/3 (EUR 1 million annually) could be allocated to environmental thematic co-operation, including the increasing Fund for Local Co-operation of the Embassy of Finland in Cairo. In addition, other ODA instruments can be used increasingly, such as co-operation with multilateral development organisations, regional development co-operation, the MFA's support to INGOs and NGOs, funds of the Siemenpuu Foundation (and the other two Finnish development co-operation foundations KIOS and Abilis) and the North-South Local Authority Co-operation Programme managed by the Association of Finnish Local and Regional Authorities. It is also a principle of the MFA that the future co-operation shall be based and built upon the results and experiences achieved in the previous and current environmental co-operation. 7.1 Scenarios for development co-operation of the public sector and NGOs On the basis of the above described general conclusions we have drawn up three alternative scenarios which illustrate the state of bilateral development environmental co-operation and the "Finnish presence in the scene" beyond 2007. The key variable in the scenarios is the volume and form development aid. The scenarios describe what could be seen as results after the transition period up till 2007, i.e. what Finland wants to be achieved in the environmental sector in Egypt in the long perspective. The scenarios have been elaborated to catalyze discussions between different parties involved in co-operation in creating a common understanding of the wanted vision of the future. 1. “Survival of the fittest”

This scenario foresees that all current cooperation projects, such as EPAP, HWMP, EAIS etc., would cease during the transition period, as present plans indicate. Also all multilateral input to Egypt, via the World Bank to e.g. METAP or via UNEP to the Basel Convention centre, would be terminated during the transition period. This would indicate that only “fittest of the fittest” initiatives (e.g. private sector co-operation that has spun-off from projects or new co-operation proposals of NGOs or INGOs) that are really viable and/or profitable would continue beyond the transition phase. They would need to be built on the contacts and experience obtained during the stronger Finnish presence in Egypt, or directly via commercial channels. Conclusion: Finnish-Egyptian environmental co-operation will gradually vanish and the presence of Finland will be hardly noticed.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 43 SECTOR BETWEEN FINLAND AND EGYPT 2. “Diversification"

This scenario is focusing on continued support to multilateral and regional initiatives in Egypt or in the region. In addition, cooperation with Egyptian and regional NGOs and local authorities would increase which would require promotion of existing instruments and active approach in phasing out of current projects (potentially short phasing out periods). Similar type of approach should be applied in multilateral and regional co-operation that Finland is supporting. Also EU projects would be a channel for Finnish inputs. However, all Finnish activities would be channelled through other actors, and through participation in their activities. Conclusion Finland will continue to be present in Egypt yet there is a risk that it may seem to have ceased from the Egyptian point of view.

3. Bilateral “thematic” co-operation

This scenario is intended to guarantee the continued presence of Finnish expertise for the Egyptian environmental sector and to build on the previous successful projects (mainly EPAP and Alexandria HWMP) and also include the NGO and local cooperation elements available for diversified environmental cooperation described in Scenario 2. The strong presence would take place through diverse activities and through one core activity, namely the participation in EPAP Follow-up project, the preparation of which has recently been kicked-off by the World Bank. Participation in the EPAP Follow-up project would make it possible to provide support to the newly established Industrial Unit of EEAA and further to consolidate collaboration with Alexandria. Alternatively preparation of one or maximum two bilateral projects on the same basis can be considered. Putting strategic focus on pollution abatement, cleaner production and hazardous waste could facilitate promotion of direct contacts between Egyptian and Finnish private sector and potentially open possibilities to collaborate with other actors like UNIDO (Cleaner Production Center). Conclusion: A strong presence of Finland in the environment sector in Egypt is guaranteed and a core for true thematic co-operation would be secured. This would also complement the hopefully emerged new private sector cooperation as Finland would continue to have high profile in the environmental scene in Egypt.

An analysis of the produced scenarios reveals that the situation for continued strong Finnish presence in the Egyptian environment sector is favourable. Continued public sector cooperation supports the private sector, and there are promising possibilities for both to achieve good results, if an active presence is continually supported. There is also the very strong likelihood of Egypt forming a gateway to other Arab countries, as Egypt is seen as a forerunner in the area. Without active measures, environmentally oriented public sector activity between Finland and Egypt is, however, likely to become very limited. The good momentum and goodwill present projects have created would thus be wasted. This study proposes Scenario 3, “Bilateral thematic cooperation”, on a scale to enable TA support to at least one major activity in Egypt (estimated scale 0,6-0,8 MEUR/year). The activity would build heavily on previous successful projects, EPAP and HWMP, and would be directed as TA support for EEAA Industrial Unit and Alexandria Governorate on industrial pollution issues through participating in the EPAP Follow-up project in collaboration with the World Bank and other donors. The preparation one major project with big donors is likely to proceed relatively fast and it would facilitate coordination between donors and thus pave the way to potential future sector programmes.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 44 SECTOR BETWEEN FINLAND AND EGYPT 7.2 Private sector co-operation scenarios The track record of private sector business activity between Egypt and Finland in the environment sector does not provide justification to expect any drastic change. Without forceful measures, new environment-oriented private sector business relationships will remain dormant. Egypt’s needs in this sector are vast, but the financial resources are limited and bureaucratic hurdles and irregular business practices often surmountable (see Annex 3). To illustrate possible future state of affairs in this business relationship, this chapter presents the following three scenarios:

4. Business as usual – no environmental trade or investments 5. Possibility of sporadic environmental projects by 2010 6. Likelihood of several environmental projects and partnerships by 2010

Only the first scenario will happen by itself as is the case in development co-operation scene as well. The fulfilment of the other two scenarios requires decisive action from the enterprises and supportive measures from the two governments. This chapter describes the scenarios and the nature of required action. Chapter 8.2 presents a recommended transition strategy and action plan for the preferred scenario. It is important to note that all actions and promotional measures should be market driven and initiated by Egyptian and Finnish enterprises. 1. Business as usual – no environmental trade or investments

Egyptian exports to Finland will remain marginal for both countries, and the growth prospects will remain modest. There will not be any conceivable connection to the environment. Finnish forest sector exports to Egypt are likely to maintain their position, without dramatic changes. Telecommunication exports and other exports of machinery and equipment are likely to grow, depending on the overall growth prospects of the Egyptian economy. If the value of euro continues to appreciate, the Finnish multinationals are likely to source products from their production units outside Europe. The trade imbalance is likely to remain large. Finnish exports to Egypt may include minor goods and equipment for environmental protection purposes. Tourism from Finland to Egypt is likely to grow and become an essentially bigger source of foreign exchange than trade. At the moment, Egypt positions itself as a low cost holiday destination that increasingly attracts tourists from central and eastern Europe. There is a potential for higher value added services with a distinct cultural and environmental connection, e.g. eco-tourism. Foreign direct investments from Finland to Egypt in general, and investments in the environmental sector in particular, are likely to remain marginal. Investments from Egypt to Finland in the foreseeable future are not likely. Conclusion: Without active measures, environmentally oriented private sector activity between Finland and Egypt is likely to remain marginal.

2. Possibility of sporadic environmental projects

The existing Finnish instruments for trade and investment promotion (concessional credits, equity and loans from Finnfund, guarantees from Finnvera, project development support from Nopef, and EIT appropriations) have been underutilized in Egypt. This reflects the low level of interest of the enterprises, as all these


instruments are essentially enterprise-driven. There is, however, a possibility to promote actively the use of existing instruments for trade and investment promotion. Much would depend on the Egyptian side, because of the modest interest in Finland. Finnish engineering consultants providing environmental services are likely to participate occasionally in tenders in Egypt. The funding sources will normally be EU institutions or the international development finance institutions. The references of the Finnish consultants gained in development cooperation projects in specific regions and sub-sectors in Egypt are solid. The outlook for Finnish commercial construction services in Egypt is bleak. One of the two Finnish construction companies that have been active in Egypt (in development cooperation projects) has recently withdrawn from Egypt, and the other one has limited interest only. With active promotion of current instruments, a few project deliveries and even productive activities (join ventures) by Finnish industrial enterprises in the environment sector are possible, but not very likely. Finland has state-of-the art technology in many industries and processes. The cost of imported technology on commercial basis remains a major problem. In addition, the Egyptian companies are reluctant to take the foreign exchange risk in the unstable macroeconomic circumstances. In the tourist sector Finnish investments in environmental projects (eco-tourism) in Egypt are not very likely, due to the limited number and different orientation of possible investors. Egyptian investments to Finland in trade or services are not likely in the foreseeable future. Conclusion: Active promotion in the use of existing instruments for trade and investment promotion could lead to 1-2 environment-related commercial projects (major consulting projects, equipment/project deliveries or joint ventures) by 2010.

3. Likelihood of several environmental projects and partnerships

Unlike its Nordic neighbours and other European donors, Finland has not practiced pro-active promotion of private sector participation in development cooperation. Sweden has a range of instruments to promote private sector participation, and Denmark has successfully implemented its Private Sector Development Programme in about 15 countries, including Egypt. There is now the last opportunity for Finland to launch pro-active measures to promote private sector ventures between Finland and Egypt, with focus on the environment. To achieve results, the incentives offered to enterprises in the transition period (2004 – 2007) have to be substantially more attractive than the existing Finnish instruments. Results could be expected in industrial pollution abatement and clean production in specific sectors. A special opportunity and strong interest on the Egyptian side seems to exist for CDM projects (carbon trade). New cooperative constellations are also possible in equipment production for effluent or solid waste treatment, and in consulting services for environmental protection. Eco-tourism can tap the Finnish demand for higher value added tourist services. The pro-active measures could include direct support to enterprises for project preparation and business promotion (see Chapter 8.2). Another alternative would be to organize an “export ring” of interested enterprises with complementary products and services under the auspices of Finpro. However, the low interest among Finnish enterprises in the Egyptian environment sector is a limiting factor. Conclusion: With new pro-active measures for the promotion of Finnish/Egyptian private sector


ventures and interests for environmental protection could generate 2 – 5 environment-related commercial projects (project deliveries, CDM projects, production joint ventures, major consulting assignments etc.) by 2010.

This study proposes Scenario 3, “Likelihood of several environmental projects and partnerships". In order to achieve the results proactive measures are necessary during the transition period. 7.3 Other environmental co-operation One of the key ideas of the transition strategy is the diversification of co-operation by involving new actors and by introducing new mechanisms and ways to collaborate. As a rule it is very difficult to trigger this type of co-operation from the outside as it is often based on individual contacts and common interests identified via existing networks. Therefore no scenarios have been elaborated in this field.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 47 SECTOR BETWEEN FINLAND AND EGYPT 8. Proposals for the transition period (2004-2007) In order to pave the way for the wanted state of co-operation beyond 2007 we have identified a number of activities are needed during the transition period and in which resources and active approach of MFA is required. 8.1 Development co-operation of the public sector and NGOs This chapter addresses bilateral cooperation during 2004-2007, as well as regional cooperation. It also discusses NGO cooperation, and deals with the numerous proposals obtained during the mission. Finally it sets a frame for action on private sector cooperation, to ensure the development foreseen in Chapter 7. 8.1.1 Bilateral "Thematic" co-operation Possible Extensions of Current Projects As mentioned in Chapter 4.1.3, a proposal has been made to continue the Beni Suef Water Supply, Regional Sanitation and Municipal Solid Waste Management Project (RWSP) for another two years in order to ensure smooth phasing-out of the Project. The decision remains to be made by the competent authorities. As part of the possible continuation of the project in Beni Suef, it would be advisable to identify actively opportunities for future co-operation of Egyptian and Finnish cities/municipalities and NGOs in order to promote the shift from bilateral governmental projects to other forms of co-operation. The possible needs for continuing the other two current environmental projects, the Hazardous Waste Management Project in Alexandria and El Annania Wastewater Treatment Project, will need to be assessed at a later stage. A mid-term review on the Egyptian Antiquities Information System will be carried out in March 2004 and thus the recommendations for potential continuation and implications to future thematic co-operation will be available soon after submitting this report. Egyptian Pollution Abatement Project Follow-Up (2005-) As described in Chapter 4.1.1, there is a clear need for consolidating the support provided by EPAP to EEAA (Industry Unit) in order to make it sustainable. Likewise, the governorates, particularly their Environmental Management Units (EMUs) are in a continuous need of support in order to implement the recent decentralisation policy and the strategies for achieving the compliance of Egyptian industries with the environmental legislation. Alexandria is one of the governorates supported by Finland through EPAP and the HWMP, but it will not be supported by the reshaped Environment Sector Programme of Danida. Therefore, Alexandria is emerging as an appropriate partner for Finland in the diversified environmental thematic co-operation with Egypt. In principle, there are two different options for Finland to continue the co-operation with EEAA and/or with the Governorate of Alexandria: (1) through one or more separate bilateral project(s), or (2) through a joint multi-donor programme. In order to improve co-ordination of donor activities and to achieve the necessary leverage, it would be advisable for the MFA to go for the second option instead of separate bilateral projects. The “Egyptian Pollution Abatement Project Follow-Up” would provide such an opportunity during the transition period and beyond.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 48 SECTOR BETWEEN FINLAND AND EGYPT During its mission to Cairo, the study team received a draft “project concept note” of the World Bank on the Egyptian Pollution Abatement Project Follow-Up. The proposed project is a follow-up on the on-going EPAP, supported by the World Bank, the EIB and the government of Finland. The proposal is based on the shared view of EEAA and the World Bank that sustained efforts and commitment from the Egyptian government, as well as from bilateral donors and international financing institutions, are still necessary in order to strengthen the benefits from past operations (from an institutional, regulatory and technical point of view), and for improving the level of environmental performance of the industrial sector at large. The proposed project is likely to include the following components:

- Strengthening of the capacity of EEAA (particularly, the Industry Unit) to provide technical assistance to eligible partners (companies, banks, NGOs, participating governorates) and of the Environmental Protection Fund (EPF) to align its expanded role with its statutes and management. This technical assistance component would also include the development of compatible "benchmarking systems" at different levels and an environmental disclosure system maintained by EEAA.

- A financing window to be established within the EPF to provide loans for environmental

investments through participating commercial banks. The interest rate would be agreed between the World Bank, the Government of Egypt and the other co-financiers of the project. The loan applications would be appraised by a supervisory board comprised of representatives from EEAA, other concerned authorities, participating co-financiers and NGOs. The beneficiary companies would receive the loan at a market rate with a grant portion that would be freed only after the targeted environmental performance has been reached.

- A revolving fund within the EPF targeted to finance mitigating measures aimed at decreasing

pollution generated by small and very small industrial facilities in the formal and informal sectors. An NGO would be selected to promote the facility and to establish a working relationship with the entities from the small-scale industrial sector.

According to the concept note, the project would geographically focus on the governorate of Alexandria (and possibly some other northern governorates to be identified later). There is a clear need for a technical assistance component to be included in the project, which is likely to require involvement of a bilateral donor agency. The project would consolidate the previous support of Finland to EEAA/RBOs and EMUs. It could also have a strong synergy with the HWMP in Alexandria and include further co-operation with local NGOs, such as the Friends of the Environment Alexandria. It might also be possible that the project would include an effort to identify opportunities and assess the interest of Finnish cities in environmental co-operation with the Governorate of Alexandria and the interest of Finnish and Alexandrian NGOs to establish bilateral co-operation.

Proposed Action: It is recommended that the MFA consider seriously the possibility to pursue active participation in the preparations of the "Pollution Abatement Project Follow-Up" in close co-operation with EEAA, the World Bank and possible other co-financiers (such as Japan) from the very beginning. The preparation would need to be based on the lessons learned in EPAP. It should be carefully co-ordinated with other relevant programmes and projects, such as the reshaped ESP (supported by Danida), in order to ensure harmonised and coherent support to the development of decentralised environmental management in Egypt. The budgetary vision of the MFA might allow for an allocation of e.g. EUR 0,6-0,8 million annually for the Follow-Up Project, starting possibly late 2005.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 49 SECTOR BETWEEN FINLAND AND EGYPT 8.1.2 Multilateral and regional co-operation Regional co-operation for the implementation of the UN Convention to Combat Desertification Since there will be practically no possibilities to start new bilateral co-operation between Egypt and Finland in the field of desertification or dryland management, the MFA might wish to consider opportunities to increase regional co-operation. At this stage, the following two principal options could be considered:

- possible phase III of the Programme of Catalytic Support to Implement the UN Convention to Combat Desertification in West Asia and North Africa (2006- ); and

- possible phase III of the Regional Initiative for Dryland Management. In 2000-2002, the first phase of the "Programme of Catalytic Support to Implement the UN Convention to Combat Desertification in West Asia and North Africa" was supported by the government of Finland (FIM 9.0 million, or approximately USD 1.45 million) and implemented by the regional office of the UNDP Drylands Development Centre (based in Beirut, Lebanon) in six countries: Jordan, Lebanon, Syria, Yemen, Morocco and Algeria. The programme also supported a few regional processes. The field review conducted by the government of Finland in October 2002 concluded that the performance of the programme had been good. In June 2003, the 2nd phase of the programme was started and expanded. The government of Finland financed it with another EUR 1,01 million (approximately USD 1,1 million). In total, the programme is now supporting nine partners: Iran, Tunisia and Palestinian Territories besides the six countries of the first phase. The 2nd phase has two expected outcomes: (1) support to national drylands development processes provided through capacity building, advocacy, resource mobilisation and innovative programming; and (2) support to Arab/regional and sub-regional drylands development processes provided through policy advice, technical assistance and knowledge networking. According to the Regional Programme Manager, Dr. Elie Kodsi, a request to extend the support to Egypt has been received but could not have been followed-up so far. A mid-term review of the programme was carried out in April-May 2004. The review recommended that continuation of the programme would be prepared and the feasibility to expand the programme to Egypt (and to other countries that have recently requested assistance) would be assessed during the remaining period of the current phase. The Regional Initiative for Dryland Management is an integral part of the Middle East Peace Process. It was created in 1995 to promote technical co-operation between Israel and Arab nations (Egypt, Jordan, Palestinian National Authority and Tunisia). The International Centre for Agricultural Research in the Dry Areas (ICARDA) was contracted as an executing agency for the implementation of the work programme. ICARDA houses the Initiative’s Facilitation Unit and its offices in Cairo. The first two phases of the Initiative (1995-1999 and 2001-2003) were supported by the World Bank, the European Commission and the governments of Switzerland and Japan. The extension of the 2nd phase of the Initiative started in July 2003 and will be completed in December 2005. The purpose of the Initiative is to achieve regional knowledge-sharing based on information generated by national field work in two thematic activities: (1) watershed management and (2) safe use of treated wastewater and bio-solids. It is expected that the results and experiences of the pilot demonstrations will be efficiently disseminated and have an impact on the national policies. The implementation of the Initiative is significantly constrained by the difficult political situation. Representatives of the MFA have participated in some of the Donors Consultation Meetings of the Initiative, but Finland has not yet contributed financially to its implementation in spite of informal requests that have been received by the MFA representatives. Proposed Action:

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 50 SECTOR BETWEEN FINLAND AND EGYPT It is proposed that the feasibility to expand the Programme of Catalytic Support to Implement the UN Convention to Combat Desertification in West Asia and North Africa to Egypt in 2006 would be assessed during the remaining period of the current phase of the Programme, as recommended by the recent mid-term review. In addition, it is recommended the MFA would keep on receiving reports of the Regional Initiative for Dryland Management and consider the possibility of participating in the preparation and implementation of the possible next phase of the Initiative (2006- ) in case the political situation allows for effective implementation of the Initiative.

Possible extensions of support to current regional and multilateral partners At this point it is difficult to assess the concrete collaboration potential between Finland and Egypt that could raise from the regional and multilateral programmes and initiatives which Finland is currently supporting (see 4.2). Both METAP IV and the Finnish project supporting the Nile Basin Initiative (NBI) will be finalised by 2005 and an assessments of future need for support and sustainability factors are likely to be carried out. In this context the MFA could emphasise the need to take into consideration the specific goals of the Finnish-Egyptian transition strategy. During the mission the study team received some proposals for cooperation that could have links to the currently Finnish supported activities of METAP and NBI (see 8.4.1 and 8.4.3) if desired. Some more general proposals or needs were also raised with potential links to NBI and/or METAP. For example the representatives of Ministry of Water Resources and Irrigation emphasised the need and will of Egypt to consolidate the legal or contractual framework guiding the management of the transboundary watercourse Nile river basin. In this process the support of international community would be valuable. Further, the representatives of the Cabinet of the Minister of State for Foreign Affairs pointed out that Egypt has been supporting some environmental development co-operation projects in the Nile Basin area countries. A good example of such a project is the Village Water Supply programme in Kenya supported by Egypt. The project is in line with the national water supply strategies of Egypt according to which all water supply of all villages should be secured. Egypt is seeking partners for similar activities in the region, also to the project ongoing in Kenya. The coastal area management initiatives with potential links to METAP activities are specified in Chapt 8.4.1.

8.1.3 Co-operation trough the EU The EU is seeking to reinforce its cooperation with its neighbouring areas due to its enlargement in May 2004. The outline of this process was presented in two Commission Communications: "Wider Europe–Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours" (March 2003) and "Paving the way for a new Neighbourhood Instrument" (393/2003). It is estimated that in this context regional and sub regional co-operation amongst the Southern Mediterranean countries will be strongly encouraged. Additionally the EU is in the process of reshaping financial instruments used in collaboration with neighbouring areas. This will most likely cause changes in the MEDA funding procedures after a transition period (2004-06), but it is difficult to foresee what kind of new possibilities it would bring along for the Egyptian-Finnish co-operation through the EU. There are, however different ways for Finland and Egypt to seek increased co-operation in the field of environment in EU context. The Euro-Mediterranean Partnership is the wide framework for co-operation under which there are two main axis for co-operation, namely bilateral and regional. In the bilateral field the co-operation is guided by the Association Agreement which includes environmental chapters setting the frame for the co-operation. It is foreseen that an environmental sub-group will be established for implementation of the Agreements once it has entered into force in Egypt in 2004. This

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 51 SECTOR BETWEEN FINLAND AND EGYPT group is likely to continue the work of the Environmental Sub-Group of the EU delegation to which representative of is Finland also invited. The Sub-Groups provide a good forum for co-ordination between Egypt and the EU-member states. In the multilateral field there are a number of initiatives and programs, such as the SMAP (see 5.3.1), METAP (see 4.2.2) and the MAP which all closely co-operate with Egypt. In the SMAP framework there are two ways to have dialog and to collaborate; firstly there is the dialog between the SMAP correspondents and secondly there is the possibility to elaborate regional joint proposals for the SMAP programme. The next call for regional SMAP proposals is tentatively scheduled for June 2004. Basis for future projects and synergies could be found between the created SMAP networks and those created within Finnish bilateral projects in Egypt. The SMAP project preparation process is however demand driven and therefore the possibilities to promote preparation of projects with Egyptian and Finnish partners are limited. The same applies for most of the EU funded programmes available for increased Egyptian-Finnish co-operation (TEMPUS, Life 3rd countries, INCO-MED research programme etc.).

8.1.4. Support to international/regional non-governmental organisations (INGOs) One of the key elements of the transition strategy is diversification, which could include initiatives of international/regional environmental NGOs covering Egypt. The MFA allocates development co-operation funds to international and regional non-governmental organisations (INGOs) as well as to other international organisations whose activities are in line with Finland’s foreign and development policy priorities and goals. This support complements Finland’s development policy and inter-governmental development co-operation on the sectors and activities with strategic importance, including the environment. The decisions on support are based on the strategies of the MFA and the applications and proposals prepared and submitted by INGOs to the MFA. So far, Finnish supported INGO activities have not concerned Egypt. The funds for supporting environmental activities of INGOs are managed by the MFA and the annual budget has been in the order of EUR 200 000. In the environmental sector, the funding is primarily directed towards the international environmental activities where the work by the INGOs is an extension of the work Finland is already engaged in. The priority environmental issues include the climate change (mitigation and adaptation), water and sanitation, sustainable forest resources management, watershed management, land degradation (desertification), biodiversity and implementation of sustainable development as stipulated in the Johannesburg Plan of Implementation. The main focus is to assist co-operation with developing countries, particularly in developing their capacity building and awareness on environmental issues at all levels of the societies. The co-operation of the INGOs with Finnish partner organisations is considered very positively as it would also enhance awareness of global environmental concerns in Finland. The policy of the MFA is to concentrate its support to a limited number of INGOs in order to reach a real partnership. Therefore, the MFA is internally evaluating its portfolio on previous assistance to INGOs. The results of the evaluation will provide guidance for further collaboration. At the moment, it is not very clear how the funds for INGO support will develop in the coming years. There is one very active INGO in Egypt focusing on regional environmental activities, namely The Arab Network for Environment and Development (RAED), established in 1990. RAED has partner organisations in 16 Arab Countries (Mauritania, Morocco, Algeria, Tunisia, Libya, Sudan, Egypt, Palestine, Jordan, Lebanon, Syria, Kuwait, Bahrain, Qatar, Yemen, Saudi-Arabia). In 1995, the Arab League has recognised RAED and designated it to be an observer in the Council of Arab Ministers responsible for environmental affairs. At the international level, the UN has designated RAED as the advisory capacity in the Economic and Social Council of the General Assembly.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 52 SECTOR BETWEEN FINLAND AND EGYPT RAED aims at developing, improving and co-ordinating the work of its members, to tighten bonds of co-operation between them, and to contribute in achieving the environmental and developmental integration between them by various means, including communication and exchange of information, training programmes, participation in international and regional events and joint environmental projects. For example in 2000-03, RAED was responsible for the co-ordination of “The Regional Community Solid Waste Management Programme” (RCSWMP) financed by the regional EU/ SMAP I programme (Euro-Mediterranean Programme). The other four project partners were ENDA Maghreb (Morocco), Association for the Protection of Nature and Environment in Kairuan (Tunisia), Arab Office for Youth and Environment (Egypt), Lebanese Council for Environment and Development (Lebanon) and “Tauw Milieu” (the Netherlands). According to its final report, the RCSWMP achieved it aims to a great extent. Currently, RAED is preparing a programme to co-ordinate the follow-up of the World Summit on Sustainable Development (WSSD) in the West Asia/North Africa Region, and to enable a number of countries in the region to fulfil their WSSD obligations through completion of specific actions and activities. RAED is seeking international support for the programme and has submitted a proposal to the MFA. In principle, RAED is a noteworthy potential INGO partner for the MFA, if the funds available for supporting environmental INGOs will develop positively. Proposed Action: It is proposed that the MFA would appraise the proposal on WSSD work submitted by RAED. In the assessment both MFA's INGO strategies and the objectives of the (draft) strategy for transition for the co-operation between Finland and Egypt should be taken into consideration.

8.1.5. Support to environmental activities of Egyptian NGOs There are two Finnish instruments for directly supporting environmental activities of Egyptian NGOs, namely:

- funds of the Siemenpuu Foundation; - Fund for Local Co-operation of the Embassy of Finland.

In both of the two instruments, decisions on support are based on applications and proposals prepared and submitted by southern NGOs and appraised against the criteria for support of the respective instruments. The Siemenpuu Foundation was established by 15 Finnish environment and development NGOs to support the environmental activities of southern NGOs on their behalf. Since the Finnish environmental NGOs have very limited resources for international development co-operation in general and they have hardly any contacts in Egypt the Foundation is in practice likely to be the only opportunity for them to (indirectly) co-operate with Egyptian NGOs in the short and medium term. Through the projects potentially supported by the Foundation, the Finnish NGOs would be able to get acquainted with the work of Egyptian NGOs and to establish closer co-operation in case a mutual interest arise. The Foundation is currently in the process of developing its strategies and focusing its activities thematically and geographically. The results of this process must be taken into account in the future discussions concerning the support to environmental activities of Egyptian NGOs. The Embassy of Finland in Cairo has proposed that its Fund for Local Co-operation should be gradually increased significantly, with a reference to the one in South-Africa which is about EUR 1,85 million annually (KAI0003-26 / 28.10.2002; KAI0003-7 / 31.03.2003; KAI0004-10 / 29.01.2004). Since the same NGO projects are in principle be eligible for the both above mentioned NGO support

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 53 SECTOR BETWEEN FINLAND AND EGYPT instruments, there is a clear need for strategic planning as well as co-ordination and exchange of information between the Embassy of Finland and the Siemenpuu Foundation. At present, the exposure of Egyptian NGOs to information on the above instruments is very limited. The Fund for Local Co-operation is introduced in the Directory of agencies supporting NGO activities (published by the USAID-supported NGO Service Centre in Cairo) with the contact information to the Embassy of Finland and its website. However, at the Embassy’s website there are no links to instructions for applying support from any of the Finnish NGO support instruments. Seemingly, the Embassy of Finland has been reluctant to market its Fund actively as it does not have the capacity to manage a much greater number of applications. In order to avoid an overload of applications, it might not be advisable to drastically increase the marketing of the Finnish NGO support instruments to Egyptian NGOs. However, it might be appropriate to provide basic information on the Fund and the links to the other relevant instruments at the website of the Embassy. Proposed Action: If/when the Fund for Local Co-operation of the Embassy of Finland in Cairo will be increased, it is advisable to prepare a clear strategy on environmental co-operation for the Fund with an outreach plan (information dissemination) and specific criteria for project selection. The strategy should be co-ordinated with the strategies of the Siemenpuu Foundation with regard to possible support to environmental activities of Egyptian NGOs. In order to encourage environmental NGO activity in Egypt but to keep the number of applications manageable to both the Embassy and the Foundation, it is recommended that:

- The Embassy and the Foundation would consider the possibility of tentatively reserving a certain amount of support to environmental activities of Egyptian NGOs.

- If the above were acceptable to the Embassy and the Foundation, a joint announcement with instructions, selection criteria and a dead-line for proposals would be published in the relevant websites and sent to Egyptian NGOs which have previously been partners in the Finnish-Egyptian environmental co-operation projects or are otherwise well-known to the Finnish actors (for example those listed in Annex 4).

- A joint assessment and selection of projects (and partner/s) would be arranged on a competitive basis.

The NGOs should be given sufficient time to undertake a thorough stakeholder analysis and to discuss the objectives, activities and outputs that will be presented in their proposals with the beneficiaries and other stakeholders. In addition, it is recommended that the identification of opportunities for Finnish-Egyptian NGO co-operation be included in the proposed extension of the water supply and sanitation project in Beni Suef and in the proposed "Egyptian Pollution Abatement Project Follow Up" to support environmental activities in Alexandria and in EAIS project.

8.1.6 Support to co-operation of local authorities In order to support co-operation of Finnish and southern local authorities, the “North-South Local Authority Co-operation Programme” was launched in January 2002 by the MFA and the Association of Finnish Local and Regional Authorities. In the pilot phase (2002-2004), the whole budget allocation of EUR 1,17 million has been committed to partnerships between six Finnish local governments and their

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 54 SECTOR BETWEEN FINLAND AND EGYPT partners in Namibia, South-Africa, Swaziland and Tanzania. The co-operation supports municipal services in several sectors, including the environment. The Programme is currently being evaluated. The evaluation is expected to be completed by the end of February 2004 and to provide proposals for the preparation of the next phase (2005 to 2007 or beyond). The volume of support in the next phase is likely to be on the same or a higher level than in the pilot phase. The geographical focus of the Programme will need to be discussed. Proposed Action: It is proposed that in the preparation of the next phase of the Finnish “North-South Local Authority Co-operation Programme” the possibility to include Egypt in the potential partner countries and the mechanisms to encourage Finnish-Egyptian co-operation within the Programme would be considered. In addition, it is recommended that the identification of opportunities for Finnish-Egyptian local authority co-operation would be included in the proposed extension of the water supply and sanitation project in Beni Suef and in the proposed "Egyptian Pollution Abatement Project Follow Up" to support environmental activities in Alexandria.

8.2 Private co-operation; Egypt Private Sector Environmental Transition Facility (EPSETF) This study recommends promotion of private sector environmental cooperation with Egypt. Egypt could be considered a hub, or a gateway to regional business activities. It is however clear, that private sector activities need a special support action to get a proper beginning. Such an activity, clearly in line with what other donor countries have done in Egypt and elsewhere, would need to be supported by the Finnish government. The proposed support would be recorded as Finnish ODA. Proposed Action: Rationale Apart from sporadic trade transactions, environmentally oriented business ventures between Finnish and Egyptian private enterprises do not exist. There is, however, a possibility to generate Finnish/Egyptian private sector ventures for environmental cooperation. The current instruments and institutions alone will not achieve this objective. A pro-active promotion effort is necessary to enterprises, in Egypt and in Finland, to come up with ideas for sustainable business cooperation in the environment sector (broadly defined), and to process these ideas into viable and sustainable business projects. These projects could include industrial wastewater treatment, CDM (to meet the emission targets of the Tokyo protocol), eco-tourism, promotion of environmentally sound Egyptian exports to Finland, afforestation and many other ventures. Objective To generate 2 – 5 environment-related, sustainable, private sector projects (consulting, joint ventures, project deliveries, CDM etc.) with Finnish/Egyptian connection by 2010. Scope The proposed EPSETF will support initial stages of the project cycle by providing funding for:

1. Preparation of project proposals (100 % grant support for market studies, partner identification etc.; budget max. 10,000 EUR/project), and for

2. Preparation of feasibility studies etc.(90 % grant support; budget max. 50,000 EUR/project). Existing institutions in Finland (Finnfund, Finnvera, Nopef etc.) and in Egypt (Environmental Protection Fund, EPAP, EIB, MEDA etc.) will support the implementation phase.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 55 SECTOR BETWEEN FINLAND AND EGYPT Procedure The preparation of projects for EPSETF support will include the following procedures:

1. Enterprises in Egypt and in Finland to submit short (one page) concept papers that identify specific, environment-related business opportunities. No financial support necessary.

2. Enterprises in Egypt and in Finland to apply for support from EPSETF for the preparation of detailed project proposals, which need to have a Egypt/Finland connection (market demand in Finland or Egypt, customer, know-how partner, supplier, sub-contractor etc.).

3. Enterprises in Egypt and in Finland to apply for support from EPSETF for the preparation of necessary documentation (feasibility studies etc.) required for investment and financing decisions.

4. Enterprises to implement projects with the support of existing institutions and instruments in Finland (Finnfund, Finnvera, Concessional Credits) and in Egypt (EPF, EPAP, EIB, MEDA, commercial banks, NGOs). Additional support from EPSETF may be required to mitigate e.g. foreign exchange risk in specific cases (local market projects).

The support decision of EPSETF will be made within 4 weeks from application. Administration No new institutional arrangements are necessary. The Ministry for Foreign Affairs of Finland will outsource “Egypt Private Sector Environmental Transition Facility” management from a Finnish/Egyptian Consortium (management consulting company), to be selected on the basis of competitive bidding. Applicants will choose their preferred consultants for project preparation. MFA will give “no objection” to financial support decisions (within one week). Funding Proposed funding for EPSETF: 1 million EUR for 2004 – 2007. The facility will be closed at the end of 2007. 8.3 Other co-operation Need for sectoral agreement According to the ToR for this assignment, the need for a sectoral framework agreement should be studied. It was assumed that the agreement could e.g. cover main areas of co-operation and methods of implementation in the environmental field between the two countries. The Finnish Ministry of the Environment has currently two framework agreements with developing countries: Finland–India Joint Working Group on Environment ("Suomi-Intia TTT-sekakomission alainen ympäristötyöryhmä") and Protocol on Collaboration between the Environmental Protection Agency of Peoples Republic of China and the Ministry of the Environment of Finland. These could be referred to as sectoral framework agreements yet they are very general (like letters of agreement). The above agreements do not guide all bilateral environmental collaboration between the countries and no resources are channelled via them. In practice they are very general frameworks for collaboration between the sector ministries and thus not recommended as models for Finnish-Egyptian environmental collaboration. In case some inter-governmental sectoral agreement would be considered by the MFA, the scope of the agreement should be limited to activities that can be financed with (bilateral) ODA funds. Increased co-operation between public institutes The possibilities of the MFA to promote institutional co-operation derive mainly from the networks which have spun off from the bilateral projects. External resources are often needed for this type of co-operation. Most of the Finnish projects in Egypt have collaborated with Egyptian Universities and Institutes and from this context the new (ODA funded) NORTH-SOUTH Higher Education Network

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 56 SECTOR BETWEEN FINLAND AND EGYPT Programme established in March 2004, can prove to be very useful. The programme is coordinated by a Finnish governmental agency called Centre for International Mobility (CIMO) and it is set to facilitate exchange of students and teachers of Finnish and Egyptian universities. It is mainly targeted to the Sub-Sahara countries yet Egypt and Peru are also included in the eligible countries. The three-year pilot programme has a budget of EUR 2,5 million and the aim is to send some 140 Finnish students and 65 teachers to the target countries and receive some 220 students and 45 teachers from these countries. This initiative together with the co-operation agreement between the academies of Finland and Egypt and the potential future co-operation of some individual universities can provide good framework for increased collaboration in the field of environmental research and education as well. Active approach in information dissemination to different stakeholders on new supporting mechanisms is vital. Public awareness and information dissemination Further, different campaigns and events, like the semi-annual People and Development campaign organised by the MFA, can be used to increase awareness and to promote exchange of information. The timing, scope and objectives of the newly launched "A Thousand and One Steps" campaign which focuses on the Arab World in 2004 can prove to be useful for the implementation of the transition strategy. Co-operation in the field of Clean Development Mechanism During the visit to EEAA the study team also met with the persons responsible for Egypt’s activities for the Kyoto Mechanisms, and especially the CDM (Clean Development Mechanism). The team obtained proposals for two research projects, and also two CDM project proposals. The proposals for research cooperation have been handled over to the team at the Finnish Environment Institute doing research on climate effects and mitigation. The CDM project proposals are being studied by the Finnish CDM/JI pilot programme, administered at the Institute. 8.4 Proposals of Egyptian stakeholders The study team obtained a number of project proposals or ideas from the Egyptian partners during the study mission. The feasibility of these proposals has been preliminarily assessed in this analysis.

8.4.1. Other proposals Presented by EEAA A number of concept papers prepared by various technical departments of EEAA were presented as ideas for future environmental co-operation between Egypt and Finland in a meeting between representatives of EEAA’s General Department for International Affairs and Technical Co-operation and the study team (January 27, 2004). The proposals and assessments of their feasibility are summarised in the following table. Proposal Assessment of Feasibility

NGOs Unit Project Financial support to EEAA’s NGOs Unit for equipment and staffing, organising workshops and conferences, producing brochures, flyers and media packages on environmental issues, supporting 15 environmental projects and 5 sector projects.

The proposal was originally submitted to Danida. There are no direct links to previous co-operation between Egypt and Finland, no value added of Finnish involvement and no signs of ownership among major Egyptian environmental NGOs. It would be more feasible to support directly environmental initiatives of Egyptian NGOs


through the Fund for Local Co-operation, Siemenpuu Foundation and/or the EPAP Follow-Up.

Preparation of an Integrated Coastal Area Management Plan for Khor Allaqui, Lake Nasser Institutional capacity building, training on the use of GIS, accessing satellite images, preparation and printing of coastal zone maps and resources atlas, preparation of guidelines, management plans and project plans, organising workshops and seminars.

This would be a separate bilateral project with no direct links to previous co-operation between Egypt and Finland. It would be more feasible for Finland to contribute to the development of sustainable coastal zone management policies, strategies and practices through METAP.

Support to “Environmental Quality Sector” Development of the systems of monitoring of water quality in the River Nile and coastal waters and air quality by technical assistance, development of laboratory procedures and data management systems, training and provision of equipment (software and hardware).

This would be a separate bilateral project with no direct links to previous co-operation. It would be more efficient to strengthen the monitoring of industrial pollution and compliance, with direct link to law enforcement activities at the local level (e.g. through the EPAP Follow-Up in Alexandria).

Support to institutional strengthening and capacity building for MSEA/EEAA and its Regional Branch Offices and governorates’ Environmental Management Units Training programmes on e.g. industrial pollution, municipal waste, agricultural waste, hazardous waste, desertification, coastal zone management and combating oil pollution and safe use of treated sewage water for afforestation.

Most of the objectives could be achieved through the EPAP Follow-Up, Hazardous Waste Management Project in Alexandria and regional co-operation related to hazardous waste management (Basel Convention Regional Centre of the Arab Countries), coastal zone management (METAP) and desertification, in which Finland is already involved.

8.4.2 Regional Industrial Pollution Abatement Project for Arab Countries (RIPAPAC) The study team received a project proposal on “Regional Industrial Pollution Abatement Project for Arab Countries (RIPAPAC)” which has been submitted to the MFA. The proposal contains a preliminary plan for a regional project involving nine countries: Algeria, Egypt, Jordan, Lebanon, Morocco, Sudan, Syria, Tunisia, and Yemen. The executing organisation would be the Arab Academy for Science and Technology (under the Arab League) in co-operation with the Arab Industrial Development and Mining Organisation, and in co-ordination and consultation with the Department of the Environment and Sustainable Development of the Arab League. The proposed project would:

1. provide technical assistance and financial support to industrial establishments in the Arab Countries to abate industrial pollution and comply with the local environmental laws;

2. assist in the capacity building of the inspection teams of the environmental authorities; 3. provide training to industry engineers on cleaner production and other environmental

management tools; and 4. increase awareness of the public on industrial pollution issues and support the efforts and

activities of the NGOs on industrial environmental issues. The total cost of the proposed preparatory phase is estimated at EUR 550 000 of which EUR 400 000 is proposed to be covered by a support of the MFA. The study team does not recommend that the MFA would get involved in the proposed project at this stage for the following reasons:


- The interviewed representatives of the Arab League did not recognise the proposed project as a priority activity of the Arab League, although it is proposed to be the host organisation of the project.

- The interviewed representatives of EEAA have not recognised the proposed project as a priority activity for Egypt.

8.4.3 Other proposals presented to the study team The study team received a number of proposals from the Centre for Environment and Development for the Arab Region and Europe (CEDARE), which is actively seeking for partners for co-operation and new financiers for joint projects. CEDARE was established in 1991 by three principal sponsors (the Government of Egypt, the Arab Fund for Economic and Social Development and UNDP) and it is dynamically run by the former Minister of Environment H.E. Dr. Nadia Makram Ebeid. CEDARE aims at capcity building of national institutions of the region to enchance environmental management and sustainable development and is currently concentrating on three priority fields: environmental information, water sector and solid waste management. CEDARE has a wide geographical coverage in the Arab countries and in the Mediterranean area and therefore it plays a key role in intiating different environmental networks and projects in the region. In all 25 countries have nominated focal points for CEDARE activities. The proposals and assessments of their feasiblity are summarised in the following: Proposal Assessment of Feasibility

Conservation of Biodiversity and Ecosystem Management in a Sample of Representative Islands of the River Nile (UNDP/GEF) Financial support (co-funding) to an UNDP/GEF funded project to conserve endemic and endangered biodiversity, development of community based resource management system, local capacity building and promotion of sustainable livelihoods, institutional development (modification of related legislation).

A proposal (tot. value USD 1,5 million) has been prepared by CEDARE and endorsed by the Egyptian GEF focal point at EEAA as well as by the Ministry of Water Resources. The International Research Development Centre has been identified as potential co-sponsor, yet Finnish support would be wanted as well. This would be a new multilateral project with no direct links to previous co-operation between Finland and Egypt nor with multilateral programmes supported by Finland, thus support cannot be considered feasible within the framework of transition strategy .

Water Resources Management Program (CEDARE) Four regional initiatives: Establishing a regional monitoring network for utilization of the Nubian sandstone aquifer system, establishing coordination and task forces for North Africa water millennium development goals, development of integrated ground water resources management (IWRM) programme for North Africa and technical assistance to developing national IWRM plans in North Africa Two Egyptian initiatives: Workshop on water pollution abatement in Munofeya Governorate,

All the initiatives would require preparation of separate regional or bilateral projects with relatively weak links to previous co-operation between Egypt and Finland. It would be more feasible for Finland to contribute to the development water resources management issues through existing programmes (e.g. METAP, EU initiatives) or consider some specific co-operation with CEDARE.


contribution to the Egyptian Water Partnership Endowment Fund Developing a Decision Support System for Sustainable Development in an Environmentally Sensitive Area (Lake Maryout) (CEDARE) Development of a Decision Support System to be used in management of common problems in environmentally sensitive areas raising from urban sprawl, deteriorating livelihoods, weak public participation.

This would be a separate bilateral project with some links to the regional project COMAS-project funded by the MFA and some links to METAP activities. Finland could potentially contribute to this via METAP.

Developing Cairo Governorate Municipal Waste Management Information System (CEDARE) Enhancing the capacity of Cairo governorate in monitoring and managing municipal waste management by developing information systems.

This would be a separate bilateral project with weak links to previous Finnish projects (Beni Suef). Further, the USAID has had major projects in this field, also in Cairo, and thus it is not feasible for Finland to start with a new project in this field and geographical area.

ANALYSIS OF CO-OPERATION OPPORTUNITIES IN THE ENVIRONMENT 60 SECTOR BETWEEN FINLAND AND EGYPT 9. Next steps The follow-up of and action on key proposals presented in Chapter 8 is essential for continued cooperation and maintaining the momentum created by successful projects. In the following we have specified some concrete follow-up actions related to projects, other activities and private sector co-operation. The steps and actions aim for a preparation of the bilateral talks, now proposed to take place in September 2004. There are, however, many possibilities to promote especially commercial cooperation before that, and they should not be missed, as valuable time and goodwill may be lost otherwise.

9.1. Next steps related to development co-operation of the public sector and NGOs Actions related to projects

1. appraisal by the MFA of the proposal submitted by the Arab Network for Environment and Development (RAED), taking into consideration both the MFA’s INGO strategies and the objectives of the (draft) strategy for transition of the co-operation between Finland and Egypt, without delay;

2. assessment of the possible needs for continuing the Egyptian Antiquities Information System project (scheduled to end in Sept 2005) in the light of the transition strategy and environmental sector cooperation, March 2004;

3. incorporation of the identification of opportunities for future co-operation of Egyptian and Finnish cities/municipalities and NGOs into the proposed continuation phase of the Beni Suef Water Supply, Regional Sanitation and Municipal Waste Management Project;

4. participation of the MFA (and/or consultant assigned by the MFA) in a joint mission with EEAA, the World Bank and possible other donors in order to prepare a project document for the “Egyptian Pollution Abatement Project Follow-Up”, spring 2004;

5. commencement of the support to the Basel Convention Regional Centre of the Arab Countries as soon as possible;

6. a mid-term review of the Programme of Catalytic Support to Implement the UN Convention to Combat Desertification in West Asia and North Africa (Phase II), including an identification and assessment of needs for and opportunities to include Egypt in the possible third phase of the Programme, spring 2004;

7. assessment of the possible needs for continuing the two current environmental projects, the Hazardous Waste Management Project in Alexandria and El Annania Wastewater Treatment Project, 2006.

Other actions

1. visit by a group of Finnish environmental journalists (partly sponsored by the "A Thousand and One Steps semiannual People and Development campaign" organised by MFA), April 2004;

2. participation of the MFA in the seminar on the implementation of the Egyptian National Environmental Action Plan (to be organised by EEAA with the support of the UNDP), spring 2004;

3. preparation and implementation of a co-ordinated strategy and action plan of the Embassy of Finland in Cairo and the Siemenpuu Foundation with regard to supporting environmental activities of Egyptian NGOs, spring 2004;


4. preparation and implementation of a workshop for Finnish experts and consultants involved in bilateral and regional projects to promote exchange experiences and networking (e.g. by inviting private companies and public institutes that potentially could benefit from the experiences and contacts gained), summer 2004;

5. participation of the MFA in the inauguration of the Egyptian National Action Plan to combat desertification (NAP), late 2004;

6. monitoring by the MFA of the Regional Initiative for Dryland Management and consideration of the possibility of participating in the preparation and implementation of the possible third phase of the Initiative, 2004-2005

9.2 Next steps related to commercial collaboration:

1. (preparation of the Egyptian – Finnish environmental sector seminar to promote partnerships in the private sector, March 2004);

2. approval of the proposed EPSETF, March 2004;

3. preparation of the detailed guidelines and terms of reference for the proposed EPSETF, April 2004;

4. establishment and start-up of the proposed EPSETF, May 2004;

Final Programme of the Mission Annex 1.

The Environmental Mission visit in Cairo 16. - 29.01.2004

Participants Mr Alec Estlander Flight LH592 from Frankfurt on 16.1.2004 at 6.40pm Mrs Tea Törnroos Flight LH592 from Frankfurt on 16.1.2004 at 6.40pm Mr Pekka Salminen Flight OS863 from Wien on 16.1.2004 at 2.50pm Mr Martti Lariola Flight LH590 from Frankfurt on 23.1.2004 at 3.15pm Dr Tarek Genena EcoConserv, President, Egyptian expert Friday 16.01.2004 Arrival to Cairo Check-in Hotel Flamenco 2, El Gezira El Wosta Street, Zamalek tel. 735 0815 Saturday 10:00 Meeting at Marriott Hotel with Dr. Tarek Genena, Dr. Noha Gaber and 17.01.2004 Ms. Mariam Draz

13.00 Meeting with Azza Shawarby & Naguib Amin, EAIS Project

Sunday 09.30 Meeting with Mr. Raimo Lilja EPAP 18.01.2004 EEAA 7th floor 11.00 Meeting with Mrs Yasmine Fouad, Acting Director International Conventions Department Mr. Tamer Abou Gharara and Ms. Heba El Kady General Department for International Affairs and Technical Cooperation MSEA/EEAA Counter part 14.00 Meeting with Margot Nielsen, DEM Component, DANIDA/EEAA Monday 19.01.2004 10.00 Meeting with H.E.Ambassador Hannu Mäntyvaara and Counselor Mrs. Ulla-Maija Nevalainen Finnish Embassy 3, Abou El Feda Street, Zamalik

13:30 Taher Bishr Semiramis Intercontinental 15:30 H.E. Dr. Nadia Makram Ebeid Director, CEDARE 2, Hagaz Street, Heliopolis

Tuesday 20.01.2004 11:30 Meeting with Mrs. Hanan El Hadary EPAP EEAA 7th floor 13.00 Meeting with H.E. Minister Dr. Mamdouh Riad (MSEA) and Dr. Mohamed S. Khalil (CEO of EEAA)and heads of EEAA's departments at MSEA/EEAA premises 30, Misr Helwan Road, Maadi 14:00 Marshall Zaher, EMU's Capacity Building, EEAA 14:30 Moussa Ibrahim Moussa Head of the Environment Sector, EEAA

15:30 Mr. Mohamed El Shahawy CDM - EEAA

Wednesday 21.01.2004 09.00 Meeting with Mr Massimo Garzellin UNIDO Representative 2, Latin American Street, Garden City, C/O Ministry of Industry 4th fl. 11.00 Meeting with H.E. Ambassador Mohamed Tawfik Director of Cabinet of the Minister of the State for Foreign Affairs Cornish El Nil, 1st floor 13.00 Meeting with Mr. Mohamed Bayoumi GEF Representative, UNDP Office 4th floor Meeting with Samia Guirguis, Assistant Resident Representative UNDP, 4th floor Thursday 22.01.2004 10.00 Meeting with Mr Philip Jago, Chairman of EU Ms-countries, Environmental Sub-group & DFID EEAA 30, Misr Helwan Road, Maadi, 5th floor

12.00 Meeting with Dr. Emad Adly, Chairman, NGOs Network Center 3A Misr Lel Taimir Building, Zahraa El Maadi Street, New Maadi 14:00 Ronnie Daniel, Special Projects Officer USAID – 1A Laselky Street, New Maadi 15:00 Yasser Sherif and Ahmad Gaber (Alec) 15:30 Mr. Luigi Marcon, Head of Regional Office (Tea & Pekka) European Investment Bank 6, Boulos Hanna Street, Dokki 17:00 Meeting with Dr. Tarek Genena, EcoConServ

Friday 23.01.2004 Departure of mr Estlander - Arrival of mr Lariola

Ismail El Bagoury, Advisor Land Development Land and Water Resource Management Programme, CEDARE

Saturday 24.01.2004 10.00 Meeting with Dr. Mona El Kady Chairman, National Water Resources Centre 12:00 Dr. Samir Gharib Ministry of Local Development Sunday 25.01.2004 10.00 Meeting with Mrs. Hoda Sabry, Director of Environmental Protection Fund EEAA, 7th floor

11:30 Counsellor Mohamed Abu Alam – Egyptian Scandinavian Bus. Association Helnan Sheppeard lobby (Martti)

11:45 Dr. Aly Lotfy, Chairman of the Consulting Center for Finance & Economy (Martti)

6, Dokki Street, next to German School 12:00 – 14:00 NGOs round table (Tea & Pekka)

Arab organization for Youth & Environment Dr. Emad Adly Association for the Protection of the Environment Mrs. Yosriya Loza Association of Enterprises for Environmental Conservation Eng. Mohamed Kamel Egyptian Environmental Affairs Agency Mr. Hendawi, NGO Division

14.00 Meeting with Mr. Richard McTaggart, CIDA

Country Program Director (Tea & Pekka) 26 Kamal El Shenawy Street, Garden City

14:30 – 16:30 Private Sector Round Table (Martti) – might be postponed 1 day. Environmental Quality International /Eco-Tourism & Eco-Lodge

Dr. Mostafa Saleh & Magda Nassef System Technique - Water Sector Eng. Ihab Hashem, Marketing Nexant – Energy Sector Eng. Emad Hassan

16:30 Laila Kamel, CID, Maraashly Street Zamalek (Pekka) Monday 26.01.2004 10.00 Meeting with Ms. Ayat Soliman, Senior Natural Resources Specialist Environment & Rural Development World Bank, WTC, 15th floor

11:30 – 12:30 Mr. Madgy El Sanady, Program Manager Population, Health & Environment – NGO Service Centre 11, Ibn Affan Square in front of Shooting Club, Dokki

13.00 Meeting with Counsellor Mrs. Inge-Marie Lorenzen Environment, Royal Danish Embassy 12, Hassan Sabry Street Zamalek 16:00 Meeting with Dr. Tarek Genena, EcoConServ Tuesday 27.01.2004 9:00 Adel Khafaga, Deputy Head Nile River Sector Ministry of Water Resources & Irrigation 13, Mourad Street, in front of Zoo

11:00 Eng. Samira Nikola 96, Ahmad Orabi, Mohandessine

11:00 Meeting with Eng. Galal Abdel Daim, Chairman AlfaTex (textile Industry) – Martti 10th of Ramadan City, 3rd Industrial Zone, A3 next to Dawar El Asher

13:00 Yasmine Fouad, Acting Director

International Conventions Department

13:00 Mr. Juhani Kari, FINNMAP (Martti) 33, Hassan Sadek Street off Oruba Street next to Meridien Heliopolis Heliopolis Wednesday 28.01.2004 10.00 Debriefing meeting at the Finnish Embassy with H.E. Ambassador Hannu Mäntyvaara and Counselor Ulla-Maija Nevalainen

12:30 Visit with H.E Dr. Mamdouh Riad, MOSEA and H.E. Ambassador Hannu Mantyvaara

Sadat City Forest and Lunch at Golf El Soleimaneya Thursday (Departure of Mrs. Tea Tornroos) 29.01.2004 11:00 Pascal Odul, EU Delegation (Tea) => CANCELLED 37 Gameat El Dowal El Arabia Street Mohandessine 12:45 Mr. Salah Idriss, Environment Office (Pekka) Arab League Friday 30.01.2004 Departure of Mr. Martti Lariola and Mr. Pekka Salminen

EIB Lending to Egypt by Sector, 1995 - 2003 Annex 2.

Sector Signature Name Million EUR Water, sewerage 22.12.2003ABU RAWASH WASTEWATER 55,0Energy 19.12.2003IDKU LNG PLANT 152,2Energy 19.12.2003IDKU LNG PLANT 152,2Energy 15.07.2003NUBARIYA POWER PLANT II 150,0Total 2003 509,5Energy 10.09.2002NUBARIYA COMBINED CYCLE POWER PLANT 150,0Global loans 15.05.2002UPGRADING EGYPTIAN ENTERPRISES II 25,0Transports 02.03.2002CAIRO METRO LINE 2 EXTENSION 50,0Total 2002 225,0Energy 01.10.2001CAIRO NORTH POWER PLANT 150,0Global loans 09.04.2001EDBE GL II 30,0Total 2001 180,0Global loans 07.12.2000IDBE GLOBAL LOAN III 50,0Farming... 01.08.2000NATIONAL DRAINAGE PROGRAMME 50,0Total 2000 100,0Global loans 19.09.1999RED SEA HOTELS ENVIRONMENTAL FACILITY 25,0Energy 19.09.1999GASCO II PIPELINE 23,3Energy 19.09.1999GASCO II PIPELINE 5,0Industry 19.09.1999SUEZ OIL REFINERY PROJECT 100,0Water, sewerage 21.04.1999ALEXANDRIA WASTEWATER PROJECT (* 30,0Industry 21.04.1999MESSER EGYPT INDUSTRIAL GASES 5,0Total 1999 188,3Global loans 17.11.1998COMPETITIVE UPGRADING EGYPT ENTERPR. 25,0Energy 30.09.1998GASCO-PIPELINES PROJECT 50,0Farming... 09.06.1998PUMPING STATIONS REHABILITATION 20,0Water, sewerage 09.06.1998NAGI HAMMADI DAM 75,0Industry 08.06.1998ANSDK II 75,0Transports 10.03.1998NORTHERN COASTAL HIGHWAY 5,0Total 1998 250,0Industry 23.12.1997LECICO CERAMIC PROJECT 4,0Industry 19.12.1997LECICO CERAMIC PROJECT 16,0Global loans 29.10.1997EGYPT - VENTURE CAPITAL FUND 2,5Industry 29.09.1997EGYPTIAN CEMENT COMPANY PROJECT 15,0Industry 29.09.1997EGYPTIAN CEMENT COMPANY PROJECT 15,0Transports 19.07.1997EGYPT AIR 75,0Transports 19.07.1997NORTHERN COASTAL HIGHWAY 10,0Total 1997 137,5Industry 16.12.1996ALEXANDRIA TYRE (R.C.) 2,5Global loans 14.11.1996POLLUTION ABATEMENT FACILITY 15,0Water, sewerage 16.07.1996GABAL AL ASFAR WWTP II 55,0Water, sewerage 16.07.1996CAIRO WASTEWATER II 35,0Total 1996 107,5Industry 07.12.1995MISR COMPRESSOR FACTORY II 6,0Industry 19.10.1995EGYPTALUM 70,0Industry 29.06.1995MIDOR REFINERY PROJECT (EGYPT) 220,0Total 1995 296,0Grand Total 1813,7*) Note: The project has not come into operation, therefore EIB has decided to close and reasses the project.

MAJOR EGYPTIAN ENVIRONMENTAL NGOs ANNEX 4 1. Association for Health and Environmental Development (AHED) 17 Beirut St. Apt # 501, 505 Heliopolis – Cairo Tel: +20-2-2565613 Fax: +20-2-2565612 E-mail: [email protected] Website: www.geocities.com/ahed_egypt Contact: Dr. Amal Sabry Director Environment and Development Programme Mobile: +20-10-5646101 2. The Association for the Protection of the Environment (APE) PO Box 32, Al Kalaa, Cairo Tel: +20-2-510 27 23 Fax: +20-2-510 01 49 E-Mail: [email protected] ([email protected]) Website: www.ape.org.eg 3. Association of Enterprises for Environmental Conservation (AEEC) 86, Mohie El Din Abou El Ezz Street 12411 Dokki Giza Cairo Tel: +20-2-336 7016/17 Fax: +20-2-392 5728 E-mail: [email protected]; [email protected] Website: www.aeec-egypt.com Contact: Ismail Osman, Chairman 4. El Maktab El Arabi Lei Shabab Wal Biah (Arab Office for Youth and Environment, AOYE) P.O. Box 2 Magles El Shaab Zahraa El-Maadi St. Massaken Misr Leltaameer Building #3A 1st Floor Apartments #1,2 Cairo, Egypt Tel: +20-2-516 1245 and 516 1519 Fax: +20-2-516-2961 E-mail: [email protected] Website: www.aoye.org 5. Friends of the Environment Alexandria (FEA) 22 Ahmed Bek Gharbo St. Zizinia – Alexandria Tel & Fax: +20-3-5845759 E-mail: [email protected] Contact: Mr. Mohamed Nada Mobile: +20-10-5005146

6. Friends of the Environment and Development Association (FEDA) 88 Al Kasr El Ainy Street, 4th floor, Suite #31, Garden City, Cairo Tel: +20-2-7957 637 / 7953 346 Fax: +20-2-7957 637 E-mail: [email protected] 7. Social Organization for Environmental Protection (SOEP) El Hawatem -Resedential Blocks, Block No. 1, Entrance "A" Fayoum Governorate, Egypt Tel : +20-84-341774 (+20-2-4341774) Fax : +20-84-341774 (+20-2-4341774) E-mail: [email protected] Website: http://soep.8m.com 8. Tree Lovers Association 36A Road - Al Maadi P.O. Box 675, Cairo. Tel: +20-2-519-5240 Fax: +20-2-358-0099 E-mail: [email protected] 9. The Egyptian Society for Industry and Environment (ESIE) 165 El Horreya Road, El Hadra, Alexandria Contact: Chemist Taher Bishr, Chairman Tel: (03) 426 4777; Mobile: +20-12-2166800 10. Nile Guards & Environment Protectors Association (NAGEPA) 38 Rabie El Giezy St. Giza, Egypt Tel: +20-2-5702424 Fax: +20-2-5738989 E mail: [email protected] 11. Coptic Evangelical Organisation for Social Services (CEOSS) 1331 Dr. Ahmed Zaki St., El Nozha El Gedida, Cairo Tel: +20-2-297 5903 (Cairo) E-mail: [email protected] 12. NGO Service Center 13 Ibn Affan Sq. Dokki - Giza Tel: +20-2-7496276, 3385594, 3386049 Fax: +20-2-3372690, 7496955 E mail: [email protected]; [email protected] Website: www.ngocenter.org.eg

Source material ANNEX 5. Reports and publications

Annual Cooperation Report 2002: Egypt. European Union, 2003.

Annual Report, Environmental Protection Fund. EEAA, Egypt 2003.

Country Environmental Analysis (Draft). EcoConserv for the World Bank, May 2003.

Egypt, Country Environmental Analysis (CEA), Draft 14.5.03

Environmental Quality International. 2004. The Egyptian Pollution Abatement Project. Assessment of the NGO, and Media & Awareness Component. Final Report. January 2004. 102 pp.

International Consortium for Cooperation on the Nile (ICCON), Nile Basin Initiative, Strategic Action Program, Overview.). Nile Basin Initiative Secretariat in cooperation with the World Bank, May 2001.

The National Environmental Action Plan 2002/2017., Ministry of State of Environmental Affairs, Egyptian Environmental Affairs Agency, January 2002.

Private Sector Development Programme, Company Guidelines 1. Danish Ministry of Foreign Affairs, Danida, Denmark, 2003.

Report on the first five years of implementation of SMAP. European Commission 2002. 35 pp. + annexes.

Skyttä, T.K., Ojanperä, S. & Mutero, J. 2001. Finland's Support to Water Supply and Sanitation 1968-2000. Ministry for Foreign Affairs of Finland, Evaluation Report 2001:1.

Tervo, L., Hiltunen, E., Kuosmanen, P., Lundström, T. & Maula, J. 2001. Evaluation of the Development Co-operation Programme between Egypt and Finland. Oy Finnagro Ab. Ministry for Foreign Affairs of Finland, Evaluation Report 2001:2. 103 pp. + annexes.

Other (memorandums, project reports etc.)

Conclusions: Bilateral consultations between Egypt and Finland, Cairo March 16,2002. (Ministry for Foreign Affairs)

Discussion paper: Co-operation between Finland and Egypt, A Strategy for transition (May 2003) . (Ministry for Foreign Affairs)

Draft Completion Report (Oct 1999-Oct 2003), Hazardous Waste Management Project in Alexandria/ Plancenter Ltd

Evaluation of EPAP Public Information, Awareness and Participation Component (Draft). 2003.

Evaluation of EPAP Industrial Component (Draft). Environics 2003.

Muistio 9.12.1999: Suomen ympäristöyhteistyö Välimeren alueella. (Ministry for Foreign Affairs)

QPR 1/2003 (Jan-March), Regional Water and Sanitation Project in Beni Suef/ Plancenter Ltd

QPR 2/2003 (April-June), Regional Water and Sanitation Project in Beni Suef/ Plancenter Ltd

Regional Water and Sanitation Project in Beni Suef Governorate, Completion Report. Plancenter Ltd., December 2003.

Selvitys käynnissä olevien kehitysyhteistyöhankkeiden yhtymäkohdista Egyptin siirtymästrategian toiminnallistamiseen. (Ministry for Foreign Affairs)

Tausta-analyysi 7.3.2002: Suomen ja Egyptin yhteistyöneuvottelumandaatin taustamuistio. (Ministry for Foreign Affairs)

Work Plan Jan-Dec 2003 (draft), EPAP/ Soil and Water Ltd

Vesihydro Consulting Engineers. 1996. Badr City Water Supply and Sewerage Project. Final Report. September 1996. 10 pp + 5 appendices.

List of persons interviewed in Finland Annex 6. Person

Position Organization

Bottas Kari Director Siemenpuu Foundation Gröndahl Stephan Managing Director Nordic Project Export Fund Hassinen Veijo Export Manager YIT Corporation Ltd Hattula Raija Academy of Finland Hynninen Pekka Director Rantasalmi Institute for

Environmental Education Kangasniemi Jaakko Managing Director Finnfund Ltd Karanko Kari Head of Unit Ministry for Foreign Affairs of

Finland, Environment Policy Unit Kokkala Heikki Senior Advisor Ministry for Foreign Affairs Korvenoja Tita Senior Advisor Ministry of Environment Laurila Eeva Academy of Finland Leminen Kari Director Plancenter Ltd Liikkanen Heli Co-ordinator The Association of Finnish Local

and Regional Authorities Matinpuro Hanna International Affairs

Officer The Finnish Association for Nature Conservation

Oksanen Kari Export Manager Tana Ltd Ovaskainen Esa Director Soil and Water Ltd Pajala Kaija Senior Programme

Coordinator CIMO

Pikkarainen Pirjo Mikkeli Polytechnic Pyhälä Minna Ministry for Foreign Affairs of

Finland, Environment Policy Unit Swan Riitta Counsellor Ministry for Foreign Affairs Sykkö Janne Ministry for Foreign Affairs Tervilä Klaus Vice President Lemminkäinen Construction Ltd Toivola Matti Director Minereplast Oy/Ltd Tolonen Yrjö Mikkeli Polytechnic Arif Sherif Regional Environmental

and Safeguard Advisor World Bank, Water, Environment, Social and Rural Development Department, Middle East and North Africa Region

an analysis of co-operation in the ...an analysis of co-operation in the environment sector between...

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