Kerry to welcome Egypt's economic reforms at investment summit

[March 13, 2015]  SHARM EL-SHEIKH, Egypt (Reuters) - U.S. Secretary of State John Kerry will welcome recent economic reforms by Egypt's government and press for more progress when he addresses an Egyptian investment summit in the Red Sea resort on Friday, a senior State Department official said.

Egypt, one of America's most important strategic allies in the Middle East, is using the conference to urge more investment to boost its economy, which is still recovering from political turmoil.

During his visit the secretary of state will meet with Egyptian President Abdel Fattah el-Sisi later on Friday, as well as Jordan's King Abdullah and Palestinian leader Mahmoud Abbas.

"We are coming to acknowledge the steps that the Egyptians have taken recently to try to build a more welcoming and open investment environment and press for more of the same," the senior official told reporters.

The official said Sisi's government had taken "pretty meaningful" economic steps over the past year to put the economy on a sounder footing, including tackling wasteful energy subsidies and refining the tax code to attract investors.

The United States is among Egypt's top three trading partners and American firms are the second-largest source of foreign direct investment (FDI) in Egypt.

FDI flows in Egypt have declined since 2009 but are now picking up, according to the International Monetary Fund, which put FDI over the past three years at just 1.5 percent of gross domestic product.

In his meeting with Sisi, Kerry will discuss economic and regional issues, including the security situation in neighboring Libya and the Sinai, and the growing threat from Islamic State militants, the official said.

Aside from militants over the border in Libya, Sisi faces an insurgency in the Sinai Peninsula where Islamic State's Egypt wing claimed responsibility for a series of attacks that killed over 30 members of the security forces in January.

Kerry will not pledge military assistance to Egypt during his two-day visit despite a call by Sisi on March 9 for increased U.S. military aid. The official said the American delegation wanted to keep the focus on economic investment.

"There are no new decisions on the military assistance side," the official said, "This is something that is a constant source of discussion."

Washington normally sends $1.5 billion in mostly military aid to Egypt each year but it suspended transfers to demonstrate unhappiness after the ousting of President Mohamed Mursi in 2013 and a violent crackdown on protesters.

In April last year the U.S. said it would deliver 10 Apache attack helicopters to Egypt to help its counter-terrorism operations in the Sinai Peninsula.

(Reporting by Lesley Wroughton; Editing by Kim Coghill)

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