Published in the Jerusalem Post, 26 March 2024
On March 17 a delegation of EU leaders visited Cairo and announced that the EU Commission had decided to provide Egypt with finance totaling $8.1 billion (some 32 billion shekels) over the three years 2024 – 2027. Amidst the flurry of self-congratulatory statements, neither side specified what one particular tranche of the package was for.
That Egypt needs the
money, it goes without saying. The country has been in economic difficulties
for years. Russia’s 2022 invasion of Ukraine made matters worse. The country relied heavily on wheat imports from
both Russia and Ukraine, and food prices increased by more than 70%. The International Monetary Fund (IMF), which
has supported the Egyptian government over the past 8 years with loans, has
demanded strict financial controls. Government
action taken to meet IMF conditions, such as the removal of bread and fuel
subsidies, new value-added taxes, and an increase in metro fares, aroused public
opposition.
In August 2023 inflation
in Egypt hit a record year-on-year high of just under 40%, while the Egyptian
pound was losing value hand over fist.
Over 2023 the cost of a US dollar hovered around 30 Egyptian pounds. At
the beginning of March 2024 it was 70 pounds.
Then Egypt’s fortunes
suddenly took a turn for the better.
Three recent announcements in quick succession have dissipated the
financial gloom.
Impressed with the steps
Egypt has taken to tighten the economy, and after Cairo agreed to further
financial reforms including a flexible exchange rate and raised interest rates,
on March 6 the IMF agreed to a $5 billion increase in the current $3 billion loan
agreement.
Then, on March 17 came
the announcement from the EU of its $8.1 billion package, spread over three
years. Finally, and apparently out of the blue, on March 17 the United Arab
Emirates (UAE) announced it would inject $35 billion into Egypt over two months.
There is no doubt that
this $48 billion windfall will go a long way toward clearing the economy’s
dollar shortage and eliminating any near-term risk of default.
The financial bonus from the UAE is by way of investment in the development of Ras El-Hikma, a 170 million-square-meter peninsula, stretching over some 50 kilometers of white-sand beaches along Egypt’s Mediterranean coastline. The project, managed by an Emirati organization, aims to transform Ras El-Hikma into a luxury tourist destination coupled with a financial center and a free zone.
The EU financial package
is less explicit in its objective.
European Commission
President Ursula van der Leyen was joined by the leaders of Austria,
Belgium, Cyprus, Greece and Italy to meet Egyptian President Abdel Fattah
al-Sisi for the signing ceremony. The deal,
both sides agree, lifts the EU's relationship with Egypt to a
"strategic partnership" aimed at boosting cooperation in renewable
energy, trade, and security. The
financial package specifies five billion euros in loans, 1.8 billion euros in
investment, and hundreds of millions for “bilateral projects”.
In their official
statements following the announcement, neither side mentioned the word
“migrants”. However one official attached to the EU Commission
told Radio France Internationale that part of the tranche
allocated to “bilateral projects” is specifically earmarked to stem irregular
migrant flows to the EU bloc. In 2023 the EU's border agency Frontex
recorded nearly 158,000 migrant arrivals in Europe via the dangerous Mediterranean
sea route, an increase of 50% on the previous year. Migration was
referred to briefly by Italian prime minister Georgia Meloni, who hailed
the EU-Egypt accord as a chance to give “residents of Africa” a chance
"not to emigrate" to Europe, while the Greek prime
minister, Kyriakos Mitsotakis, said: "We must prevent the
opening of new migration routes and we will work very closely with Egypt to
ensure that this will be achieved."
In negotiating this
agreement, the EU Commission doubtless had in mind the rising popularity of right-wing
parties in several EU nations, and the growth across Europe of anti-immigrant
rhetoric. It must also be aware of its own
failure to cope effectively with the flow of uncontrolled migration into Europe
from Africa.
Statistics for 2023 from the International Organization for Migration (IOM) show migrants setting out into the Mediterranean from Algeria, Libya, Tunisia and Egypt – that is, the entire stretch of the north African coastline, with the sole exception of Morocco. By far the most favoured destination was Italy, but many thousands landed also in Spain, Greece, Cyprus and even Malta – all EU countries. The EU Commission’s concern is understandable.
Egypt insists that
migrant boats have not sailed from its coast in recent years, yet Egyptians
still arrive by sea in Europe, mostly in Italy, via Libya or Tunisia. Recently these numbers have increased. There
are thousands of Egyptians currently in Libya, waiting for transport to Italy,
and Libya has taken to shipping them back to Egypt in their hundreds.
This Libya-Italy route remains open despite deals already concluded by the EU in
northern Africa, notably with Libya, Tunisia and Mauritania, aimed at reducing
the uncontrolled flow of migrants across the Mediterranean. The new agreement with Egypt is intended to augment
those deals and make them more effective.
Flavio Di Giacomo, a
spokesperson for the IOM, makes a different point. He has said the 2023 migrant numbers were a far cry from those
recorded in 2015 when more than a million people reached European shores via
the Mediterranean.
“There is no real
emergency,” Di Giacomo is reported as saying. “They are very manageable
figures, and more should be done to give people who arrive by sea access to a
system of protection.”
Egypt however, its immediate financial crisis averted, is no doubt grateful that the EU sees things rather differently.
Published in the Jerusalem Post, and the Jerusalem Post online titled: "EU deal with Egypt to stem migration is morally ambiguous", 25 March 2024:
https://www.jpost.com/international/article-793684
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