Published in the Jerusalem Post, 18 March 2025
Egypt is currently playing a
crucial role in two of the most significant efforts related to the Gaza
conflict.
As a mediator, along
with the US and Qatar, of the arms-length discussions between Israel and Hamas,
Egypt has hosted many rounds of ceasefire and prisoner exchange
negotiations. Now, strengthened by its central role in the ceasefire
talks, it has master-minded a detailed $53 billion reconstruction initiative
for Gaza, which has received strong backing from Arab nations, western
governments and the UN. It has provided a credible alternative to US
President Trump’s “Riviera of the Mediterranean” concept, which proposed the
displacement of most of Gaza’s Palestinian population into neighboring Arab states.
In late 2023, Egypt did allow the
immigration into Egypt, via the Rafah crossing, of a limited number of foreign
nationals, dual citizens, and wounded Palestinians. Subsequently,
however, it has strongly opposed extending this program, holding firmly to the
belief that Gazan citizens should not be displaced from their homeland.
Early in February Israel accused Egypt of expanding its military presence
near the border, perhaps to guard against an influx of refugees from
Gaza. Egypt said its soldiers were there to fight extremists, who are
certainly active in the Sinai peninsula.
Total rejection of the idea of
displacing large numbers of Gazan citizens lies at the heart of Egypt’s
proposals for post-war Gaza. Egypt is shaping the region’s response to the
crisis and positioning itself at the forefront of regional diplomacy, making it
a central actor in shaping the future of Gaza and broader Middle East
stability.
Egypt’s initiative would carry
real conviction if it emanated from an economically flourishing nation state,
but Egypt is not flying high on the domestic front. It is one of the
world's most indebted emerging markets. Servicing its debts, especially to the
IMF and Gulf states arising from previous financial rescue packages, is a major
burden.
As a condition of accepting these
loans, Egypt's president, Abdel Fattah el-Sisi, was obliged to
restrict public spending and impose heavier taxes. This resulted in soaring
inflation and the persistent depreciation of Egypt’s currency. This, at
least, Sisi has been attempting, with some success, to remedy.
Egypt’s annual inflation rate in
2020 was about 5.4%. By 2023 it had surged to some 34%, and in September
2024 it peaked at 38%, plunging large parts of the population into real
penury. Since then it has been brought under control, and is now
declining. A Reuters poll projects that the inflation rate in
February will have fallen to 14.5% - much too high for comfort, but on the
correct trajectory.
As for the Egyptian pound, in 2022
its trading rate was about E£16 to the dollar. In 2023 it traded at
around E£31. By the end of 2024 the Egyptian pound had devalued to
E£50.64 per US dollar.
However Sisi is succeeding in
reversing the downward economic spiral. As of March 2025, Egypt's
economic indicators show definite signs of improvement. Its GDP growth rate
recorded 3.5% in the first quarter of the fiscal year 2024/2025, reflecting the
positive impact of economic reform policies. Looking ahead, the
ratings organization Moody's Analytics forecasts a 5% growth for Egypt's
economy by the fiscal year 2025/2026, with average inflation expected to fall
to 16% in the next fiscal year, before further decreasing to 13% by 2026.
Sisi's political standing at home,
at a particularly low ebb during the worst of the economic hardship, has not
yet shown much sign of improvement. Egypt’s enhanced international
standing, following from acceptance by the Arab world and the UN of its plan
for Gaza’s future, may start to turn the popularity ratings in Sisi’s
favor.
What could effect a sea change in both Sisi’s and Egypt’s standing would be for its economic development program, Egypt’s Vision 2030, to achieve some of its goals in the next five years.
Saudi Vision 2030, the ambitious
program to revolutionize Saudi Arabia economically and
socially, led by Crown Prince Mohammed bin Salman (MBS), has received
a fair degree of publicity. Egypt’s Vision 2030, about which much less
has appeared in the media, is no pale copy. On the contrary, it was
launched in February 2016, two months before MBS announced his plan for Saudi
Arabia.
Egypt's Vision 2030 is a long-term economic
development program aimed at achieving sustainable growth and improving the
country's global competitiveness. It focuses on key areas such as economic
diversification, infrastructure development, education, healthcare, and
environmental sustainability. The plan aligns with the UN Sustainable
Development Goals (SDGs), and aims to position Egypt as a leading economy in
the region by enhancing investment and digital transformation.
Despite Egypt’s economic
difficulties in recent years, the program has achieved a degree of
success With a population of 115 million, Egypt has been capitalizing on
its skilled workforce, prime location, and rich resources to strengthen its
position as a key economic hub within Africa.
A key component of Vision 2030 is
the Digital Egypt strategy, focusing on fostering artificial intelligence and
digital innovation. In 2024 Egypt’s tech sector recorded a 16.8%
year-on-year growth.
Central to the program is Egypt’s construction sector, growing at an annual rate of 7.4%. Vision 2030 has driven several ambitious projects, including New Alamein City,
the high-speed rail and urban railway networks, critical seaport and road infrastructure, and the $45 billion New Administrative Capital. This massive urban development project, intended to house some 6.5 million people eventually, is designed to ease congestion in Cairo and serve as the country’s new government and financial hub. Estimated to cost over $58 billion, it was started in 2015. Government offices began to relocate there in 2024, while the designated business district, which contains Africa’s tallest skyscraper, the Iconic Tower, is growing rapidly. A new rail and monorail system connects it to Cairo, and an international airport is under construction.
Vision 2030 envisages 42% of
Egypt’s energy coming from renewable sources by 2030. Prioritizing wind,
solar, and green hydrogen production, the country is expanding its renewable
capacity to 45,000 megawatts from projects already under construction.
In 2024, Egypt attracted 15.7
million tourists, breaking its own record for the second consecutive year.
Sherif Fathy, Minister of Tourism & Antiquities, projects that Egypt is on
track to reach 30 million tourists by 2030.
With its own multi-million development program showing every sign of succeeding, Egypt is particularly well placed to master-mind an international effort to reconstruct Gaza. Its plan has been widely endorsed. Will that be enough to see it launched?
Published in the Jerusalem Post, and in the Jerusalem Post online titled: "Egypt's Gaza strategy: Ceasefire talks and a bold reconstruction plan", 18 March 2025:
https://www.jpost.com/opinion/article-846247