The implications of the Emirates’ billions supporting the Egyptian regime

Egyptian Prime Minister Mostafa Madbouly announced an Egyptian-Emirati agreement to establish an urban project in the Ras El-Hikma area, an area of 41,000 acres, according to which Egypt will receive $24 billion in liquidity across two instalments. The first instalment will be $10 billion, the second $14 billion and another $11 billion to be deducted from the external debt owed to the United Arab Emirates (UAE) and spent on other investments.

It is natural that the news in which the Egyptian media highlighted the figure of $35 billion as the value of the project that will enter Egypt and the figure of $150 billion as the value of the project’s investments, even though the timeline is still unknown, would cause small-time entrepreneurs who have dollars to rush to get rid of them. The media has played on the psychology of these people, increasing their fear and drive to sell.

The media played the same game a few weeks ago, with security campaigns targeting dollar holders, causing the price in the parallel market to fall from 70 Egyptian pounds to less than 50. However, a few days later, the dollar exchange rate in the parallel market rose to around 60.

Regarding the Emirati project, it is known that Western countries have expressed their keenness to support the Egyptian regime as a reward for its role in starving the people of Gaza in an effort to divide the Palestinian ranks united behind the resistance. Evidence of this reward appeared in the statement of the International Monetary Fund (IMF) Director Kristalina Georgieva in which she revealed that the IMF intends to raise the value of the loan it is granting to Egypt, justifying this by saying that Egypt was harmed by the Gaza war. We are also seeing similar signs from the European Union (EU).

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Rewarding Jordan and supporting the Pakistani regime

There is nothing new about this method. Jordan obtained a loan from the IMF last January worth $1.2 billion as a reward for its participation in the siege of Gaza and for supplying Israel with vegetables of which the residents of Gaza have been deprived. The IMF also rewarded the ruling government in Pakistan by lending it $3 billion in June, $1.2 billion of which was disbursed immediately, even though the IMF’s rules prohibit lending to unelected governments. The UAE and Saudi Arabia also provided Pakistan with deposits worth an additional $3 billion.

Therefore, everyone was anticipating the value of the Western reward to the Egyptian regime for its measures to eliminate the resistance and its reluctance to allow aid to pass through to the residents of Gaza, especially after US Treasury Secretary Janet L. Yellen’s meeting with Egyptian economic officials.

In order to continue the deceptive image of the regime’s role towards Gaza, these Western powers believed that the reward should come from a Gulf state in the form of an investment project after the Israeli lawyer at the International Court of Justice (ICJ) exposed the Egyptian position, stating that Egypt was responsible for preventing aid to Gaza. Moreover, US President Joe Biden stated that he convinced the Egyptian regime to allow some aid to enter Gaza.

The IMF director stated that she had spoken with Gulf countries in order for them to support the Egyptian regime in addition to the IMF’s loan to it. The Egyptian prime minister indicated that the IMF director had recently been in the UAE during the World Government Summit in Dubai, along with senior officials from the World Bank and the EU, which confirms they agreed on the Emirati support.

The Emirati deal provides an opportunity for the UAE to whitewash its blood-stained pages in Yemen, Libya, Sudan and others. It is also a reward for its insistence on the economic corridor linking the UAE to the port of Haifa by land and facilitating transport vehicles from the UAE to Israel to compensate it for the difficulty of ships reaching the Port of Eilat after the Houthis prevented ships crossing through Bab Al-Mandab.

Urgent needs many times the value of the deal

The Western countries achieved the goal of saving the Egyptian regime that supports Israel without costing itself much and conveying a message to the rest of the rulers of the Arab and Islamic countries that they are loyal to those who follow their policies to support Israel and eliminate the resistance in Gaza. Western countries also suggested that they should compare this to what happened when they rebelled against its orders, such as the case of Pakistani Prime Minister Imran Khan, who was prevented from participating in the elections and even imprisoned. Although his supporters won the highest votes in the recent parliamentary elections, an alliance was made between the second and third largest parties in votes to form the ministry.

The most crucial issue about the dollar resources that the Western Emirati reward will provide, amounting to $24 billion, is the question of where it will go. Many areas are proposed for this, as there is a dollar deficit in the banking system, including the Central Bank and the banks operating in the country, which exceeded $27 billion at the end of last year. This deficit must be reduced so the banks can release the goods piled up at the ports to increase commodity supply.

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There are instalments and interests on external debt, which exceed $42 billion this year, and they must be paid so that the lenders do not demand all of their instalments in the event of difficulty in repayment. There are commodity imports that must be provided, whether to meet food or energy needs, and these are imports whose value reached $ 81 billion despite the difficulties of importing, according to the Statistics Authority.

Even if the authorities prevent the import of some goods, such as cars and durable goods, as reported, 75 per cent of those imports are necessary and indispensable, such as raw materials, production requirements and fuel. Without providing them, exports will be affected, which was the case last year.

There are service imports that reached about $13 billion last fiscal year (2022-2023), as well as the profits of foreign companies operating in Egypt that request to be repatriated to their countries of origin, amounting to $12.5 billion last fiscal year despite the difficulties they faced. The delay in the exit of those profits causes direct and even indirect investments to hesitate to come to Egypt, despite the interest on government debt reaching more than 28 per cent recently.

Promises of the economic conference and the new channel

There are also projects that the general considers a priority from his point of view, such as the completion of the New Administrative Capital, which was scheduled to open in mid-June 2020, the Monorail project to connect the New Administrative Capital to the old capital, and other projects that the general considers a symbol of his rule. Of course, no one can go against the general’s orders in determining the priorities for spending.

The media is flooding the public with dreams and hopes that the problems the Egyptian economy is suffering from will end using the resources of the Emirati project, claiming it will bring eight million additional tourists. They are taking advantage of the poor memory of many, as Egyptians have previously heard such promises, but they were never fulfilled, such as with the projects announced at the economic conference in March 2015. It turned out they were merely memorandums of understanding. The same goes for the New Suez Canal project, as there were claims that it would achieve $100 billion annually, the floating of the Egyptian pound in 2016 and the climate conference in 2022, all of which were not achieved. Ordinary citizens no longer trust these promises, with their main question becoming: will Emirati resources reduce the prices they can no longer afford?

I must point out that the Western countries are concerned with saving the ruling regime and not with saving the Egyptians so that they can be preoccupied with their suffering. They are deceiving them with the so-called Muslim countries testifying against Israel in the ICJ to buy more time for Israel to plan against the resistance and for the rulers of those countries to continue their positions to continue to deceive their people.

Tyrannical rulers are always keen to implement the slogan “Starve your dog and he shall follow you” as a means to keep people busy with trying to secure food for their children rather than noticing the weak positions of their rulers, their tyrannical practices or the detainees.

Of course, the prices of some commodities may go down with the decline in the dollar exchange rate, but this decline is limited and not guaranteed to continue because the real way to continuously reduce prices is to increase agricultural, industrial and service production. This path requires time and, before that, the will of a world that does not allow developing countries to take the path of development, forcing them to remain dependent on the dominating countries of the world and consume what they export.

Translated from Arabi21, 25 February 2024

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.