Why so generous? Lifting the veil on Europe's aid package to Egypt

With an economy in decline, a growing population and a growing refugee community, Egypt can be the source of the next migration wave into Europe. This package aims to stave off this 'threat'.

AFP

European Commission President Ursula von der Leyen and Egypt's President Abdel Fattah el-Sisi show signed declarations after their summit with the leaders of Austria, Belgium, Cyprus, Greece, and Italy in Cairo on 17 March, 2024.

Why so generous? Lifting the veil on Europe's aid package to Egypt

Amr Emam

last update on 21 Mar 2024

Europe is offering Egypt a generous aid package of €7.4bn.

While the new package is a drop in the ocean of Cairo's economic needs, it demonstrates the rampant fears in European capitals of the risks associated with leaving Egypt to fend for itself in the face of its growing economic and security challenges.

Multiple European leaders, including the Belgian, Italian, and Greek prime ministers, converged on the Egyptian capital along with the Austrian chancellor, the Cypriot president and European Commission President, Ursula von der Leyen on 17 March to sign and celebrate the deal.

They vowed to return to Cairo in the second half of this year for an investment conference where Egyptian investment planners will showcase their country's investment attractions with a view to increasing the involvement of European companies in the Egyptian economy.

Egyptian President Abdel Fattah el-Sisi described the European leaders' visit to Cairo as "an important phase in relations between Egypt and the European Union."

Von der Leyen said the presence of six European leaders in Cairo simultaneously showed how deeply the Europeans valued their partnership with Egypt.

The president of the European Commission wrote on X that "Egypt is a pillar of stability and security in the Middle East."

Egypt is a pillar of stability and security in the Middle-East.
We will work hand in hand with Egypt and other partners to channel aid to Gaza via all possible routes.
Civilians must be protected and there can be no forced displacement of Palestinians from Gaza.
We want to... pic.twitter.com/2zosgutTT4
— Ursula von der Leyen (@vonderleyen) March 17, 2024

"With Egypt's political and economic weight and its strategic location in a very troubled neighbourhood, the importance of our relations will only increase over time," she added.

Critical time

The billions of euros pledged by Europe to Egypt come as the populous Arab country struggles to overcome its economic hardships.

The government blames these hardships on international developments, such as COVID-19 and the war in Ukraine, even as government detractors point to economic mismanagement and the misspending of public funds.

The war in Gaza and its expanding scope, with its negative toll on revenues from the Suez Canal, are adding to the woes of the Egyptian economy and depriving the Egyptian treasury of badly needed funds as vessels avoid the Egyptian waterway and opt for the safer, but longer, Cape of Good Hope.

These billions of euros also come as international crediting agencies, including the International Monetary Fund and the World Bank, scramble to offer Cairo an economic lifeline to help it avoid the prospect of economic collapse—a scary scenario for a country with a population of 105 million and one that hosts close to 9 million refugees.

Root causes

The European aid package is tailored to revive the Egyptian economy, help Cairo stem the tide of illegal migration, and incentivise cooperation between the two sides in vital areas, such as energy, including natural gas and green hydrogen.

It includes €5bn in concessional loans to support Egypt's macroeconomic reforms and €1.8bn in additional investments under Europe's neighbourhood policy to boost renewable energy and digital connectivity.

The European aid package is tailored to revive the Egyptian economy, but more importantly, it's to help Cairo stem the tide of illegal migration.

On migration management, the agreement earmarks €200mn to help Cairo crack down on human smuggling and trafficking as part of a more comprehensive package of €600mn in non-repayable grants.

Cairo is expected to use these funds to create economic opportunities for its people, which can ultimately reduce the likelihood of illegal migration to Europe from the Arab country.

The same funds will help the Egyptian government address the needs of the large refugee community Egypt hosts, which includes hundreds of thousands of people fleeing wars and bloodshed in countries such as Sudan, Syria, Yemen, and Ethiopia.

Turning fortunes

Cairo's economic fortunes are turning with the abovementioned financial support from international crediting agencies and the European Union and a major investment deal signed last month that will see the United Arab Emirates inject a whopping $35bn into Egypt's economic veins.

Nevertheless, Europe is acting out of fear of the prospect of economic collapse in Egypt, which could unleash a wave of unwanted migration to its shores.

According to the European Union Agency for Asylum, there has been a dramatic rise in asylum applications by Egyptian nationals in Europe. These applications jumped from 6,616 in 2021 to 26,512 in 2023. The agency says most of these claims were made in Italy and Greece.

Egypt—a safe haven for refugees from Africa and the Arab region—also faces the mounting burden of catering to the needs of these refugees, observers said.

After fleeing war-torn Sudan, Sudanese drivers wait by their buses upon arrival at the Egyptian village of Wadi Karkar near Aswan on May 14, 2023.

"Egypt has always borne the burden of refugees from all parts of the world," Mohamed al-Shazli, a former assistant to the Egyptian foreign minister, told Al Majalla.

"However, this has added to its economic burdens," he added.

Deteriorating economic conditions in Egypt compound its ability to address the needs of its refugee community. Despite its own burdens, Egypt treats refugees equally to its citizens in terms of health, education, and social services.

Added urgency

According to Ahmed Fahmi, the Egyptian presidency spokesman, the aid package was two years in the making but was fast-tracked after Israel's war on Gaza, a development that—apart from having a heavy toll on the Egyptian economy—could open the door for another massive refugee surge into the country.

This possibility is especially true if Israel succeeds in pushing Palestinians out of Gaza.

The aid package was two years in the making but was fast-tracked after Israel's war on Gaza, which could open the door for another massive refugee surge into Egypt.

On its part, Egypt has tried to boost the delivery of humanitarian and relief aid to the coastal enclave through the Rafah crossing station on the shared border with it. Still, Israel has been severely restricting aid from entering.

Egypt has also tried to get aid through airdrops, but they are not cost-effective and unable to get massive amounts of desperately needed aid to Gaza's starving population.

Meanwhile, Egypt has been trying to broker a ceasefire between Gaza's factions and Israel with US and Qatari involvement.

But as the Israeli army prepares to invade southern Gaza, hundreds of thousands of Gaza's residents are expected to turn to the Egyptian border for safety.

Rafah, where almost 1.4 million people are displaced from the northern and central parts of Gaza, is only kilometres away from Egypt's Sinai.

"The residents of Gaza will most likely escape to Egypt if Israel launches a major military operation in Rafah," Nourhan al-Sheikh, a professor of political science at Cairo University, said al-Sheikh told Al Majalla.

"The fear in Europe, especially among the advocates of right-wing populism, of which Italian Prime Minister Giorgia Meloni is one, is that once they are here, these people will turn Egypt into a transit point on the road to Europe," she added.

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