By Henry Srebrnik, [Charlottetown, PEI] Guardian
Last fall Egypt was on the brink of economic collapse. By February, Cairo’s public debt was 89 per cent of its gross domestic product. External debt had soared to 46 per cent of GDP. Annual inflation was over 35 per cent.
President Abdel Fattah el-Sissi blamed the country’s economic woes on factors beyond his control, including the COVID-19 pandemic and Russia’s invasion of Ukraine. Egypt is also paying heavily for the ongoing Israel-Hamas war on its border. Its three main sources of revenue --hard currency from the Suez Canal, tourism, and remittances from Egyptian workers abroad -- have plummeted between 30 and 40 per cent.
But the Gaza war has also made Egypt indispensable because if its economy and government were to collapse, the chaos already generated by the conflict would become insurmountable.
So in March, Cairo secured a critical $8 billion loan from the International Monetary Fund, with strong American support. The European Union promptly agreed to provide another $8 billion in grants and loans. In total, the IMF, Europe, and the Gulf states have now poured well over $50 billion of foreign currency into Egypt’s coffers.
They agreed “that the Sissi government could not be permitted to fail,” said Steven Cook, an expert on Egypt at the New York-based Council on Foreign Relations. “Geopolitics has taken over.”
After the 1948 Arab-Israeli war, Egypt administered the Gaza Strip. When Israel captured Gaza in the Six-Day War in 1967, Israel administered the region until the Oslo Accords of 1993. After Israel withdrew from Gaza in 2005, the Palestinian Authority ruled the strip until Hamas was elected in 2006 and violently ejected the Authority. Egypt and Israel responded by sealing Gaza.
But Egypt’s side of the border was more porous, allowing for the smuggling of weapons and materials, aided by Hamas’ tunnels, enabling Hamas to build a formidable military infrastructure, even though a decade ago the Egyptians demolished thousands of houses on their side of the border to create a buffer zone that would protect Egypt’s national security.
Egypt and Israel have been formally at peace since 1979, when they signed a peace treaty in Washington. But there is little cooperation between members of Israeli and Egyptian civil society.
Egypt also has little sympathy for Hamas given its own brief and disastrous experience with Islamist rule under the Muslim Brotherhood’s Mohamed Morsi, who was president from 2012 to 2013. For years, Egypt fought militants in Sinai who were backed by Hamas with military training and weapons. But Cairo’s relations with Hamas improved after 2017, when Hamas released an updated charter disassociating itself from the Muslim Brotherhood.
Egyptian Foreign Minister Sameh Shoukry has said that Egypt has worked hard as a broker in talks between Israel and Hamas to secure a cease fire and the return to Israel of its remaining hostages in Gaza, but so far without success.
However, Cairo has been adamant in rejecting any temporary relocation of Gazans in the Sinai to allow Israel to clear the Hamas stronghold of Rafah. “The Camp David peace accords have withstood pressure from a series of crises in the region,” Shoukry stated. “We’ve been able to contain this one. But we don’t want a resurgence of terror in Egypt.”
Relations between Egypt and Israel have taken a turn for the worse since Israeli troops seized control of the Hamas-controlled side of the Rafah border crossing between Gaza and Egypt on May 6. Since then, Egypt has kept its side of the border shut and has said it will remain closed as long as Israeli troops are there. Egyptian intelligence officials claimed Israel has failed to keep previous promises that the joint border crossing would not be affected by Israel’s ongoing operation in Gaza.
“Egypt definitely considers the Israeli concentration of troops on the border as a potential long-term security concern,” according to Nathan Brown, a professor of political science and international affairs at George Washington University in Washington. “Cairo’s concern is that the war between Israel and Hamas will create problems for Egypt,” he added.
Egypt has made its anger clear and is contemplating recalling Khaled Azmi, its ambassador to Israel.
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