Gulf's investments in Egypt keep its economy afloat and provide benefits in return

• Published date: 25 January 2023

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The roots of Egypt's deteriorating economic condition date back at least a decade, but it has been exacerbated by the COVID-19 pandemic and the Russo-Ukrainian war.

"Egypt is strapped for cash and has been in a dire economic situation. Gulf investments represent a real lifeline for the country," Emma Soubrier, an associate researcher at the Institute for Peace and Development in Nice, France and at the World Peace Foundation, told The Media Line.

With the spark of the Arab Spring in 2011, then-Egyptian President Hosni Mubarak, who had ruled the country for three decades, was overthrown. In June 2012, Mohamed Morsi, a politician affiliated with the Muslim Brotherhood, was elected to the presidency and a year later was removed from power by President Abdel Fattah el-Sisi, who has remained in power since then.

Gulf countries such as Saudi Arabia and the United Arab Emirates supported el-Sisi during the 2013 coup and have economically supported his government since then.

"The Egyptian economy has remained very fragile and has recurrently needed financial boosters from Riyadh and Abu Dhabi, which in turn needed Cairo not to slip back under the control of the Muslim Brotherhood," Corrado Čok, a consultant analyst at Gulf State Analytics with expertise in the regions of the Gulf and the Horn of Africa, told The Media Line.

Now, the debt and food security crisis are a serious threat to Egypt's stability, with the cost of grain very high in the global market, and most of the country's debt due to be repaid soon.

"Gulf funds provide relief to Egypt's battered economy and some investments will probably have a positive economic turnout," he said.

Gulf states expect value assets in return for investments

But after the billions invested in Egypt by the Gulf countries, they expect value assets in return, such as Egypt's ports. "It is often forgotten that Egypt even promised to transfer sovereignty of the islands in the Strait of Tiran to the Saudis in exchange for financial support," he said.

"The Gulf countries are certainly gaining the most, as they extend partial control over relevant state assets and companies, especially for the projects based in and around the (Suez) Canal, due to its geo-economic and strategic value," Čok said.

In addition, Saudi Arabia needs Egypt as a military power, to help it fill its defense capability gaps, he added.Today, Gulf investments are mainly taking over Egypt's publicly...