Le Monde: Egypt, mired in an economic crisis, sells its lands and infrastructure to the UAE and Saudi Arabia

Paris -  Under the headline: “Egypt, mired in an economic crisis, sells its lands and infrastructure to the Gulf states,” the French newspaper “Le Monde” said that Egypt, burdened with debt, has sold assets in the fields of tourism, agriculture, and ports to the United Arab Emirates and the Kingdom of Saudi Arabia over a period of ten years.

The French newspaper added that while Egypt faces a stark shortage of foreign currencies, the United Arab Emirates is preparing to pump $35 billion into the country within two months. Most of the funds are allocated to the development of the Ras El Hekma region, located in northwestern Egypt, which covers an area of ​​170 million square meters and extends about 50 kilometers of white sand beaches.

A breath of air for Sisi

Behind this acquisition is the UAE sovereign wealth fund Holding Company (ADQ), which is headed by Sheikh Tahnoun bin Zayed, brother of President Mohammed bin Zayed Al Nahyan. This company, which will manage the project, wants to make Ras El Hekma “one of the largest new cities developed by a private consortium” by turning it into a luxury tourist destination, along with a financial center and a free zone, Le Monde explains, noting that this has been announced. The agreement, which is unprecedented in the history of Egypt, according to its Prime Minister Mostafa Kamal Madbouly, last February 23, from the New Administrative Capital, which is another huge project in which the UAE has invested greatly.

The Ras Al-Hikma agreement comes as part of a series of investments made by Abu Dhabi and Riyadh over the past ten years, to save the Egyptian economy

The French newspaper went on to say that at a time when Cairo is drowning in debt estimated at more than $160 billion and facing the worst liquidity crisis in decades - exacerbated by turmoil in the Red Sea and dwindling Suez Canal revenues - these huge investments constitute a breath of fresh air for the Egyptian regime.

“An unexpected rescue”

“It is an unexpected rescue,” said Timothy E. Kaldas, co-director of the Tahrir Institute for Middle East Policy, a nongovernmental organization dedicated to democratic transition in the Middle East. “This capital will, in the short term, help halt the deterioration.” Amazing for the economy, and to reduce inflation. “But nothing will change if the government continues with the same policy it has followed for ten years, which is to multiply huge projects that are very expensive and poorly profitable for the country’s economy, and which mainly benefit a nebula of supporters and those close to the regime.”

Dollars will be pumped from Abu Dhabi in several batches: $10 billion has already been transferred, to which $14 billion will be added within two months; The remaining 11 billion will be spent on Emirati deposits in the Central Bank of Egypt, which will be used to finance various projects throughout the country, Le Monde notes.

The newspaper continues by explaining that in the short term, this record injection of liquidity has already had the effect of reevaluating the unofficial price of the Egyptian pound, which has been in free decline on the black market for several months. While the bank set the exchange rate at 30 Egyptian pounds to the dollar, the local currency reached 70 pounds in February on the unofficial market, before falling to 44 pounds in early March after the announcement of the UAE deal.

Imminent depreciation of the currency

Le Monde continued to say that by addressing the parallel market, the Egyptian authorities are paving the way for an imminent decline in the value of the currency, while negotiations with the International Monetary Fund - which culminated on Wednesday, March 6 with the granting of a new loan worth $5 billion, after... An initial agreement on 3 billion by the end of 2022 - the main condition for which will be for the Egyptian currency to float freely, as international donors have been demanding for years. Last Wednesday, the Central Bank of Egypt raised the key interest rate by 6 points to a record level of 27.25%.

The Ras Al-Hikma agreement comes within a series of investments made by Abu Dhabi and Riyadh over the past ten years, to save the Egyptian economy. The cumulative deposits of the Gulf countries in the Central Bank of Egypt have reached about $28 billion, since 2013, as the two countries supported President Abdel Fattah El-Sisi after the overthrow of Mohamed Morsi.

In return, Gulf financiers expect the Egyptian authorities to facilitate their acquisition of real estate and assets in many sectors ranging from tourism, agriculture, banks, ports, and the pharmaceutical industry. In line with the International Monetary Fund, they have been demanding structural reforms since 2016, calling for more privatization, limiting the army’s control over the economy or creating a floating exchange rate to facilitate investments, explains “Le Monde.”

“Agreements signed without the knowledge of citizens”

Le Monde considered that despite the Egyptian government’s announcement that it would retain a 35% share of the expected profits from the Ras El Hekma project, the agreement lacks transparency.

In this regard, the newspaper quotes economic expert Elhami Al-Mirghani as saying: “We do not really know through which channels these billions will be pumped and in which projects the remaining funds will be spent.” Did Egypt give up ownership of these lands? It all seems very mysterious. By selling these assets, the country loses control of its resources while continuing to go into debt. We are losing our businesses and strategic resources, and we are mortgaging our ports and airports. All this for agreements signed without the knowledge of citizens. He also emphasized the human cost of these projects, which lead to the confiscation of many residents’ properties in exchange for meager compensation.”

Le Monde went on to point out that, in parallel with the agreement with the holding company (ADQ), the Egyptian authorities have been conducting discussions for several months about another huge investment project that could see the light in South Sinai on the Red Sea. The Ras Jamila Peninsula may attract Saudi funds estimated at $15 billion to develop a huge tourism project on the seashore.

In addition to selling several historic and prestigious hotels to the holding company (ADQ) last February for $800 million, the Egyptian government is also preparing to transfer management of its airports to private sector operators, announcing the launch of an international tender. In addition, Egyptian President Abdel Fattah El-Sisi ratified a law allowing the sale of desert lands to foreign investors.

As happened in 2017, during the ceding of the islands of Tiran and Sanafir in the Red Sea to Saudi Arabia, which sparked the discontent of many Egyptians, the Ras El-Hikma project caused a huge uproar on social media networks, as a portion of Egyptian citizens take a very dim view of the sale of land, infrastructure, and historical heritage.