- The EU plans to quickly provide Egypt with financial assistance of up to $1.1 billion.
- The EU is using financing procedures that bypass parliamentary oversight and other safeguards.
- Officials say the fast-track funding will inject much-needed capital into the Egyptian economy.
European Union The EU’s executive branch president said the EU intends to quickly deliver some aid funds to Egypt through emergency financing procedures that bypass parliamentary oversight and other safeguards.
The $1.1 billion planned for this is part of a larger $8 billion plan financial support The European Union announced on March 17 that it would travel to the North African country.
Egypt has for years relied on cash handouts, often from wealthy Gulf Arab states, amid growing concerns that economic pressure and regional conflict could force more migrants from the region to European shores.
EU signs 7.4B euro aid package for Egypt to address immigration issues, etc.
The EU package includes three years of grants and concessional loans to the Arab world’s most populous country. The majority of the funds ($5.4 billion), known as Macro Financial Assistance (MFA), will be disbursed directly to the Central Bank of Egypt.
On March 17, 2024, Egyptian President Abdel-Fattah el-Sisi (right) held talks with European Commission President Ursula von der Leyen at the Presidential Palace in Cairo, Egypt. (Egyptian Presidential Palace Media Office, Associated Press)
The EU rarely sidesteps safeguards, but European Parliament elections are due to be held from June 6 to 9 – and if checks are implemented according to this timetable, the delivery of funds will be slowed.
With these polls in mind, European Commission President Ursula von der Leyen announced plans for “an emergency MFA operation of up to €1 billion” for Egypt, in a letter to EU Parliament President Roberta Metsola The country’s “economic and fiscal situation has deteriorated rapidly,” the report said.
The letter, seen by The Associated Press, was issued before the deal with Egypt was announced.
Egypt to combat migrant influx, economic pressure with $8 billion EU aid package
Von der Leyen accused “Russia’s full-scale aggression in Ukraine, the wars in Gaza and Sudan, and the attacks by the Houthi armed forces in the Red Sea, which have had a great impact on the economy” and said that “it is necessary to ensure that the first tranche of payment is provided to Egypt before the end of 2024.” Significant donation.”
To do this, the European Commission will use a rarely used part of the EU treaties, Article 213, which stipulates that the 27 member states must approve the funds, but not the parliament, the EU’s only democratically elected body.
Even as COVID-19 spread in 2020 and the EU bailed out governments from the Balkans to the Middle East, this path was not pursued. Nor has it been used to sustain Ukraine’s war-torn economy, although Kyiv did benefit from it a decade ago when Russia annexed Crimea and raised gas prices.
As well as removing the need for parliamentary oversight, the emergency funding process sidesteps the requirement for impact assessments of aid effectiveness.
Von der Leyen said that the new parliament formed after the EU elections will “fully participate” in providing Egypt with the remaining $4.3 billion in multilateral financial assistance, which will be disbursed when Cairo agrees to implement “more comprehensive” reforms.
The deal also includes a $1.9 billion investment plan and a $647 million loan, of which at least $217 million will be used for “migration management” in Egypt.
The fast-track funding will inject much-needed cash into Egypt’s economy, which has been battered by years of government austerity, the coronavirus pandemic, Russia’s full-scale invasion of Ukraine and, most recently, the fallout from Israel’s Hamas. Gaza war.
Typically, multilateral financial agreements are aimed at governments whose economies are in serious economic distress and are intended to encourage them to implement reforms. However, the committee acknowledged that Egypt has been “slow” in policy revision and already has a “backlog of domestic reforms” that need to be addressed.
Migration is a key factor driving the EU-Egypt deal. As in previous years, this will be an electoral issue for the EU, with mainstream parties hoping to reduce arrivals to deprive the far right of campaigning momentum.
Cairo’s deal comes just weeks after signing a deal with Mauritania on funds to help the country strengthen border security. Mauritania is a major transit hub for people traveling through Africa to Europe.
In July last year, the EU reached a more substantive deal with Tunisia that expanded on a model the bloc developed with Turkey in 2015 to stem the flow of migrants into Europe.
While Egypt’s coast is not a key departure point for traffickers ferrying crowded boats across the Mediterranean to Europe, Egypt faces migrant pressure from the region and the looming threat that the Israel-Hamas war could spill over to Egypt’s borders.
When asked by The Associated Press what conditions Egypt should adhere to in order to receive emergency funds, the committee said “relevant and feasible reform priorities need to be selected taking into account corresponding time frames.”
The committee’s website states that macro-financial assistance must be “of a special nature” and that “prerequisites for the granting of multilateral financial assistance are respect for human rights and effective democratic institutions.”
Amnesty International implored the EU to put human rights abuses at the center of its relationship with Egypt, with the commission acknowledging that “human rights challenges in Egypt remain serious”.
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Nonetheless, the EU executive maintained that “Egypt’s political leadership has taken a number of measures in recent years to place greater emphasis on the importance of respecting human rights.”
Earlier this month, Egypt floated its currency and announced a deal with the International Monetary Fund to increase its bailout loan from $3 billion to $8 billion to support the economy. an economy It has been hit by a severe shortage of foreign currency and soaring inflation.
Cairo’s coffers will also be replenished with $35 billion through a massive project jointly developed by an Emirati consortium in the Mediterranean city of Ras Hekma.
Since taking power in 2013, Egyptian President Abdel Fattah el-Sisi has relied heavily on Gulf Arab states, with more than $100 billion estimated to have flowed into Egypt through central bank deposits, fuel aid and other support.