EU to provide Egypt €7.4 billion funding package

World Sunday 17/March/2024 16:09 PM
By: DW
EU to provide Egypt €7.4 billion funding package

Brussels: The European Union (EU) will provide Egypt with a funding package of €7.4 billion ($8.06 billion) from 2024-2027, a senior European Commission official told several news agencies on Sunday.

The funding is intended to assist Egypt in stabilising its economy while reducing its dependence on Russian gas. It includes a grant to help address the flow of migrants from the region into Europe.

The deal includes €5 billion of macro-financial assistance, €1.8 billion of investments and €600 million in grants over the next three years to support Egypt's faltering economy.

European Commission President Ursula von der Leyen and several European prime ministers will meet Egypt's President Abdel Fattah el-Sissi in Cairo to sign the agreement.

The agreement is to form a "strategic partnership" aimed at boosting cooperation in renewable energy, trade, and security.

"Egypt is a critical country for Europe today and for the days to come", said the Commission official, who asked not to be named, and who pointed to Egypt's "important position in a very difficult neighbourhood, bordering Libya, Sudan and the Gaza Strip."

Egypt's economy, which is focused on expensive infrastructure mega-projects, has been hit hard by recent economic shocks.

The country is under political and economic pressure due to the ongoing conflict in Gaza. Fighting there has meant important income earners for Egypt, like tourism and shipping through the Suez Canal, have been throttled.

Earlier this month the  International Monetary Fund (IMF) agreed to an $8 billion loan package after Cairo implemented a flexible exchange rate and raised interest rates.

That followed an announcement in February by Egyptian leaders that the United Arab Emirates would be investing €32 billion directly into the Egyptian economy, mostly via a construction project at Ras al-Hikma, a Mediterranean peninsula near the city of Alexandria.

European governments have long been worried about the risk of instability in Egypt where economic adversity has pushed increasing numbers to migrate.

This is in addition to the 9 million migrants and refugees that the UN's International Organization for Migration has residing in the country.

The EU official said their deal includes steps on "security, counter-terrorism cooperation, and protection of borders, in particular the southern one" with Sudan.

It follows other controversial deals the EU has sealed in northern Africa, including Libya, Tunisia and Mauritania, to stem the flow of irregular migrants.

Italian Prime Minister Giorgia Meloni and Greek Prime Minister Kyriakos Mitsotakis, whose countries are front-line countries that receive the vast majority of migrants to Europe, were joining Von Der Leyen on her Cairo trip.

The Greek government is especially worried about the increasing arrivals of migrants of Egyptian origin.

The UN Refugee Agency has already registered more than 1,000 people arriving on Greece's southernmost island, Gavdos, and neighboring Crete, via a new refugee route from Tobruk in Libya towards Crete.

US-based Human Rights Watch criticised what it labeled "the EU's cash-for-migration-control approach" that it said "strengthens authoritarian rulers while betraying human rights defenders, journalists, lawyers and activists whose work involves great personal risk."