Egypt hopes that the ceasefire will save the economy

One of the mediators that was really anxious to complete the ceasefire agreement, is Egypt. President Abdel Fattah al-Sisi built very expensive projects such as the new capital, knowing that the Suez Canal is a reliable source of 2% of GDP. However, in the shadow of Houthi attacks near the southern entrance to the Red Sea, Bab al-Mandav, the scope of the ships hBro in the canal last year dropped by 60%. The ceasefire gives Egyptian hope that the Houthi attacks will decrease, and shipping giants will return to pass through the area.

Cairo has been drowning in loans for years. It is the third largest lender from the International Monetary Fund, with loans amounting to approximately 8.6 billion dollars. For the sake of comparison, Ukraine, with all the consequences of the war with Russia, borrowed about 11.2 billion dollars. This does not prevent the al-Sisi administration from turning its full attention to the establishment of the new capital, whose budget is expected to total approximately 58 billion dollars.

dependent on Israeli gas

The year 2024 constituted a triple Egyptian challenge between the same internal development ambitions of the Egyptian president, and a war of iron swords on all its levels, and the local energy needs. Al-Sisi is already using the new capital, for example last month to convene a conference of leaders of Muslim countries, including Turkey and Iran. This is his way of presenting an image of abundance, even though his office admitted that they lost 7 billion dollars in revenue throughout 2024 due to the many ships that diverted their sailing routes to the Cape of Good Hope.

At the same time, there is a serious internal crisis in Egypt, with the lack of energy at its center. Daily power outages are recorded from summer to summer, and sometimes in other seasons as well, even though Egypt is a source of 2% of the world’s gas production. This is due to a number of factors, including the growth of Egypt’s population of more than 100 million citizens, global warming and problems with the gas infrastructure.

All of these led to a turning point in the field of natural gas in Egypt, from being a country that exports LNG (liquefied natural gas) in a similar wayTef, she was required to import one. According to the Reuters news agency, last summer Saudi Arabia and Libya agreed to purchase natural gas for it in the amount of at least 200 million dollars.

Throughout the war, the Egyptians joined the Arab countries in condemning Israel, but in practice, al-Sisi’s dependence on his most reliable natural gas supplier, Israel, is evident. Last weekend, the leading energy magazine MEES published that in 2024 Egypt’s total natural gas imports from Israel increased by 18% to a record of 981 million CFDs. Beyond that, imports in December alone were equal to an annual rate that amounts to 1.065 billion CFDs, i.e. the growth trend continues.

As a result, the end of the war is financially beneficial to Sisi in all arenas: he will be less required to explain why he imports so much gas from Israel, why Egypt has to deal with the consequences of the war like the Houthis, and how he spends a huge fortune on an impressive capital when many citizens do not have Electricity at home.

Dr. Ophir Winter, a senior researcher at the Institute for National Security Studies, points out that the dependence on natural gas is mutual: Egypt needs Israeli gas for domestic use, while Israel needs the Egyptian liquefaction facilities for export.

“The shared energy interest, which is also related to international companies and other countries, dictates a decision-making process that separates economic from political considerations. Therefore, the gas business between Israel and Egypt was almost unaffected throughout the war and plans to develop transmission infrastructure between the countries continue as usual,” explains Winter, who adds that ” Most of the criticism of the energy relations between the countries comes from exiled opposition elements, partly due to the relatively low profile in which The issue is being reviewed in Egypt.”

The tourism industry is at its peak

A field that was a beacon of light for the Egyptian economy during the war is tourism. According to Al-Arab Al-Jadid, Egypt enjoyed a record 15.7 million foreign tourists. In the first 11 months of the year, the state’s income from tourism grew by 7.8% to 14 billion dollars. The country that brought in the largest total revenue was Saudi Arabia ($1.5 billion), but other significant sources were Germany, England and Russia.

This helped Egypt reduce its deficit by about 15 billion dollars within a year, to 152.9 billion in June last year.

Last week it was evident that Cairo recognized an opportunity in the progressing talks for a ceasefire, and announced the completion of 90% of the construction of the Santa Catherine project in Sinai. The project, known as “The Revelation”, is intended to strengthen the connection between the place and the estimates according to which God revealed himself to Moses on Mount Sinai in the place – and thus to increase Crusader tourism in the place. The ambition in Cairo is that, thanks to the project, the number of foreign tourists will increase from 100,000 a year to one million.

“The timing of the announcement also reflects an Egyptian desire to launch the project ahead of the spring and summer tourism seasons,” concludes Dr. Winter. Marine or desert. In Egypt, they are considering a combination of the inauguration of the project with the events of the anniversary of the liberation of Sinai, on April 25.”