The real price of Egypt’s €7.4 billion agreement with the EU

The EU agreed last week to loan Egypt €7.4 billion in a cash-for-migration-control agreement with Cairo, after Brussels feared a migration wave arising from crises in Sudan and Gaza.

The funding pushes Egypt closer to the EU than ever before and gives President Abdel Fattah el-Sisi the incentive to implement even harsher policies towards migrants.

The EU claims the funding will help address Egypt’s long-term economic stability as well as mitigate the impacts of regional crises. But critics fear the funding will legitimise the regime’s actions towards refugees, in breach of international law.

“Security forces in Egypt carry out arbitrary and systematic raids against migrants, mostly based on racial profiling,” Rasmus Alenius Boserup, Executive Director at EuroMed Rights, told The New Arab.

“At border areas and inside the country, thousands are arrested and detained in different premises, from prisons to police stations, in inhumane conditions. After being detained, many are forcibly deported in contravention of international law.”

Egypt hosts an estimated 9-10 million refugees, with real numbers likely to be even higher following the Sudanese war, the Gaza crisis and the ongoing economic crisis in Syria. The nation itself has suffered a difficult few years and the majority of Egyptians have been pushed closer to the poverty line as food prices have risen around 50% in the past year. 

Since the outbreak last year of fighting in Sudan and the worsening of the economic crisis in Egypt, human rights groups claim the situation for refugees in Egypt has deteriorated further. 

“Especially since August 2023, hundreds of reports documented the systematic arrest of refugees and migrants, arbitrary detention, and forcible return campaigns carried out by the Egyptian authorities, especially against Sudanese,” Boserup said.

Effects on Egypt’s foreign policy

With the exception of the $6 billion agreement with Turkey at the height of the migrant crisis in 2016, the EU has never given nearly as much money to a partner state. The financial exchange transforms Sisi into a close ally of the union.

The significance of the agreement from an EU perspective was shown by the appearance last week of Ursula von der Leyen and Italian Prime Minister Georgia Meloni in Cairo, as well as the prime ministers of Poland, Austria, Cyprus and Greece. 

“The presence of six European leaders today shows how deeply we value our relationship. We share our strategic interests in stability and prosperity,” Von der Leyen told Sisi in a press conference.

But for Egypt, the funding is just one of a string of multi-billion pound transactions, meaning it will dilute the EU’s power to persuade Egypt to pursue meaningful political reform. In recent weeks the sovereign has received $50 billion of funding including a $35 billion investment from UAE investors in exchange for land, an $8 billion package from the IMF and $6 billion from the World Bank.

“Behind this deal, Egypt has a great amount of money to change its international situation, tackle poverty, rising inflation, but in general the EU deal will not change Egypt’s foreign policy,” Giuseppe Dentice, head of the MENA desk at the Centre for International Studies, told The New Arab. “It is a purely economic deal.”

Human rights concerns

President Sisi has had a bleak record on refugee treatment since his tenure officially began in 2014. Human rights groups are concerned the EU’s funding will validate his policies.

“In any cooperation with the Egyptian government, the EU should prioritise human rights and accountability benchmarks – also in its budget support – without blankly legitimising Sisi’s authoritarian rule, under which Egypt’s human rights situation has deteriorated steadily since 2014,” Boserup told TNA.

“When it comes to migration specifically, the EU maintains a wrongful and short-sighted approach to boost border management.”

The EU has been criticised for lending to authoritarian rulers like Sisi and Tunisian leader Kais Saied, in exchange for migration control and turning a blind eye to the policies the leaders implement. 

“The deal, like many others, offers no conditionality on human rights or political reforms,” Dentice said. “It is focused solely on Egypt’s economy as the EU wants to contain the economic situation in Egypt.”

If the EU continues to push its border policies onto third-country states like Egypt, there are concerns that migrants will face more deadly crossings.

“Externalisation agreements like the one between EU and Egypt have the effect of making migratory routes more dangerous and lethal,” Boserup said.

“With the humanitarian crises developing in Egypt’s neighbourhood, Egypt will be pressured to boost its border control capacity at the southern borders with Sudan, as well as the border with Libya – through which many Egyptians transited to take the sea from the eastern Libyan coast,” he added.

“The consequences of EU policies – and funding – aimed to enhance border management in third countries are always the same: migratory routes become more dangerous, people on the move encounter increasing risks – especially crossing the Sahara desert – and the number of deaths en route rises.”

Money talks

The EU said it stands ready to “secure long-term macro-economic stability and sustainable economic growth” in Egypt. Yet there are questions over the long-term effectiveness of lending to the IMF’s second largest debtor, without enforcing any meaningful reforms.

“For me, the new money is very positive for Egypt in the medium term,” Dentice said. “But in the long-term, without political and social reform, Egypt will continue to face the same problems.”

For the past few decades, Egypt’s economy has been defined by overspending by the state, budget deficits, overindebtedness and a reliance on third-party donors like the Gulf States, IMF and World Bank to prop up the economy.

President Sisi has again fallen into the trap of over-borrowing, plunging the nation into an economic crisis and needing a bailout from sponsors which will not fix the long-term debt problem.

While the loan from the EU will address short to medium-term debt repayment needs, the chance to turn around Egypt’s long-term economic prospects further shrinks as Egypt’s $164.73 billion external debt burden swells as new debt floods in and there is less incentive to tackle structural problems.

“Even with this large amount of money, I don’t see Egypt’s long-term transformation as there is no clear vision from its leadership,” Dentice said.

Lara Gibson is a Cairo-based journalist closely following Egypt’s economic and political developments.

Follow her on Twitter: @lar_gibson