Frank Vogl is the author of "The Enablers: How the West Supports Kleptocrats and Corruption—Endangering Our Democracy." He is the co-founder of Transparency International and the Partnership for Transparency Fund.
With famine looming in the devastation of Gaza, where Israel's military campaign continues, behind the scenes Egypt's leaders may be maneuvering to exploit the situation. Massive amounts of hard cash have suddenly fallen into the hands of President Abdel Fattah al-Sisi's regime. In recent days, his government has reached a series of agreements that collectively provide more than $50 billion of foreign currency to cash-strapped Egypt.
Under the former general who seized power in a 2013 coup, this is a government that has jailed thousands of critics, democracy advocates and journalists. It is a government that right now is attacking human rights activists in the northern Sinai Peninsula—the potential site, if Israel gets its way, of a massive new Palestinian refugee camp adjacent to the Rafah and Kerem Shalom crossings on the border of Gaza and Egypt.
There is no hard evidence yet linking the flood of money pouring into Egypt and the willingness of Sisi's regime to change its publicly stated policy and accept Palestinians forcibly displaced from Gaza. Back in October, Israeli media reported that the Israeli government had pushed for the World Bank to write off much of Egypt's foreign debt in exchange for Sisi hosting Palestinian refugees from Gaza. Various reports have cropped up since then suggesting similar proposals: essentially cash or debt cancellation to Egypt if it accepted mass Palestinian displacement.
More recently, there have been more hints and clues.
Massive amounts of hard cash have suddenly fallen into the hands of Sisi's regime, with agreements that collectively provide more than $50 billion of foreign currency to Egypt.
- Frank Vogl
Start with the map. Satellite images of the border area between Egypt and Gaza, analyzed by Amnesty International's Evidence Lab last month, "show the clearing of land and construction of a new wall" on the Egyptian side. The images back up a recent report by the Sinai Foundation for Human Rights, an Egyptian organization that focuses on Egypt's militarized northern Sinai, detailing the rapid construction by Egyptian authorities of a newly fortified area along on the border with Gaza and Israel. Based on witness accounts, photographs and videos, the Sinai Foundation reported that the construction of security posts and a new wall around approximately 15 kilometers of cleared agricultural land was "for the purpose of receiving refugees from Gaza in case of a collective displacement."
Sisi's regime responded with a smear campaign and threats against the Sinai Foundation and its Egyptian director, who is based in the United Kingdom.
Against this background, it is difficult to believe that the rush to provide Egypt with hard cash is all just a coincidence.
The International Monetary Fund, which for years has been discussing a $3 billion rescue package for an Egyptian economy in freefall, unexpectedly announced in early March that it had reached an agreement with Egypt on a much larger bailout of $8 billion. The official reason given by the IMF for this huge rise in funding is the increasing damage done to Egypt's economy by the war on its border, what the IMF euphemistically called "a more challenging external environment."
Many developing economies have faced acute debt problems in the last three years, from Sri Lanka to Zambia, but none has received anything like an $8 billion bailout from the IMF. The United States is by far the largest shareholder in the IMF, with a 16.5 percent share that effectively gives it veto power over the Fund, since major decisions need 85 percent approval. It would not be surprising, given the intense discussions taking place daily between Cairo and Washington over resolving the war in Gaza, if the U.S. pushed hard to secure this scale of IMF generosity.
Is the U.S. supporting vast payments to Sisi's regime in exchange for Egypt hosting Palestinian refugees from Gaza?
- Frank Vogl
And the IMF is not alone. The European Union is adding to Cairo's haul of foreign currency inflows with an aid package of approximately another $8 billion in grants and loans. The money will ostensibly boost the failing Egyptian economy and help the EU to prevent the movement of African migrants to Europe via Egypt. As the Financial Times reported: "The agreement includes support for Egypt's energy sector and assistance to deal with the rising number of Sudanese refugees in the country. It also pledges help to fortify Egypt's border with Libya, from where people are crossing the Mediterranean en route to Europe, according to several EU officials briefed on the matter."
Just before the IMF and the EU news, the United Arab Emirates announced that it was making an extraordinary $35 billion investment in Egypt to develop a prime stretch of state-owned land along the Mediterranean coast totaling 170 square kilometers. The deal with ADQ, one of Abu Dhabi's main sovereign wealth funds, is for a grandiose development of the Ras al-Hekma peninsula east of Marsa Matruh, which it aims to turn into a luxurious new international tourist hub. Normally, such investments are spread over many years as the infrastructure is slowly constructed. But not this time. About $15 billion has already been transferred to Egypt's Central Bank, according to reports, while the remaining $20 billion is to be transferred over the next two months.
This is hard to see as a strictly commercial investment deal, as ADQ is chaired by Sheikh Tahnoun bin Zayed al-Nahyan, an Emirati royal who is also the UAE's national security adviser and the brother of President Mohammed bin Zayed al-Nahyan. As one portfolio manager told Reuters, the deal showed that for the UAE, Egypt was "too big to fail."
The influx of billions of dollars into Sisi's regime comes as "the Egyptian authorities issued new legislation that will entrench and widen the already broad powers of the military over civilian life in a manner that undermines rights," according to Human Rights Watch. These new laws in February "grant sweeping new authority for the military to fully or partially replace certain functions of the police, civilian judiciary, and other civilian authorities and further expand the jurisdiction of military courts to prosecute civilians."
This is a regime that has squandered billions in public money on extravagant megaprojects, including a new administrative capital in the desert far outside Cairo. Businesses owned by the military have often won the contracts for these projects, and there has been little to no transparency or accountability for the staggering costs. Sisi's regime has repeatedly moved from one economic crisis to another, yet always found ways to secure bailouts from its Gulf benefactors. For the IMF, its $8 billion rescue package sends a message that the Fund will overlook both human rights abuses in Egypt and its own publicly stated anti-corruption policies.
Since the IMF could not make such a large deal without U.S. backing, it looks like another sign that Washington, once again, has prioritized the "strategic importance" of a close U.S.-Egypt relationship over concerns about democracy, human rights and corruption. But is it also a sign of the U.S. supporting vast payments to Sisi's regime in exchange for Egypt hosting Palestinian refugees from Gaza? Time will tell.
