Cairo continued to warn Israel against a possible ground invasion in Rafah and secured major financial deals with IMF, EU and World Bank.

Egypt pursued high-level diplomacy to prevent attack on Gaza’s Rafah city. President Sisi 13 March met Dutch PM Mark Rutte, in subsequent press conference warned Israel against launching ground invasion in Rafah, said it would threaten lives of more than a million Palestinians; 15 March, said that Egypt was working to reach ceasefire in Gaza, increase aid and allow for displaced people to return home. While threat of immediate invasion of Rafah seems to have temporarily receded, despite Israel’s repeated warnings that it might soon happen, authorities continue to worry about potential consequences of all-out attack for domestic stability and Sinai, due to possible forced displacement of Palestinian refugees.

Major financial foreign deals helped stabilise economic outlook. PM Mostafa Madbouly 6 March unveiled a new deal with International Monetary Fund (IMF), which agreed to $8 billion loan, in return for floating currency, spending cuts and levelling playing field between public and private sector firms. Announcement took place on same day as authorities let Egyptian pound float, triggering devaluation of official exchange rate from around 30 to the dollar to around 50 to the dollar. European delegation led by Ursula von der Leyen 17 March visited capital Cairo, presented EU financial support package worth $7.4 billion to support country’s green and digital transitions, investment in various other areas and, most importantly, migration control. World Bank 18 March confirmed deblocking $6 billion lending package to support country. Ratings agency S&P next day upgraded Egypt outlook from stable to positive.

In other important developments. Egyptian Foreign Minister Sameh Shoukry 5 March met Somali Foreign Minister Ali Mohamed Omar in Cairo, re-affirmed Egypt’s support for Somalia’s stance against Ethiopia’s deal with Somaliland on red sea access. Shoukry 18 March met with U.S. Special Envoy to Sudan Tom Perriello in Cairo, highlighted country’s diplomatic efforts through neighbouring countries and other channels to promote de-escalation, secure sustainable ceasefire, and support Sudan’s unity.

Cairo continued to grapple with repercussions of Israel’s war on Gaza, reportedly preparing for refugee influx in case of ground offensive on Rafah; Cairo and UAE signed major investment deal, alleviating Egypt’s foreign currency shortage.

Egypt reportedly built security zone in Sinai anticipating refugee influx from Gaza. Responding to speculation that Egypt was ready to suspend peace treaty with Israel if latter launches ground offensive on Gaza’s southern city of Rafah, FM Sameh Shoukry 12 Feb said Cairo remained committed to agreement as long as Israel was, too. NGO Sinai for Human Rights 14 Feb said Egypt was building fortified buffer zone along border with Gaza to accommodate refugees in case of mass exodus from Gaza, while isolating them from rest of Sinai Peninsula. North Sinai governorate 17 Feb refuted report, claiming ongoing construction works were meant to create logistics zone to manage humanitarian aid. Meanwhile, efforts to broker truce in Gaza picked up pace. After Egypt, Israel, Qatar, and U.S. representatives met in French capital Paris, White House national security adviser Jake Sullivan 25 Feb said parties “came to an understanding” on basic contours of hostage deal and ceasefire; senior Hamas official 27 Feb however said “big gaps” remained on major issues, notably length of truce.

UAE signed agreement for largest foreign direct investment in Egypt’s history. Egypt 23 Feb announced mega-deal with United Arab Emirates sovereign wealth fund for development of real estate on Mediterranean coast; deal will bring in $35bn, virtually solving Egypt’s liquidity problems. International Monetary Fund Director Kristalina Georgieva 2 Feb said talks over new loan were in final stretch. Exchange rate devaluation likely to take place before IMF disburses first tranche of new loan.

Turkish president’s visit marked culmination of rapprochement between Cairo and Ankara. Turkish President Erdoğan 14 Feb met with President Sisi during first official visit to Egypt since 2012, marking further step in diplomatic reconciliation between two countries and offering opportunities for understandings on issues including East Mediterranean and Libya. Sisi expected to visit Türkiye in April.

Amid Gaza war, tensions between Egypt and Israel continued to rise; IMF held talks with Cairo to expand $3bn loan and potentially soften reform program. 

War in Gaza continued to strain Egypt-Israel relations. Israel’s request to occupy fourteen-kilometre-long buffer zone on Egypt’s border with Gaza, known as Philadephi Corridor, with a view to halting weapons smuggling route from Egypt into Gaza, ratcheted up tensions. Cairo, which currently patrols area, 22 Jan issued warning to Israel, saying any move to control Philadelphi Corridor would pose serious threat to bilateral relations. Israel Security Agency (Shin Bet) director Ronen Bar 29 Jan met with head of Egypt’s General Intelligence Directorate Abbas Kamel in Cairo to discuss tensions over control of Philadelphi Corridor. Meanwhile, security situation remained precarious along border with Gaza and Israel. Egyptian forces reported preventing drug smuggling attempt 15 Jan on Egyptian-Israeli border near Awja crossing, with six suspected smugglers arrested; Israeli army reported one soldier wounded same day in exchange of fire with armed individuals near Awja. Anonymous military source quoted next day by The New Arab website said they were not smugglers, but pro-Hamas militants attempting to infiltrate Gaza.

IMF showed readiness to expand loan amid economic impact of Gaza war. Insecurity in Red Sea impacted shipping traffic through Suez Canal. Osama Rabie, chairman of Suez Canal Authority, 11 Jan said traffic since 1 Jan had dropped by 40% compared to a year prior, inflicting damage to key source of foreign reserves. Drop in Suez Canal traffic also contributed to further weakening of Egyptian pound on black market. Egyptian media outlet Al Ahram 14 Jan reported exchange rate on black market had shot up to record high level of close to 60 pounds to the dollar. International Monetary Fund (IMF) confirmed readiness to help Cairo. Financial institution 11 Jan said increasing size of IMF loan to Egypt was “critical”, and delegation led by IMF Egypt Mission Chief Vladkova Hollar mid Jan travelled to Cairo to discuss $3bn loan and reform program.

Election authority announced President Sisi’s re-election by landslide in presidential vote; Cairo accelerated talks for new loan with IMF, and put forward three-step plan for ending war in Gaza.

President Sisi secured third consecutive term in power. Following presidential election held 10-12 Dec, National Elections Authority 18 Dec declared Sisi winner with 89.6% of votes, and turnout highest ever at 66.8%; Alongside threats and intimidation deployed by authorities to make sure voters turned out, Gaza war seems to have had mobilisation effect on voters, who have rallied behind Sisi’s public stance against threat of forced displacement of Gazans and narrative that he is able to provide security and stability to country surrounded by crises.

Govt accelerated talks for new loan with International Monetary Fund (IMF). IMF 7 Dec confirmed discussing with Egypt possible increase in loan that Cairo originally secured in 2022. News Agency Bloomberg 20 Dec reported IMF loan would be expanded from $3bn to $6bn; IMF expected to request depreciation of exchange rate as prerequisite to agreement.

Cairo continued to promote ceasefire in Gaza. Egypt maintained mediation efforts amid growing pressure from displaced Gazans crowding Rafah border area. Egyptian security sources 25 Dec said Hamas and allied Islamic Jihad rejected Egyptian proposal that they relinquish power in Gaza Strip in return for permanent ceasefire. Govt 28 Dec confirmed having put forward three-stage proposal to end conflict between Israel and Hamas in Gaza Strip. Meanwhile, security forces 16 Dec shot down drone near resort town of Dahab on Red Sea, highlighting security repercussions that Gaza war and Yemen’s Houthi rebels’ attacks on shipping have on Egypt; another “flying object” reportedly shot down 26 Dec off coast of Dahab.

GERD talks ended with failure. Water Resources Ministry 19 Dec said fourth round of direct talks between Egypt, Ethiopia and Sudan over Grand Ethiopian Renaissance Dam (GERD) ended without breakthrough.

Presidential election campaign kicked off, with President Sisi set to win third term in December; Cairo allowed entry of several groups of wounded Palestinians and dual nationals from Gaza Strip.

Sisi bound for re-election having sidelined all serious contenders. Election authority 8 Nov announced final four candidates in 10-12 Dec presidential election, and electoral campaign started 9 Nov. Amid ongoing restrictions on free speech, Sisi’s re-election for third term is virtually guaranteed even as country grapples with record inflation and massive debt. Prominent presidential hopeful Ahmed Tantawi, who in Oct withdrew his presidential bid after failing to gather necessary endorsements to run, 28 Nov faced trial on charges of “circulating election-related papers without official authorisation”.

Some wounded Palestinians and foreign passport holders left Gaza Strip for Egypt. Cairo 1 Nov for first time allowed 76 wounded Palestinians and 335 dual nationals stranded in Gaza Strip to pass through Rafah border crossing. Evacuations in following weeks continued at slow pace amid difficult security situation, and truck carrying fuel 15 Nov crossed from Egypt into Gaza for first time since start of Israel’s war with Hamas. Pause in fighting between Israel and Hamas 24-30 Nov allowed larger amounts of fuel and humanitarian aid to reach Gaza (see Israel/Palestine). Foreign ministry 14 Nov once again rejected Israeli Finance Minister Bezalel Smotrich’s suggestion that Palestinians leave Gaza, slamming it as “irresponsible” and violation of international law.

International donors offered fresh support amid new pressures arising from Gaza. With war in Gaza putting new strain on Egypt’s economy, notably threatening tourism industry and natural gas imports, ratings agency Fitch 3 Nov downgraded Egypt’s sovereign rating from B to B-, while country’s main international partners appeared set to offer fresh credit. Cairo 14 Nov reported Qatar was ready to invest $1.5bn in Egypt’s industrial sector in 2024. EU Commission President Ursula von der Leyen 18 Nov visited Egypt, reportedly discussed possibility of enhanced partnership on migration and economic cooperation with Sisi.

Cairo engaged in mediation efforts to stop escalation of violence in Gaza Strip; President Sisi announced re-election bid.

Authorities took steps to stem fallout from Israel-Hamas war. Egyptian policeman 8 Oct killed two Israeli tourists and their Egyptian guide in Alexandria city one day after Hamas launched attack against Israel (see Israel/Palestine), fuelling fears in Cairo of possible “imitation effect”. As Israel in following days laid siege to Gaza Strip and launched airstrikes on enclave ahead of ground offensive, Sisi engaged in diplomatic efforts to pre-empt potential repercussions of Israel-Hamas war for Egypt, including mass influx of refugees from Gaza into Sinai Peninsula and reactivation of jihadist networks. Cairo 19 Oct announced agreement with Israel for humanitarian aid to enter Gaza Strip through Rafah border crossing, and some aid 21 Oct started flowing. Cairo 21 Oct also hosted peace summit to push for ceasefire, but conference ended without breakthrough.

Presidential hopeful forced to withdraw amid harassment by authorities. Sisi 2 Oct confirmed third term bid. Authorities continued to press ahead with organisation of presidential election in December, making it virtually impossible for opposition candidates to challenge incumbent. Prominent presidential hopeful, Ahmed Tantawi, 13 Oct said he had not reached 25,000 individual endorsements required to stand in election, after authorities deployed series of measures to block his supporters, including intimidation, arrests and hacking of phones. Tantawi’s withdrawal leaves only four candidates in presidential race, including Sisi.

Authorities displayed confidence that they can extract concessions from IMF. After authorities late Sept announced that International Monetary Fund (IMF) had accepted to merge first and second review of Egypt’s economic reform program, Bloomberg 13 Oct reported that Egypt is seeking to boost IMF loan from current $3bn to $5bn. Meanwhile, anti-govt demonstrations 3 Oct broke out in Marsa Matrouh town on Mediterranean coast amid deteriorating socio-economic conditions; police reportedly detained dozens of protesters.

Amid mounting economic hardship, authorities announced bringing presidential election forward to December.

Authorities set presidential vote for December. National Election Authority 25 Sept scheduled presidential election initially expected in 2024 for 10-12 December, with possible runoff to be held on 8-10 Jan 2024; move comes as Cairo faces mounting pressure from International Monetary Fund (IMF) to switch to flexible exchange rate and take other steps which could escalate tensions.

IMF once again delayed disbursement of loan funds. Amid Cairo’s lack of progress in meeting IMF’s terms for $3bn loan, IMF 17 Sept confirmed further postponement of first review of Egypt’s economic reform program and disbursement of second tranche of funds, originally scheduled for March 2023. Meanwhile, statistics agency 10 Sept said annual inflation rate hit new record high of 39.7% in Aug, with food and drinks prices rising by 71.9% over one year.

Repression of opposition continued unabated ahead of presidential election. NGO Egyptian Initiative for Personal Rights 26 Sept said security forces in recent weeks arrested around 73 campaign volunteers for opposition presidential candidate Ahmed Tantawi. Court 16 Sept sentenced opposition figure Hisham Kassem to six months in prison for slander, defamation and verbal assault on police officer; his political coalition, Free Current, next day announced boycotting presidential ballot in protest.

In other important developments. Explosion at air defence base in North Sinai 17 Sept killed seven soldiers; cause of blast – whether attack by Islamic State-affiliated militants or technical malfunction – remained unclear. U.S. administration mid-Sept reduced impact of human rights-related conditions on its military assistance to Egypt, withholding $85mn of $320mn conditioned on human rights; Senate Foreign Relations Committee chairman 30 Sept threatened to place hold on remaining $235mn.

Govt continued to shy away from fulfilling International Monetary Fund loan conditions, and President Sisi received timid recommendations from national dialogue.

Implementation of IMF reform program remained suspended. Govt continued to prioritise boosting country’s foreign currency liquidity over implementing politically-sensitive structural reforms negotiated with International Monetary Fund. Notably, in effort to boost foreign currency inflow, govt 14 Aug announced measures targeted at Egyptians abroad, including U.S. dollar pension plan and $5,000 fee to avoid military draft. Authorities 18 Aug extended acting Central Bank governor Hassan Abdalla’s term by another year, providing further sign of continuity in current approach.

National dialogue submitted conclusions. National Dialogue Board of Trustees mid-Aug submitted recommendations on number of topics to President Sisi; proposals however fall short of addressing pressing issues including plight of political detainees and exercise of political rights.

Tensions persisted with U.S. over human rights record, stance on Ukraine war. In joint letter, group of U.S. lawmakers 10 Aug urged President Biden’s administration to withhold $300mn conditional to human rights record out of annual $1.3bn in military assistance to Egypt, citing continuous repression of journalists, opposition officials and civil society activists; U.S. administration expected to release decision before 30 Sept. Meanwhile, U.S.-based daily newspaper The Wall Street Journal 11 Aug published article detailing Egypt’s reluctance to meet U.S. request to provide weapons to Ukraine, highlighting Cairo’s still warm relations with Moscow.

In other important developments. BRICS bloc of emerging economies 24 Aug invited Egypt and five other countries to join alliance. Egypt, Ethiopia and Sudan 27-28 Aug held direct talks on Grand Ethiopian Renaissance Dam (GERD) for first time in two years; talks ended without breakthrough (see Nile Waters).

Amid significant economic, social and political challenges, Cairo turned to foreign policy, restoring full diplomatic ties with Türkiye and agreeing to resume talks with Ethiopia on GERD.

Successful privatisation round not enough to quell Gulf and IMF wariness. PM Mustafa Madbouly 11 July announced Egypt had sold assets worth $1.9bn, including $1.65bn in foreign currency; Gulf investors played limited role, signalling continued wariness toward purchasing Egyptian assets. International Monetary Fund (IMF) 13 July welcomed sales as important step consistent with reform program, however reiterated call on Cairo to implement structural reforms to improve long-term economic sustainability.

Repression of critics continued to mar national dialogue initiative. National dialogue coordinator Diaa Rashwan 12 July announced that Board of Trustees would meet same day to finalise proposals before submitting them to President Sisi for approval. Journalist Khaled Dawood and human rights lawyers Ahmed Ragheb and Naged El-Bori, 18 July froze participation to dialogue to protest sentencing of researcher Patrick George Zaki to three years in prison on charges of “disseminating false news”. Board of Trustees same day urged Sisi not to enforce verdict, and Sisi 19 July pardoned Zaki.

Cairo restored full diplomatic relations with Türkyie, resumed talks with Ethiopia. Cairo and Ankara 4 July exchanged ambassadors for first time since 2013, with Cairo appointing Amr el-Hamamy as ambassador to Türkiye, and Salih Mutlu Sen becoming Türkiye’s ambassador to Egypt. Outstanding issues, such as stance on Libya and fate of Muslim Brotherhood leaders living in Türkiye, remained unresolved. Sisi and Ethiopian PM Abiy Ahmed 13 July met for first time since 2019, agreed to resume negotiations on Grand Ethiopian Renaissance Dam (GERD) with aim of reaching final deal on filling and operation of dam within four months (see Nile Waters). Egypt 13 July hosted leaders from Sudan’s neighbouring countries, announced initiative to end conflict (see Sudan).

In other important developments. In North Sinai, group of detainees 30 July reportedly seized weapons inside police facility in el-Arish city and killed four security forces, while wounding several others.

IMF continued to pressure Cairo to privatise state assets and allow flexibility in its currency; govt stiffened entry requirements for Sudanese refugees.

Divergence persisted between Egypt and IMF on economic reform program. International Monetary Fund (IMF) 11 June confirmed that review of Egypt’s economic reform program did not take place in March as initially planned due to slow pace of reforms and, as a result, second tranche of $3bn loan package was not disbursed. Central Bank of Egypt same day said annual inflation rate in May rose to 32.7%, from 30.6% in April, highlighting that prices have not yet declined since January devaluation. President Sisi 14 June signalled refusal to let Egyptian pound float and allow for further devaluation, citing impact on livelihoods. National dialogue proceeded with meetings three days a week.

Egyptian border guard shot three Israeli soldiers dead. Egyptian border guard 3 June entered Israel through Nitzana border crossing and fatally attacked three Israeli soldiers; assailant’s family denied allegations of religious radicalisation, but acknowledged his resentment toward Israel after Israeli forces reportedly killed one of his colleagues. Israel subsequently gave its soldiers authorisation to shoot at any suspicious Egyptian soldier; incident unlikely to undermine bilateral security cooperation, however.

Egypt, Türkiye moved forward with normalisation of relations. FM Sameh Shoukry 3 June travelled to Türkiye to attend Turkish President Erdoğan’s inauguration ceremony, days after Egyptian presidency announced that Sisi and Erdoğan had agreed to immediately exchange ambassadors as part of diplomatic relations upgrade.

Cairo stiffened entry requirements for Sudanese. As thousands of people fleeing fighting in Sudan remained stranded at Sudan-Egypt border with no valid travel documents, Cairo 10 June required all Sudanese to obtain electronic visas to enter Egypt, reversing longstanding visa exemption for women, children and elderly men.