‘Egypt in the worst economic crisis in five decades’
Egyptian President Abdel Fattah el-Sissi refuses to take in Palestinian refugees, fearing that Israel wants to force a permanent expulsion of Palestinians and nullify Palestinian demands for statehood. The Egyptian leader also said a mass exodus would risk bringing militants into the Sinai Peninsula.
Already, over a million people have been displaced within Gaza, and the threat of the war's escalation looms with clashes along the Lebanon-Israel border between the Israeli military and Hezbollah militants.
“To presume that there won't be a movement of people is naïve and premature,” said Swift. “Any sudden blow to the el-Sissi regime from the outside, whether it's an economic blow, or whether it's the sudden migration of a lot of people out of Gaza into the Sinai could have destabilising effects.”
Swift said that while el-Sissi's regime is heavily dependent on US economic and military assistance, it's increasingly going to be popular opinion within Egypt that determines his actions, a lesson learned from the Arab Spring protests that brought down the Mubarak regime in 2011.
In April, the IMF concluded that Egypt's financing needs for the year were equal in size to 35 per cent of its gross domestic product. On Oct. 5, Moody's downgraded Egyptian debt that was already at junk status. The downgrade came as past efforts have failed to help Egypt's economy, which was saddled with about $160 billion in debt as of the end of last year.
Mirette F. Mabrouk, director of the Middle East Institute's Egypt Studies program, said, “Egypt is in the worst economic crisis I can remember in at least five decades” and that only complicates the current turmoil from the war.
“If you have this conflagration in Gaza, you need the rest of the region to be stable for everyone to take appropriate and correct action,” Mabrouk said. “You don't need more instability in a region that is already quite unstable.”
Mabrouk said one of the most immediate signs of increasing distress is that Egypt's central bank has in the past week imposed foreign currency restrictions on cards linked to local bank accounts.
One major potential setback for Egypt stemming from the latest Israel-Hamas War would be the loss of tourists seeking to explore the country's ancient pyramids and history. Tourism is one of Egypt's leading economic sectors, and along with foreign investment provides needed access to the rest of the global economy.