One of the most important news that passed unnoticed as a result of the developments on the Ukrainian front, was the decision of Egypt to seek the assistance of the IMF (International Monetary Fund) to deal with the economic shock from the rise in raw material prices. This development has an invisible dimension to the EU’s strategic non-existence, even in its geopolitical “neighborhood”, where colossal interests are at stake, more than ever.
The announcement of Egypt for a new appeal to the IMF was made in Washington by the head of the IMF mission in Egypt, Celine Allar. It was preceded in November 2016 by a $ 12 billion loan for structural reforms and a drastic devaluation of the Egyptian pound. In 2020, a new $ 5.4 billion support program followed, when the Egyptian economy was derailed due to the coronavirus that hit tourism and aviation. The last installment was disbursed in June 2021.
As for the new support program, as clarified by Alar, Egypt is heavily dependent on imports of cereals and sunflower oil from Russia and Ukraine, while suffering from the spike in raw material prices. As a result, inflation in February reached 10% on an annual basis, as a result of rising food prices by 20%.
The problems facing the Egyptian economy will be faced by economies of even advanced western and non-western countries as a result of the same factors. The unrest caused by the war in Ukraine has come to stay and will test everyone’s endurance. The economy is becoming perhaps for the first time in history such a blatantly “weapon”. In addition to the effects on the economies, the effects remain to be ascertained as a whole, when the time comes to “check the cashier of every economy”.
That said, the EU’s strategic apathy for these developments in its geopolitical environment is striking. At the moment, they concern countries with a key role in the security architecture, which includes defense, security and the economy, especially energy security.
In 2021, Egypt boosted gas and LNG production by 550% ($ 3.9 billion compared to just $ 600 million in 2020). International analysts even point to Egypt’s advantages over Qatar as a key EU gas supplier. This is due to the close relations, the geographical neighborhood and the only country in the region with the possibility of liquefaction. It is, therefore, to be doubly amazed by the reflexes of Europe.
The EU has another reason to support Egypt: to tackle Algeria’s blackmail in Spain. Algiers recently threatened Madrid that it would stop supplying gas because Spain abandoned its policy of neutrality and sided with Morocco in the dispute between the two Arab states over Western Sahara!
It is recalled that Algeria is a strategic ally of Russia in the Mediterranean. Algerian gas is routed to the Iberian Peninsula via Morocco. The 1996 agreement has expired. Algiers wants to deprive Morocco of transit fees, but also to influence the policies of Spain and Portugal and consequently the EU on the issue of Western Sahara.
So maybe the time has come for European diplomacy to take the initiative for European financial support for Egypt. Egypt’s recourse to the IMF is a few billion euros, which is a small amount for the EU. European support would bring multiple benefits, both in terms of the Union’s foreign policy and in terms of energy.
The EU could pre-purchase Egyptian liquefied natural gas at competitive prices by paying in advance. The guarantees could also include the electricity that Egypt will supply to Greece and from there to Europe. According to international media reports, Egypt will soon have a very significant additional gas production! It is this fact that makes the proposal attractive.
Assuming that the Nile country is one that the Western world is eager to attract, EU support would be effective for two main reasons:
- The first is that the US supplies Europe with shale gas, so it is a competitor to Egypt.
- An increase in the supply of the good would de-escalate its price in international markets.
This would hurt the American interests, which have every reason to seek the greatest possible consideration for the protection they provide to Europe in the context of Euro-Atlanticism. But the EU’s interest is just the opposite, if it is to serve it. Even if for reasons of dependence on the US he eventually avoided moving, the EU, through Greece, would only benefit by raising the issue.
