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Analysis: The EU's €7.4-billion bet on Egypt comes with high risks

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Analysis: The EU's €7.4-billion bet on Egypt comes with high risks

After Tunisia and Mauritania, the European Union has found a new “strategic” partner to curb irregular migration: Egypt.

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The European Union over the weekend signed a €7.4 billion “comprehensive partnership” with Egypt, a number well over the €700 million and €210 million deals respectively struck with Tunisia and Mauritania.

The logic behind the three deals is however the same: to inject fresh money to help stabilise a wobbly economy and curb flows of irregular migration. 

As European Commission President Ursuval von der Leyen said from Cairo, Egypt could not be avoided “given your political and economic weight, as well as your strategic location in a very troubled neighbourhood, the importance of our relations will only increase over time”. 

For Egypt, the need is particularly pressing: the country is in the midst of a devastating crisis caused by a perfect storm of high inflation, heavy debt, persistent trade deficit, rising interest rates and a shortage of foreign currency. The woes have been made considerably worse by Russia’s war on Ukraine, which disrupted global wheat markets and pushed food prices to record highs, and the Houthi attacks on the Suez Canal, which have partially deprived Cairo of $10 billion in annual revenues.

The spiralling turmoil led Egypt to request its fourth loan from the International Monetary Fund (IMF) since 2016 worth $8 billion (€7.3 billion). In exchange, the country has agreed to devalue its national currency, introduce a floating exchange rate, slow down its spending on infrastructure and preserve debt sustainability.

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The €7.4-billion deal with the EU also has a strong economic dimension: €5 billion in concessional loans to support Egypt’s macro-economic reforms and €1.8 billion in additional investments under the bloc’s neighbouring policy, to boost renewable energy and digital connectivity. On migration management, the agreement earmarks €200 million to crack down on human smuggling and trafficking as part of a wider package of €600 million in non-repayable grants.

At first glance, the €200-million envelope appears small in comparison, especially given that curbing irregular migration is a priority shared by all 27 member states, regardless of their political inclination, and that Egypt currently hosts over 500,000 refugees from nearby countries, mostly Sudan and Syria.

But Brussels sees things holistically: putting cash in one place can spill over into others. Under this thinking, boosting Egypt’s domestic economy can do as much – or perhaps even more – to control irregular migration than boosting actual border controls.

In the past few years, the EU has seen a dramatic rise in asylum applications by Egyptian nationals: from 6,616 in 2021 to 26,512 in 2023, according to the bloc’s asylum agency (EUAA). Most of these claims were registered in Italy (69%), followed by Greece at a distant second (9%). This helps explain why Prime Ministers Giorgia Meloni and Kyriakos Mitsotakis joined von der Leyen’s trip.

Notably, the marked increase in requests for international protection has not corresponded with a proportional increase in recognition rates. The EUAA estimates between 6 and 7% of these requests were successful, a very low number.

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“Egyptians who migrate abroad are understood to be influenced primarily by economic factors and the search for employment,” the agency said in a study published in 2022, to explain why most of these applications for international protection were rejected.

The findings note that Egyptians seeking to reach Europe do not depart from Egyptian shores, as maritime borders are carefully guarded. Instead, most travel to Lybia, and then attempt to cross the Mediterranean Sea. A minority opts to fly to Turkey and try to enter the bloc via Bulgaria or Greece. 

Additionally, the agency highlights Egypt’s position as a transit country for migrants coming from the Horn of Africa, who often rely on the same smugglers as Egyptians do.

‘Untied and undesignated’

The agency, however, points out two additional “push factors” that are driving the exodus of Egyptian nationals: the repression of human rights and the “security situation,” a reference to the anti-terrorism campaign in the Sinai peninsula.

Since the 2013 coup, Abdel Fattah al-Sisi, a former general, has strengthened his grip on power, expanded his presidential prerogatives and deepened the military’s role in civilian life, prompting accusations of clientelism, cronyism and corruption.

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As a result, organizations like Freedom House, Human Rights Watch and Amnesty International describe Egypt as an authoritarian country where freedom of expression and assembly are legally recognised but severely restricted in practice. Courts, media and the private sector are subservient to the state and discrimination against minorities, such as LGBTQ+ people, Coptic Christians, Shiites and people of colour, is widespread. The reported use of torture and forced disappearance against political critics and dissenters have equally caused international alarm.

During her press conference with al-Sisi, von der Leyen vowed to “promote democracy and human rights” but did not elaborate further.

A Commission spokesperson later said human rights have been part of EU-Egypt relations since the entry into force of the Association Agreement in 2004 and would continue to be so under the reinforced partnership.

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“There are many issues that need to be dealt with that require that we work with Egypt. We cannot pretend this country does not exist nor can we simply ignore it,” the spokesperson said, highlighting the work done to bring relief into the Gaza Strip.

The €5 billion in concessional loans will be disbursed under the agreement of “policy reforms,” the executive explained, but the ultimate use of this money, which will be wired straight into the Egyptian treasury, will be “untied and undesignated,” meaning the government will enjoy a comfortable margin of discretion for spending.

This big bet is flawed, says Claudio Francavilla, an associate director at Human Rights Watch, because it is overly focused on the fight against human trafficking and fails to address the rule-of-law decline that has contributed to the economic turmoil and pushed investors away from the country. Both the IMF and the EU statements spoke of the need to restore “confidence” to bring back foreign investment. 

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“The economic crisis in Egypt is very, very deeply intertwined with the human rights crisis,” Francavilla told Euronews.

“Egypt has pretty much a military authoritarian leadership that strangles every part of life in the country, including the economy, and through its repression has gotten rid that anything that resembles checks and balances on the power.”

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“If you don’t address those issues, you’re simply kicking the can down the road,” he added. “The next crisis is just around the corner.”

Sara Prestianni, director of advocacy at EuroMed Rights, a human rights network, called on the bloc to make a “clear” link between pay-outs and the rule of law. Otherwise, the partnership “risks being only a legitimisation of the authoritarian drift that characterises al-Sissi’s regimes today. So, all these types of reforms, all this cooperation, must be strictly linked to conditionalities of respect for fundamental rights of the rule of law.”

Even if the Egyptian economy were to find a stable footing and Egyptian citizens had fewer reasons to leave their home country, as Brussels hopes under the multi-billion plan, there would still be an unresolved question over the fate of the Sudanese people and other nationalities who have sought refuge in the country or transit through its territory.

The European pressure to decrease irregular departures could encourage the Egyptian authorities to double down on their “repressive tools,” warns Andrew Geddes, the director of the Migration Policy Centre at the European University Institute (EUI), leading to greater suffering for those feeling war-torn nations.

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“Asylum seekers in Egypt are very heavily reliant on humanitarian assistance, live in very bad conditions and have high unemployment levels. It’s unlikely that the resources provided by the EU will be directed by the Egyptian authorities to improve this situation,” Geddes told Euronews, calling the partnership a “transactional agreement.”

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“The situation for asylum-seekers and refugees in Egypt may deteriorate and, for those that do try to move, the journeys may become even more dangerous and deadly.”

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Trump Says Iran Has Agreed to Not Have a Nuclear Weapon

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Trump Says Iran Has Agreed to Not Have a Nuclear Weapon
June 3 (Reuters) – ⁠U.S. ⁠President ⁠Donald Trump said on Wednesday ‌that Iran ‌has ⁠agreed ⁠to not have a nuclear weapon and that Iran’s Ayatollah ⁠is involved ⁠in ⁠negotiations with the United States. “They’ve already agreed ⁠they’re not ⁠going to have a nuclear weapon,” ⁠Trump told a podcast …
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Trump expands Cuba sanctions beyond US companies in major crackdown on foreign enablers

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Trump expands Cuba sanctions beyond US companies in major crackdown on foreign enablers

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The Trump administration is rolling out what experts describe as the most significant expansion of U.S. sanctions on Cuba in decades.

The administration is attempting what supporters say is the first broad application of Cuba-related secondary sanctions against foreign firms, aiming not only at Havana itself but also at foreign companies and banks that continue doing business with the island’s military-linked economic empire. 

The new framework, established under an executive order signed by President Donald Trump May 1, applies pressure beyond U.S. companies for the first time, threatening foreign firms with sanctions exposure if they continue operating in key sectors of the Cuban economy linked to Grupo de Administración Empresarial S.A., or GAESA.

TRUMP ADMINISTRATION PRESSED TO CLOSE CUBA EMBARGO LOOPHOLE AS OIL SET TO RUN OUT WITHIN DAYS

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Supporters say the move closes a loophole that allowed foreign investors to sustain Cuba’s communist regime while the longstanding U.S. embargo largely restricted Americans.

Critics argue the measures risk worsening an already severe humanitarian crisis on the island without meaningfully weakening the government.

Demonstrators attempt to burn the Communist Party headquarters in Morón, Cuba, after authorities allegedly opened fire on protesters without warning. (Obtained by Fox News Digital)

“At the top of the month, what the Trump administration did was for the first time extend the application of U.S. sanctions from just prohibiting trade between U.S. firms and U.S. persons and the Cuban island to third-party countries and enablers,” Max Meizlish, a former Treasury Department official now serving as a research fellow at the Foundation for Defense of Democracies, told Fox News Digital in an interview.

“For the first time ever in a truly unprecedented fashion, that’s the same logic that the administration is now applying to Cuba,” he said.

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The sanctions focus heavily on GAESA, a sprawling military-linked conglomerate that analysts estimate controls between 40% and 70% of Cuba’s economy, including tourism, mining, retail, ports and financial services. 

A recent Foundation for Defense of Democracies report authored by Meizlish and Connor Pfeiffer argued that foreign companies doing business in Cuba are effectively helping sustain the regime’s military and political leadership.

TRUMP DECLARES NATIONAL EMERGENCY OVER CUBA, THREATENS TARIFFS ON NATIONS THAT SUPPLY OIL TO COMMUNIST REGIME

An image of Fidel and Raul Castro and Miguel Diaz-Canel, Cuba’s president and first secretary of the Communist Party, is displayed in a billboard in Havana, April 12, 2023. (Alexandre Meneghini/Reuters)

The State Department sanctioned GAESA and several affiliated entities in May under the new authorities, opening the door for potential penalties against foreign companies and financial institutions that continue dealings with them after a June 5 wind-down deadline.

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Meizlish argued previous sanctions regimes failed because they isolated American companies while allowing foreign actors to continue financing the Cuban state.

“There’s a lot of Spanish firms, for instance, that have invested millions of dollars in luxury hotel properties, villa properties in Cuba that partner with GAESA, all funding this military enterprise at the expense of the Cuban people,” he said.

He also pointed to Canadian involvement in Cuba’s nickel and cobalt sectors, saying foreign investment has generated “huge amounts of money for the regime.”

“A lot of people think about the U.S. embargo over the years is actually being responsible for a lot of the problems on the Cuban island, but they don’t give consideration to the fact that GAESA, this newly sanctioned entity, has been sitting on an estimated $20 billion in assets and cash over the year while depriving the people of Cuba,” Meizlish told Fox News Digital.

But critics of the policy warn the economic fallout could land the hardest on ordinary Cubans.

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William LeoGrande, a longtime Cuba expert at American University, said the May 1 measures represent a major escalation because they specifically target foreign businesses rather than just Americans and aim to deter foreign companies from doing business with GAESA by threatening sanctions exposure.

LeoGrande acknowledged the measures could deprive the Cuban government of revenue but argued the broader population is likely to suffer most.

CUBA’S ENTIRE ELECTRICAL GRID COLLAPSES, LEAVING WHOLE ISLAND WITHOUT POWER

A woman with her son signals a car on a dark street during a blackout in Bauta municipality, Artemisa province, Cuba, on March 18, 2024. (Yamil Lage/AFP via Getty Images)

“This would potentially deprive the Cuban government of funds, but the impact will fall mainly on ordinary citizens because it means the government has fewer resources to import food, medicine and fuel,” he said.

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The debate comes as Cuba faces its deepest economic and humanitarian crisis in years. 

The World Food Programme says food insecurity is worsening amid fuel shortages, inflation and declining access to imported goods, while U.N. officials have warned that electricity shortages and blackouts are disrupting hospitals, vaccination programs and food distribution networks across the island.

LeoGrande also warned tougher sanctions could contribute to another migration crisis.

NICARAGUA BLOCKS PATHWAY USED BY CUBAN MIGRANTS TO REACH THE US

Protesters take to the streets in Cuba over food and electricity shortages.  (Reuters)

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“Another unintended effect is that by making living conditions in Cuba even more desperate, tougher sanctions could trigger a mass migration like we saw in 1980 or 1994,” LeoGrande said.

On background, a U.S. official rejected arguments that American sanctions are responsible for Cuba’s humanitarian crisis.

“The suffering of the Cuban people is not caused by the U.S. embargo but by the Cuban dictatorship’s failed Communist policies and human rights violations,” the official told Fox News Digital. “The embargo does not prohibit Cuba’s access to world markets or trade with third countries.”

The official added that U.S. law explicitly permits exports of food, medicine and medical equipment to Cuba and accused the regime of hiding “billions in overseas bank accounts instead of investing in electricity, infrastructure and the daily needs of its people.”

The debate mirrors long-standing arguments surrounding U.S. sanctions on countries like Iran and Venezuela, where supporters view economic pressure as a tool to weaken authoritarian governments while critics argue regimes often survive and civilians absorb the economic damage.

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Meizlish argued sanctions should not be judged simply by whether they immediately topple governments.

“The problem isn’t that the embargo went too far,” he said. “It’s that it didn’t go far enough.”

Fox News Digital reached out to the Cuban Embassy in Washington for comment but did not receive a response by the time of publication.

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US House passes Iran war powers resolution in rare moment of Trump backlash

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US House passes Iran war powers resolution in rare moment of Trump backlash

The United States House of Representatives has passed a resolution to rein in President Donald Trump’s powers to attack Iran without congressional authorisation.

Four Republicans joined Democrats to pass the bill in a vote of 215 to 208 on Wednesday in Washington, DC.

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While the resolution is unlikely to become law, it represents a stark rebuke against Trump’s decision to join Israel in attacking Iran on February 28, launching an ongoing conflict that will reach its 100th day on Saturday.

Trump did not seek congressional approval for the war, which he has attempted to label as a “skirmish” or a “short-term excursion”.

The Republican leader’s repeated use of military force abroad has frustrated some leaders in Congress, a body which the Constitution solely imbued with the power to declare war.

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Wednesday’s vote marked the fourth time this year that the House has voted on a war powers resolution to force Trump to seek congressional backing for his military actions against Iran.

It is the first time, however, that the resolution has been successful in the House. Its passage comes after a political manoeuvre that some interpreted as a Republican effort to scuttle the bill.

A divide among Republicans

A vote on the war powers resolution was expected on May 21, the eve of Congress’s Memorial Day recess.

But the vote was cancelled, despite indications that the resolution would succeed with Republican support. House Speaker Mike Johnson, a Republican and close Trump ally, chose to adjourn the chamber early.

The resolution, however, was picked up again after the recess. In Wednesday’s vote, Tom Barrett of Michigan, Warren Davidson of Ohio, Brian Fitzpatrick of Pennsylvania and Thomas Massie of Kentucky splintered away from the Republican establishment to pass the bill.

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Massie, whose re-election bid Trump actively campaigned against, marked the occasion with a message on social media.

“The Iran War Powers Resolution that I cosponsored (opposing the war) just passed the House of Representatives,” Massie wrote. “The People’s House is sending a message: end this war.”

Massie will not be returning to Congress next year. He was defeated last month in his local Republican Party primary by a Trump-backed opponent, Ed Gallrein.

Barrett, whose House seat is vulnerable to a Democratic takeover in November’s midterms, explained his vote by arguing that Trump had exceeded his mandate.

“Congress has the exclusive authority under the Constitution to declare war and authorize the use of force. The War Powers Act of 1973 delegates some of that authority to the president for a limited period of time,” Barrett, an army veteran, wrote.

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“That authority has expired, and my support of this resolution tonight is consistent with my belief that it is time for Congress to decide the scope of the mission and the appropriate limits on the use of force in Iran.”

Democrats call on Senate to act

While Trump’s war on Iran has divided House Republicans, the chamber’s Democrats were unanimous in their backing of the war powers resolution. After the vote, several urged their colleagues in the Senate to swiftly pass the measure.

“We passed an Iran War Powers Resolution in the House to rein in Trump and end his unauthorized, reckless war,” Representative Ayanna Pressley, a progressive from Massachusetts, wrote on social media. “The Senate must immediately follow suit and act to end this war.”

Representative Shontel Brown of Ohio, meanwhile, underscored the constitutional issues raised by Trump’s war, as well as its cost.

“Congress holds the power to declare war—not the executive branch,” she said in a post. “After months of chaos, higher costs, and wasted resources, it is time to end Trump’s costly war in Iran NOW.”

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The war on Iran has been costly for the US, with the Pentagon estimating in May that $29bn had been spent so far.

Some analysts consider this an undercount, though. In April, a public finance expert at Harvard University projected that the price tag could soar to more than $1 trillion.

There are also concerns that the war has cost the US in terms of military preparedness.

The Center for Strategic and International Studies, a US-based research institute, issued a report in April warning that certain critical munitions have run low, with the number used outstripping the number of anticipated replacements.

They include Tomahawk missiles, Terminal High Altitude Area Defense systems (THAADs) and Precision Strike missiles (PrSMs).

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Public backlash growing

US voters broadly disapprove of the US-Israel war against Iran. A poll last month from the Marist Institute for Public Opinion found that 60 percent of US citizens disapprove of Trump’s approach to the war, a jump from 54 percent in March.

The increase was even seen among Republicans. While 15 percent disapproved of Trump’s handling of the war in March, the number has since increased to 22 percent.

Among US citizens overall, 61 percent found that the war had done “more harm than good”.

The growing disapproval reflects, in part, the economic backlash to the war, which has sent prices for fuel and other products like agricultural fertiliser skyrocketing.

The Trump administration has also faced criticism for the unprovoked nature of the February 28 attack, though the president and his allies have argued the war was necessary to prevent Iran from obtaining a nuclear weapon.

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More than 3,400 people have died in Iran during the war. At least 13 US soldiers have also been killed in the conflict, which spilled into nearby countries, with deaths reported across the region.

Wednesday’s House war powers resolution now proceeds to the Senate, which passed a similar bill in May.

But it faces an uphill battle overall, as Trump is likely to veto any attempt to curtail his military powers.

Only a bill passed with a two-thirds majority in both the House and Senate can overcome a presidential veto. So far, neither the Senate’s version, nor the House’s, has breached that threshold.

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