Egypt Faces Economic and Diplomatic Strain Amid Gaza Conflict

Economy Clara Montgomery October 4, 2024

Egypt Faces Economic and Diplomatic Strain Amid Gaza Conflict

The Gaza conflict, sparked by a Hamas attack on Israel in October 2023, has severely affected Egypt, straining its government and economy while renewing its role as a key mediator in regional diplomacy. Egypt faces economic challenges, including a significant cut in Suez Canal revenues and rising inflation, but also benefits from international financial support aimed at economic stabilization.

The recent conflict ignited by the Hamas-led attack on Israel on October 7, 2023, has significantly impacted not only the citizens of Gaza but also neighboring Egypt. The Egyptian government faces numerous challenges as it grapples with the repercussions of the ongoing war, which has kept its officials preoccupied and strained the nation’s economy, though some benefits have emerged from the situation. Diplomatically, the conflict has generated an influx of activity among international envoys, with multiple meetings and discussions occurring under the auspices of the Cairo-based Arab League. Despite the lack of tangible success in mediation efforts, Egypt has remained central to diplomatic negotiations. Said Sadek, a professor of peace studies and human rights at the Egypt-Japan University in Alexandria, remarked that Egypt plays a critical role as a moderator in Middle Eastern affairs: “In all the negotiations that took place later on between Hamas and Israel, they always needed a mediator, and it was Egypt and Qatar and the United States. And they all played a role in that and sometimes they succeeded and sometimes they failed.” Egypt’s intelligence chief, Abbas Kamel, along with U.S. Secretary of State Antony Blinken and Qatar’s foreign minister, Mohammed bin Abdulrahman bin Jassim al Thani, have devoted considerable time to mediating between the conflicting parties. Economically, the consequences of the Gaza conflict have been dire for Egypt. Analysts, including Paul Sullivan, a Washington-based Middle East expert, have pointed out that while the conflict exacerbates existing economic issues, it has also resulted in inflows from various international bodies aimed at stabilizing Egypt’s economy. Sullivan noted, “Egypt is being squeezed between many rocks and many hard places, with a few positive bits of light.” Nevertheless, both Sadek and Sullivan agree that the Egyptian economy has suffered notable setbacks due to the Gaza conflict. One of the most pressing issues is the dramatic decline in revenue from the Suez Canal, a critical income source for the Egyptian government. Sadek highlighted, “The (Houthis) in Yemen blocked safe navigation across the Red Sea, and that affected the Suez Canal that used to bring Egypt about $10 billion dollars. Now we are getting only $3 billion, so there is a big loss of 70%.” Moreover, Sullivan warned about potential natural gas shortages stemming from possible disruptions in Israeli gas exports to Egypt, which could necessitate importing gas at significantly elevated prices. The ramifications of the conflict extend to the daily lives of Egyptians. Price increases for petroleum and natural gas have occurred twice this year, with rises of up to 15% on each occasion. Inflation has escalated to 25%, a situation that analysts attribute largely to the war. Furthermore, tourism revenues have also diminished due to the conflict, with advisories from several Western nations cautioning their citizens against traveling to Egypt and the broader Middle East.

The Gaza conflict that commenced on October 7, 2023, following the Hamas-led attack on Israel, has not only caused devastation in Gaza but has also resulted in significant repercussions for Egypt, a neighboring country that has traditionally played a role as a mediator in such conflicts. The background of the Israel-Hamas tensions is deeply rooted in a long history of political strife, territorial disputes, and regional dynamics that often require external mediation. Egypt has been pivotal in various negotiations aimed at achieving peace and stability in the region, a role that has been amplified amidst the current crisis due to its geographic proximity and historical involvement in Middle Eastern diplomacy.

In summary, the ongoing Gaza conflict has placed considerable strains on Egypt, affecting both its diplomatic role and economic stability. The nation remains engaged in intensive mediation efforts, reflecting its importance as a regional mediator, yet faces significant financial challenges, including decreased Suez Canal revenues and rising inflation. While some international assistance offers a glimmer of hope, the overall impact on the Egyptian populace has been severe, necessitating ongoing attention and support from the global community.

Original Source: www.voanews.com