Cash for Cairo

Dear readers,

Welcome to EU Politics Decoded where Benjamin Fox and Eleonora Vasques will bring you a round-up of the latest political news in Europe and beyond every Thursday. This week we look at how Egypt’s economic crisis is likely to drive an EU support package to cope with refugee flows from Gaza.

Editor’s Take:

On Wednesday (1 November), European Commission President Ursula von der Leyen welcomed the evacuation of EU citizens and other foreign nationals, as well as injured persons via the Rafah border crossing between Gaza and Egypt.

This is likely to be just the start of a refugee crisis with eerie similarities to the one that followed the Syrian civil war.

Egypt controls Gaza’s only non-Israeli border, which includes the Rafah crossing and its role in managing the fallout from the war was high on the agenda of last week’s EU summit. 

For the moment, the EU finds itself facing a diplomatic tug-of-war.

Ahead of the summit, Israeli Prime Minister Benjamin Netanyahu sought to convince European leaders to put pressure on Egypt to accept refugees from Gaza. That was rejected as unrealistic by most EU statesmen given that the Egyptian government has repeatedly rejected the idea. 

Egyptian President Abdel Fattah al-Sisi has stated that his country rejects “any attempt to liquidate the Palestinian issue by military means or through the forced displacement of Palestinians from their land, which would come at the expense of the countries of the region”. 

That said, the Rafah crossing and others are almost certain to see tens of thousands of refugees fleeing Gaza in the coming weeks, possibly many more.  

The Syrian civil war paved the way for the €6 billion ‘cash for migrants’ deal between the EU and Turkey. A similar agreement with al-Sisi is likely to be concluded in the coming weeks, though it will be closer in size to the €785 million migration control pact struck with Tunisia in July. 

Egypt’s economic crisis adds to the sense of urgency for an EU financial support package.

Ratings agency Moody’s downgraded Egyptian debt in October on the back of growing concerns about its debt affordability. The International Monetary Fund has warned that Egypt’s foreign exchange reserves will continue to tumble unless it devalues its currency, which has already lost half its value since March. Unemployment is cripplingly high.  

The EU has been quick to recognise that Egypt will need major financial and political support if it is to bear the brunt of a refugee crisis.

The IMF and World Bank have also signalled their willingness to provide economic support, while the United States is likely to unblock military aid which had been frozen because of human rights abuses by al-Sisi’s regime.  

Officials in Brussels have indicated that food imports, specifically Ukrainian grain, could be part of a broad package of economic support in exchange for Egypt controlling its borders in the event of a surge in migratory flows from Gaza. That is likely to be supplemented with direct budget support and finance for border controls and infrastructure projects. 

The prospect of Egypt’s economic collapse should focus minds. Without a buffer state, the likes of Greece, Malta and Italy could face a new wave of refugees and migrants crossing the Mediterranean Sea. With the European election campaign just a couple of months away, that would be a new nightmare for von der Leyen and other EU leaders.  

Capitals-in-brief

German trade unions lose patience with ministers over industrial subsidies. German trade unions are insisting on subsidies for energy-intensive industries in Germany, while the government and business representatives are split.

Experts in Poland call for enhanced care in chronic pain conditions. Poland’s strategies for managing chronic pain seem to be insufficient and the use of strong opioid analgesics for acute and chronic pain is significantly below the European average, health experts have noted, emphasising that more action is needed.

Journalist killings in Malta, Greece, Slovakia, Netherlands remain unsolved – report. Full justice has been achieved in fewer than 5% of murders of journalists since 1992, with four unsolved cases in the EU, the media freedom association the Committee to Protect Journalists (CPJ) found in its 2023 Global Impunity Index.

Kazakhstan welcomes Macron under Moscow’s disapproving gaze. French President Emmanuel Macron arrived in Kazakhstan on Wednesday (1 November) on the first leg of a trip to Central Asia, a region long regarded as Russia’s backyard which has drawn fresh Western attention since the war in Ukraine began.

Inside the institutions

Democracy is under threat around the world. Half of the world’s countries are suffering democratic decline, ranging from flawed elections to curtailed rights including freedoms of expression and assembly, an intergovernmental watchdog group said on Thursday (2 November).

EU squeezes Meta on personal data use for targeting ads. The European Data Protection Board said Wednesday (1 November) it had adopted a binding decision that will ban Facebook and Instagram owner Meta from using the personal data of users for targeted ads without their explicit consent.

France and Germany increasingly drift apart on digital sovereignty of cloud sector. The recent announcement of “a new, independent cloud for Europe” by Amazon Web Services (AWS) has underlined the growing divergence between the positions of Paris and Berlin regarding digital sovereignty in the cloud sector.

What we are reading

The EU must become an honest broker again in the Middle East, Caroline De Gruyter writes for EU Observer.

Trust us with AI, say the big tech titans. That’s what the banks said before the 2008 crisis, Larry Elliott writes for The Guardian.

China’s social contract has broken down, writes the Financial Times.

The next week in politics

Informal meeting of ministers responsible for space next week on Monday and Tuesday (6-7 November), Eurogroup on Wednesday (8 November), and Economic and Financial Affairs Council on Thursday and Friday (9-10 November).

Busy week at the European Parliament with committee and political groups meeting, together with a mini-plenary on Wednesday and Thursday (8-9 November).

Thanks for reading. If you’d like to contact us for leaks, tips or comments, drop us a line at benjamin.fox@euractiv.com / eleonora.vasques@euractiv.com or contact us on Twitter: @EleonorasVasques & @benfox83

[Edited by Zoran Radosavljevic]

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