Egypt’s economy is grappling with rising debt, high inflation, and a depreciating currency, pushing the government to increasingly rely on investments from Gulf states that began in earnest in 2013. These investments, framed as solutions to economic stability, have deepened Egypt’s dependency while sparking concerns over sovereignty and exclusionary development. Megaprojects financed by Gulf resources, from luxury developments on the Mediterranean and Red Sea coasts to urban expansion in Cairo, have often displaced local communities, triggering public backlash. As Egypt deepens its reliance on these foreign initiatives, the sociopolitical and neocolonial implications of this strategy call for closer scrunity.
Egypt’s financial ties with Gulf countries surged after the 2013 military coup that brought Abdel Fattah el-Sisi to power. The United Arab Emirates, Saudi Arabia, and Kuwait immediately provided about $30 billion in central bank deposits and petroleum grants, offering crucial support for Cairo as it faced a severe economic crisis after the ousting of Mohamed Morsi. Under Sisi’s government, external debt reached more than $150 billion, driven by spending on megaprojects and weapons. In 2016, Egypt agreed on a loan from the International Monetary Fund (IMF), stepping away from aid toward foreign direct investment (FDI) as the solution for economic recovery. Under the IMF’s structural adjustment programs, Egypt worked toward creating a more investor-friendly environment. Gulf countries, particularly Saudi Arabia and the UAE, doubled down and immediately became major contributors to those FDI inflows, focusing on infrastructure, tourism, and real estate development.
While the transition diversified Egypt’s economic priorities, it also deepened dependency on short-term capital inflows, neglecting long-term, sustainable development. The country’s economy has become heavily reliant on Gulf investments, exacerbating existing vulnerabilities and failing to address systemic issues such as unemployment, inflation, and income inequality. Instead of fostering inclusive growth, Gulf-funded projects mainly prioritized elite, and upper-class, interests, further entrenching socio-economic disparities.
Gulf investments in Egypt have fueled significant public backlash, driving protests and social tensions. The 2016 protests against the transfer of the Tiran and Sanafir islands to Saudi Arabia were a significant moment, symbolizing concerns over national sovereignty and broader reliance on Gulf partnerships. In recent years, discontent has grown, particularly over players like the Saudi Egyptian Investment Company, Saudi Arabia’s Public Investment Fund, and Egypt’s General Authority for Investment and Free Zones. A number of large-scale projects underscore the scale of Gulf involvement: the transformation of Ras el-Hekma, a village on the Mediterranean coast into which an Abu Dhabi-based company invested $35 billion, into a luxury tourism hub that includes a UAE-managed airport; urbanization along the Red Sea coast; and large-scale infrastructure developments in Cairo. However, these initiatives often come at a significant human cost. Residents in areas like Ras el-Hekma and El-Gameel have faced forced evictions, often with inadequate compensation, leading to displacement and disruption of livelihoods. These actions have amplified public frustration with the government’s focus on urbanization that benefits foreign investors over its own citizens.
Gulf-backed urbanization projects in Cairo further illustrate the sociopolitical implications of this dependency. The Egyptian military, which controls large sectors of the economy, including real estate, serves as a key partner for Gulf investments. Projects like the New Administrative Capital, in which the military is a central player through its engineering authority, are developed with Emirati support, reflecting how Gulf investment backs the military’s role as an economic and political force. This also causes consolidation in the central government, sidelining local governance and excluding communities from decision-making processes, strengthening authoritarian governance.
The focus on luxury tourism and high-end real estate developments perpetuates an elite-centric growth model, leaving large parts of the population marginalized. The luxury projects along the coasts cater to wealthy tourists and the elites while ignoring the needs of ordinary Egyptians. Such developments exacerbate existing class divisions and reinforce socioeconomic exclusion, with few policies in place to address the structural challenges of poverty and inequality. If viewed through the lens of modern neocolonialism, these investments allow external factors to wield significant influence over Egypt’s development trajectory at the expense of sovereignty and self-reliance.
While Gulf investments provide temporary relief for Egypt’s economy, their long-term consequences show the urgency of addressing systemic challenges. These projects reinforce patterns of socioeconomic exclusion, prioritize elite-driven urbanization and luxury tourism while marginalizing large parts of society, exacerbating existing inequalities, and consolidating authoritarian power. This raises questions about Egypt’s sovereignty and the inclusivity of its development model. To secure a sustainable future, Egypt must prioritize internal reform and inclusive growth over short-term financial inflows.
Further reading:
- Opinion: Megaprojects Don’t Feed People
- Cairo Securized: Reconceiving Urban Justice and Social Resilience
- Cities under Siege: The New Military Urbanism
- Human Rights Watch: forced evictions in Egypt 2022