Egyptian Finance Minister Mohamed Maait said on Sunday that Egypt’s $24 billion sale of Mediterranean resort real estate to Abu Dhabi, plus a $20 billion “support package” from the International Monetary Fund (IMF), will balance the national budget despite the painful loss of Suez Canal revenue due to relentless attacks in the Red Sea by the Iran-backed Houthi terrorists of Yemen.
“The positive part is the Ras al-Hikma deal, a not-small portion of which will enter the general budget in pounds. The total deficit will be less than targeted because of Ras al-Hikma,” Maait told reporters on Sunday.
Ras al-Hikma is a coastal Egyptian city that will be developed into a major vacation destination — a “fully functional urban community and not just a beach resort,” as Egyptian Prime Minister Mostafa Madbouly put it in February — with a total price tag of $150 billion. Work on the extensive construction project is scheduled to begin in 2025.
Egypt sold the development rights to Ras al-Hikma to a consortium from the United Arab Emirates (UAE) for $24 billion, plus a 35-percent stake in the development. $10 billion from the sale has already been deposited in Egypt’s central bank, with the rest due by May.
Ras al-Hikma is the largest development project, and biggest land sale, in Egypt’s history. The proceeds were large enough to significantly strengthen the Egyptian pound against the U.S. dollar, which was a condition the IMF set for its $20 billion financial support package.
The huge influx of foreign currency into Egypt’s coffers will also make imports flow more smoothly, especially Egypt’s hefty imports of food, which will have the politically fortunate side effect of making food cheaper just before the Ramadan holiday season.
Egypt has been so desperate for foreign currency that a huge black market developed for currency trades. The government response was a stringent crackdown that infuriated Egyptian citizens, who complained of vigorous police searches (and seizures) whenever they made cash withdrawals from banks.
The Suez Canal has long been a major source of revenue for Egypt, but with Iran’s Houthi terrorist proxies attacking cargo ships and tankers in the Red Sea, canal revenues fell by almost 50 percent in 2024.
A view of the oil tanker Marlin Luanda on fire after an attack in the Gulf of Aden on January 27, 2024. (Indian Navy via AP)
Egyptian President Abdel Fatah el-Sisi said in February that the loss of Suez Canal income was especially painful for an economy that was only just recovering from the Wuhan coronavirus pandemic and is still reeling from the Russian invasion of Ukraine.
In his press conference on Sunday, Finance Minister Maait cited the Red Sea crisis as a major reason for Egypt’s finances being in such disarray, combined with higher interest rates paid on its national debts.
Egypt raised Suez Canal fees by about 15 percent to compensate for lost traffic, but it could do little more to alleviate terror in the Red Sea because the Houthis are attacking ships in the name of the Palestinians. Sisi’s government feared the diplomatic fallout from taking actions that would be perceived as harming the Palestinian cause and was perhaps even more nervous about a flood of Palestinian refugees pouring in from Gaza.
Selling off a huge tract of prime oceanfront real estate was Egypt’s only means of securing billions in much-needed foreign currency. The plan has not been greeted with enthusiasm by the roughly 10,000 Bedouin tribal residents of Ras al-Hikma, who complain they have not been compensated fairly for the loss of their homes to foreign developers.
Middle East Eye (MEE) found the locals circulating bitterly sarcastic social media memes about their imminent eviction by rich Emirati developers, including some mockery of other Egyptians for assuming they can get as rich as oil sheiks by selling off the olive and fig farms that currently blanket the Ras al-Hikma area.
One elderly farmer sadly pointed out that the olive trees in his venerable family plantation are actually older than the United Arab Emirates.
“No amount of money is worth the history and pride of my family, but if we are forced, we expect to be compensated fairly, at least enough to continue our profession,” the olive farmer said.
MEE pointed out that the Egyptian government has kept details of the Emirati deal secret, including the compensation that will be offered to the people currently living in Ras al-Hikma.
