Author: Zhao Jiaxin, assistant researcher of Taihe think tank

Introduction: the conflict between Russia and Ukraine has exacerbated Egypt’s domestic difficulties and pushed up people’s discontent. The current domestic situation in Egypt is fraught with crisis, which may have an impact on Chinese enterprises in Egypt.

1、 Causes of domestic economic and livelihood crisis in Egypt

2、 The effect of the Egyptian government’s measures is limited, and the domestic situation is in danger

The Egyptian government is easing the crisis by issuing laws to control food prices and expanding the sources of foreign capital and food imports. However, the actual effect of these measures is very limited and may aggravate public discontent and trigger a new round of protests. On March 21, the Egyptian government announced a “price limit order” for non subsidized pancakes, and recently launched an investigation into businessmen who violated the “price limit order”. However, this behavior only shifts the economic pressure faced by the government downward. Instead of solving the food problem, it has been opposed because the crackdown measures are too severe. In addition, the Egyptian government announced in March that it would start negotiations with the International Monetary Fund (IMF) on a new round of loans. However, this debt driven growth model will further aggravate its economic burden, and its debt default risk will be more severe in the future. In order to meet the economic reform requirements of the IMF, the Egyptian government needs to further reduce food subsidies and other social expenditures, which will lead to the continued rise of the country’s already high poverty rate and exacerbate people’s concerns about food shortages.

At the same time, Gulf countries such as Saudi Arabia, the United Arab Emirates and Qatar successively announced to provide Egypt with a total amount of up to US $22 billion after the outbreak of the conflict between Russia and Ukraine, so as to make up for the vacancy caused by the withdrawal of foreign investors. However, in the view of the Egyptian people, these funds are mainly used to acquire some profitable hard assets, which can not provide new growth points for the economy, and will lead to the outflow of Egyptian assets, which will affect the national income. On the whole, the current domestic situation in Egypt is fraught with dangers. The forces opposed to Sisi may take the opportunity to incite and organize anti-government activities. If the Sisi government is careless or unexpected events occur, it is likely to lead to violent riots and even political unrest.

Given that China currently has a large number of projects and personnel in Egypt, and the domestic crisis in Egypt may damage our interests, Chinese enterprises in Egypt need to pay close attention to the development of the situation in Egypt and other countries in the Middle East, strengthen safety awareness and internal security measures to avoid impact.

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