Transcript [00:00] Hey everybody. So, I want to talk about [00:04] Egypt and we're going to talk about [00:06] Egypt by starting with a headline from [00:08] just a couple days ago. So, let's just [00:11] get right to it and uh we'll get into [00:14] what we're talking about. Exclusive [00:16] Egypt hesitates over joining Saudiled [00:20] maritime coalition in the Red Sea. So [00:25] before I read the article, um this is [00:28] this is published on August 4th. Saudi [00:30] Arabia formally announced a 14country [00:33] coalition to protect shipping in the Red [00:35] Sea. Turkey signed on, Pakistan Pakistan [00:38] signed on, Qatar and Jordan signed on, [00:41] and Egypt, the country that arguably has [00:44] the most to lose if the Red Sea shipping [00:47] is disrupted, is the one that is hanging [00:50] back and is hesitant about signing on. [00:53] So, let's take a look at this story and [00:54] then what we're going to do in the rest [00:55] of this video is we're going to talk [00:57] about the Egyptian situation ever since [01:00] October 7th and with all of these [01:02] conflicts going on, how it's affected [01:04] them and try to understand their [01:06] behavior. So, let's take a look. Egypt [01:08] expressed reservations about joining the [01:10] multinational maritime coalition [01:12] announced by Saudi Arabia despite [01:15] intensive Saudi efforts to persuade [01:17] Cairo. According to an informed Egyptian [01:19] source who told the New Arab, [01:23] the source said that officials from the [01:25] two countries, Saudi Arabia and Egypt, [01:28] held talks in recent days to discuss the [01:30] nature of the coalition, the objectives, [01:32] and [snorts] the mechanisms for [01:34] participation. However, Cairo informed [01:36] the Saudis that it will not participate [01:38] in military operations beyond its [01:40] borders unless they are directly linked [01:42] to its national security. Before we go [01:45] on, let me show you where Egypt is on [01:48] the map. [01:50] Let's take a look. Here we are. Here's [01:53] Egypt on the map. Okay? And this should [01:55] be pretty this is a pretty simple one to [01:58] understand. Here is the Babel Mand [02:01] strait down here. This is the This is [02:03] where the Houthis are disrupting [02:04] shipping. And here's Saudi Arabia. And [02:07] here's Egypt right here. And Egypt has [02:10] the Suez Canal that passes through here. [02:13] Right here is the Suez Canal, which so [02:15] that means that shipping can come up the [02:19] Red Sea and out to the Mediterranean to [02:21] Europe. And what this means in terms of [02:23] energy is that the the uh the Saudi East [02:28] West pipeline which comes out at Yanbu [02:30] right here can ship oil can ship uh [02:33] crude oil up through the Suez Canal to [02:36] Europe or down and out uh to the to the [02:39] east. So this is a this is a major [02:41] shipping lane here. Um let's get back to [02:45] this. So you see obvious it's obvious on [02:46] the map why what's happening in the [02:49] Baband strait why what's happening in [02:52] the Middle East has such an effect on [02:53] Egypt. Let's get back to it. The source [02:56] said that Egypt's position is based on [02:58] quote a wellestablished doctrine end [03:01] quote of foreign policy to avoid being [03:04] entangled in external military [03:06] coalitions or operations that could [03:08] expand the scope of conflict in the [03:10] region. Other words, Saudi Arabia comes [03:12] to Egypt and says, "Hey, we're putting [03:13] together a coalition to stop all this [03:15] Houthi nonsense in Babel Mandev so we [03:17] can have clear shipping through the Red [03:18] Sea. You stand to lose more than pretty [03:21] much anybody. Join the coalition. Whole [03:23] bunch of other countries in the area [03:25] join Turkey, Qatar, others, Jordan." And [03:28] Egypt says, "No, no, no, no. We have a [03:30] long-standing a well-established [03:32] doctrine. We don't get involved in any [03:34] conflict in the region." Okay. The [03:35] source further said, "Cairo seeks [03:37] political and diplomatic solutions, [03:40] particularly given the current regional [03:42] complexities because Egyptian [03:43] authorities have channels of [03:45] communication and relations with all key [03:47] parties involved in the regional [03:49] conflict. You know, we're on all sides," [03:51] say the Egyptians. The source further [03:53] said, "Cairo seeks political and [03:55] diplomatic solutions, particularly given [03:58] the um I'm sorry. Oh, yeah, I already [04:00] read this. Good. The state-owned and [04:02] state affiliated media outlets in Egypt [04:04] on Monday, this is a couple days ago, [04:07] citing an informed source, reported that [04:09] Egypt's participation in a multinational [04:11] maritime coalition aimed at protecting [04:13] navigation through maritime routes and [04:16] securing global trade is still being [04:18] studied as part of a review of all [04:20] relevant legal and constitutional [04:23] aspects. We're we're looking into it. [04:25] The source added that this current [04:27] assessment is considering all legal and [04:29] constitutional dimensions to ensure that [04:31] any further step complies with the [04:33] Egyptian constitution and laws, [04:35] safeguards national interests, and [04:37] fulfills the relevant institutional [04:39] obligations. For his part, former [04:42] assistant foreign minister, Ambassador [04:44] Masum Marzuk said to the new Arab that [04:47] while the idea of a regional security [04:49] coalition is strategically sound, the [04:52] coalition requires greater clarity [04:53] regarding its objectives. the risks it [04:56] seeks to address and the specific roles [04:58] of each participating state. We want to [05:00] learn more about this idea. Uh hello, [05:02] it's to open the Baband Strait so you [05:06] can have shipping through the Suez [05:08] Canal. It's very strange. Why is Egypt [05:09] hesitating on this? [05:12] Remember the other parties involved [05:13] here. It's not like they're, you know, [05:16] they're they're so uh friendly to the [05:18] West. uh meaning that Egypt, you know, [05:20] might might be afraid of joining, you [05:22] know, like the more moderate Abraham [05:23] Accords type countries, even though they [05:25] already have have peace with Israel. [05:27] They don't want to be fighting the [05:28] Houthis. They're going in with the Turks [05:29] and the Qataris and the Saudis. What are [05:31] they afraid of? Marzuk, who previously [05:34] served as an officer in the Egyptian [05:35] armed forces, also said he had [05:37] repeatedly called in his writings for [05:40] the establishment of a re he he had [05:42] repeatedly called in his writings for [05:44] the establishment of a regional security [05:46] system in the Middle East to confront [05:48] the threats posed by the Israeli entity [05:50] as a present and future threat to all [05:52] countries in the region, not only the [05:54] Arab states. What on earth that has to [05:56] do with opening the Babandib Strait, I [05:58] do not know. He argued Cairo's presence [06:01] within the framework would enable it to [06:03] reshape its balance and understand its [06:05] mechanisms given Egypt's position as an [06:08] active influential regional player. The [06:10] Egyptian position comes as the region [06:11] experiences growing security tensions [06:14] with continuing concerns over the [06:16] expansion of maritime confrontations and [06:18] their impact on global trade and [06:20] shipping routes through the Red Sea and [06:21] Baba Mandde. There are also concerns [06:24] about the direct repercussions for the [06:26] Egyptian economy and Suez Canal [06:27] revenues. We'll get into that in detail [06:29] very soon. In recent years, Cairo has [06:32] pursued a foreign policy based on [06:34] avoiding direct military involvement in [06:36] regional crisis. That's correct. Egypt [06:39] always sits it out. While focusing on [06:41] diplomatic tools and strengthening [06:43] mediation roles in several files, [06:45] including Gaza, Libya, and Sudan. At the [06:49] same time, it has sought to maintain [06:50] balanced relations with different [06:52] regional powers. In other words, Egypt [06:54] always tries to play all sides of every [06:56] conflict. That's what that paragraph [06:58] means. Observers believe the Egyptian [07:01] reservations also reflect Cairo's desire [07:03] to avoid being drawn into open conflicts [07:06] amid a highly complex regional [07:08] environment, particularly as regional [07:11] polarization continues and international [07:14] interests overlap in the Red Sea and [07:16] strategic waterways. The position also [07:19] reflects Cairo's determination to [07:20] distinguish between its commitment to [07:23] security in the Red Sea, which [07:25] represents a direct strategic interest [07:27] and participation in combat oriented [07:30] coalitions that could widen the scope of [07:32] the brewing regional war. Last Thursday, [07:36] the Saudi Ministry of Defense announced [07:38] that 14 countries, including Egypt, [07:40] Turkey, Pakistan, Qatar, and Jordan had [07:42] issued a joint statement supporting a [07:44] proposal to establish a multinational [07:46] defensive maritime coalition aimed at [07:48] enhancing maritime security and [07:50] protecting international sea lanes. In a [07:53] statement, the ministry said the kingdom [07:54] hosted a meeting attended by chiefs of [07:57] staff, representatives of sisterly and [07:59] friendly countries and the delegation of [08:02] the European Union to the kingdom to [08:04] discuss the kingdom's initiative to [08:05] establish the multinational defensive [08:07] maritime coalition as part of efforts to [08:10] enhance maritime security, protect [08:12] international sea lanes, and address [08:14] threats targeting maritime navigation [08:16] and global trade. And this was [08:18] translated from the original Arabic. Um, [08:21] so they were part of the original [08:23] discussions, but now they're hesitating [08:24] on whether or not to join the coalition. [08:28] Okay, that's where we are on that. [08:32] Now, we can take the story off the stage [08:34] and let's just talk about what we saw [08:36] here. Um, [08:39] so that's the story as reported. an [08:41] Egyptian source telling a reporter on [08:43] the record, but not by name, that Cairo [08:46] won't send its military into operation [08:48] into operations beyond its own borders, [08:51] unless those operations are directly [08:53] tied to Egypt's own national security [08:55] and that officials are actively weighing [08:57] what this could do to Suez Canal revenue [09:00] before committing to anything. Now, if [09:02] you've watched this channel before, you [09:04] know that [09:07] the [09:10] you know there's there's always a tell [09:12] of what's actually going on, a pattern. [09:15] And I think with Egypt, it has to do [09:17] with their very tenuous economic [09:20] situation. I made a video a couple of [09:23] days ago where really yesterday I made a [09:26] video about the Turkish economy and how [09:29] it impacts uh the Turkish geopolitical [09:32] position and behavior. We're going to [09:34] kind of do the same thing with Egypt for [09:35] the rest of this video. Okay. [09:38] Um Egypt's a different case than Turkey [09:41] and I think the numbers will explain [09:42] why. So, first of all, if we look on the [09:46] map again, we see that Egypt uh has a [09:49] border with the Gaza Strip. That's [09:52] obvious, right? Egypt has that has that [09:54] border. And um you know once you you [09:58] know when you take that into account [10:02] um when you take into account the border [10:04] that Egypt has with Gaza, [10:06] you know you know that Egypt is is is [10:09] kind of walking on eggshells uh with you [10:12] know with everything going on uh you [10:14] know over there in the Gaza Strip. And [10:16] Egypt also has a border of course with [10:19] Sudan and Sudan has had this you know [10:21] this massive civil war going on and [10:23] there are Iranianbacked militias in this [10:25] area as well. So there's a lot of things [10:28] surrounding Egypt that complicate [10:29] matters for it. [10:32] Um but let's uh you know I digress a [10:35] little bit. So it Egypt shares the [10:37] border with Gaza. controls the Rafa [10:39] crossing, the border crossing into Gaza. [10:42] And it's also been serving the role of [10:44] mediator. A lot of the negotiations and [10:46] the mediation efforts about what to do [10:48] next with Gaza are taking place there. [10:50] And yet, compared to the rhetoric, the [10:53] anti-Israel rhetoric that you hear [10:54] coming out of Turkey or certainly coming [10:57] out of the Iranian regime, Egypt has [10:59] been kind of restrained, kind of [11:01] careful, very vague, seeming to play all [11:03] sides at once, rather committing hard to [11:06] one of the sides, which is exactly what [11:08] we just saw in this in this piece about [11:10] this Red Sea coalition. So, the question [11:12] I want to ask today is the same one we [11:14] asked about Turkey yesterday. What does [11:17] the economy of Egypt what's the story of [11:20] the economy of Egypt and what does it [11:21] tell us about their behavior? So let's [11:24] start with the same measure we used for [11:25] Turkey yesterday and that is Hanky's [11:28] misery index to remind you if you didn't [11:31] see the video about Turkey go to the [11:34] channel [11:36] after you watch this video or maybe even [11:37] pause this video now and then come back [11:39] to it but make sure that you watch the [11:40] video about Turkey. It's again, it's one [11:42] of the most recent videos on this [11:43] channel. And we talked about the misery [11:45] index. The misery index, it sounds like [11:47] a silly name or like a a sort of junk [11:49] stat, but it's actually a real economic [11:52] indicator. And what it is is it combines [11:54] inflation rate and unemployment rate and [11:58] like lending rates and and and and it's [12:01] all combined into a score. And it it's a [12:03] reflection he calls it the misery index [12:04] because it's a reflection of how bad [12:06] things are for the citizen for the [12:08] person living there because of high [12:11] unemployment high inflation. Those are [12:12] the key drivers. And he ranked 178 [12:16] countries from worst to best in 2025. [12:19] Turkey was third on the list. And that [12:21] was a big again go back and watch that [12:23] video and that might shock you to hear [12:24] that if you didn't watch yesterday's [12:26] video that Turkey is really is the third [12:28] worst on the list. um you know, one of [12:32] the most one of the worst. Egypt's [12:34] nowhere near that bad. It ranks 26th [12:36] most miserable. Now, that's still really [12:38] really bad. Okay, understand there there [12:40] we're talking about 178 countries. That [12:42] puts Egypt in the bottom like I don't [12:44] know 15% or so approximately. [snorts] [12:48] That's pretty bad. Um so that's real [12:51] economic pain, but it's not the kind of [12:53] collapse Turkeykey's dealing with. But [12:55] here's an important detail, a big [12:57] difference between between Turkey and [12:59] Egypt. Turkeykey's score, as we saw [13:02] yesterday, was mainly driven by its uh [13:06] its lending rate, right? That it's [13:08] borrowing money at a tremendous rate. Uh [13:11] and because the central bank of Turkey, [13:13] what what Turkeykey's going through [13:14] right now is that the central bank is [13:16] fighting hard to keep its currency from [13:19] crashing. So, it's taking all sorts of [13:20] artificial measures. Um and Egypt's [13:23] score, Egypt's misery score is driven [13:27] mainly by the unemployment number. And [13:31] so that mean so these these two [13:32] countries are experiencing they're both [13:35] experiencing economic crisis, but [13:37] they're not exactly the same. Again, [13:38] Turkeykey's problem is its currency. [13:40] Egypt mainly, I mean it's unemployment [13:43] also, but the currency is the is the [13:45] bigger problem. Egypt's central problem [13:47] right now is massive unemployment. That [13:50] said, Egypt has its own currency and [13:52] debt problems. They're just not the [13:53] biggest single driver of their misery [13:55] score. [13:56] Now, let's go to October 7th or let's go [14:00] to before October 7th because what we're [14:03] looking at is what is the impact of all [14:04] of this war from October 7th till today? [14:07] All of the things that's happened, what [14:08] impact have they had on Egypt's economy? [14:10] So, before October 7th, Egypt's economy [14:13] was already in big trouble. Before the [14:15] Hamas attack, Egypt was in the middle of [14:18] its own domestic financial crisis [14:19] unrelated to Israel. Gaza inflation had [14:22] already climbed past 32% by early 2023. [14:26] 32% inflation. That means just in case [14:29] you don't know, that means that on that [14:31] date, the pre a year earlier to then [14:34] there's a prices rise by a third on [14:38] everything. Okay? Foreign debt had [14:40] already passed $ 160 billion. Egypt was [14:44] short on foreign currency [14:46] and the government devalued the Egyptian [14:49] pound by more than a third, cutting its [14:52] value deliberately. [14:54] And that was because of a new loan [14:56] agreement with the International [14:58] Monetary Fund. Okay, this might be [14:59] getting a little in the weeds. Pause. [15:02] Take a deep breath. I will explain. The [15:04] International Monetary Fund pushed for [15:06] Egypt to devalue its currency because [15:09] Egypt had been artificially propping up [15:12] its currency. Uh [15:15] while there was also a black market rate [15:18] for the currency that reflected more its [15:20] real value. And so there was this gap [15:23] between the black market rate for [15:24] Egyptian pounds and the and what the [15:26] official value of it was that was being [15:28] propped up by government action. And [15:31] that scared off foreign investors and it [15:34] it encouraged people to hold dollars [15:36] instead of Egyptian pounds. By devaluing [15:39] their own currency, they closed the gap [15:41] between the fake propped up value and [15:45] the real value. [15:47] And and that made Egyptian exports [15:49] cheaper and more competitive abroad. And [15:51] that gave lenders a sense that the [15:54] government was finally willing to let [15:56] the currency reflect its real value. [15:58] Okay, if this is getting a little into [16:00] the weeds, just bear with me. Uh, it [16:03] it'll all make sense. I'm going to [16:04] explain everything. [16:06] Um, meaning if you saw the Turkey video, [16:09] what Turkeykey's central bank has been [16:10] doing, spending down like spending all [16:13] their foreign currency reserves, [16:15] billions and billions of dollars, and [16:17] selling off, you know, tons of gold in [16:19] order to prop up the currency [16:20] artificially. That's what Egypt kind of [16:23] was doing. And as we saw with the Turkey [16:26] uh video, that approach can work for a [16:29] while, but it's not sustainable. [16:32] Egypt chose to devalue its currency on [16:35] its own in it in a deliberate move [16:38] rather than artificially propping it up [16:40] so to allow the International Monetary [16:43] Fund to lend it more money. This is all [16:47] happening before the Gaza war started, [16:49] before October 7th. [16:53] So then then comes October 7th, the Gaza [16:55] war begins and this adds a a new shock [16:58] to Egypt's economy that was already [16:59] weak. [17:01] So what happened to Egypt's economy once [17:02] the war started? Three things mainly. If [17:05] you were lost a little bit in the [17:06] previous points, let's let's refocus [17:09] here. I'm going to go through three [17:11] major shocks to Egypt's economy, major [17:14] blows to Egypt's economy that happened [17:16] since October 7th. First is the Suez [17:18] Canal. So, I talked a few minutes ago [17:20] about how the Sewish Canal is huge for [17:23] Egypt. It's a shipping lane, but it's [17:26] also a massive massive piece of Egypt's [17:28] economy. The Egyptian government charges [17:30] every ship that transits the Suez Canal [17:33] a toll. You're allowed to charge tolls [17:35] in a in a in a man-made canal. The [17:37] Panama Canal also charges tolls. A [17:39] man-made waterway is not an [17:41] international waterway. You can charge [17:42] tolls. Okay? So, the Egyptian government [17:44] charges tolls through the Suez Canal. [17:47] That total revenue brought in about [17:49] $10.2 billion dollar in 2023, making it [17:53] one of Egypt's largest sources of [17:55] foreign currency. Okay? It's a big piece [17:57] of the Egyptian economy. Once the [17:59] Houthis started attacking Red Sea [18:02] shipping shortly after, you know, after [18:04] the war began after October 7th, the [18:06] Houthis uh were showing solidarity with [18:10] with Kamas [18:12] and they were disrupting shipping in in [18:14] Babel Mandeb. insurers and shipping [18:17] companies [18:19] uh lost confidence in that route for [18:21] obvious reasons and they started routing [18:23] vessels around the southern tip of [18:25] Africa instead. A much longer and more [18:27] expensive route but much safer. By 2024, [18:33] Suez Canal revenue had fallen from 10.2 [18:36] billion to 4 billion. [18:39] Okay, that's a 61% drop in [18:44] in one of Egypt's most reliable sources [18:46] of foreign currency in a single year. [18:49] President Cece has put Egypt's total [18:51] accumulated losses from the disruption [18:53] of Suez at around 10 billion [18:56] about 500 billion Egyptian pounds and he [18:59] described it as a direct hit to the [19:01] state's economic capacity. [19:10] Sorry, I just had to cough. Okay, let's [19:12] put the shipping disruption in [19:14] perspective. Now, [19:16] at the start of 2023, [19:18] around 12% of the world's oil shipments [19:21] were passing through the Suez Canal. [19:24] 12%. [19:25] By 2025, [19:28] that number was cut by more than half to [19:32] about 5%. [19:34] Okay, so you put it all together, [19:36] massive loss in revenue from the Suez [19:39] Canal. So that's the first thing that [19:40] happened to Egypt as a result of the war [19:42] after October 7th. The second hit to [19:45] their economy was tourism and gas. We'll [19:50] put those together. Tourism is a ma is [19:52] another huge source of foreign currency [19:55] for Egypt. Um, Egypt is Egypt, you know, [19:59] with the, you know, the pyramids and [20:00] and, you know, it's a massive tourist [20:03] destination and tourists cancel or [20:06] rebook trips really quickly. So, tourism [20:09] can can can vanish in a flash when when [20:13] there's any instability around. So, [20:14] Egypt also and Egypt also imports [20:18] natural gas from is from Israel. Israel [20:20] provides a lot of Egypt's [20:23] uh fuel needs and this arrangement [20:26] becomes a lot harder to maintain when [20:29] Israel's fighting a war in the region. [20:31] So the tourism revenue and the gas [20:34] supply were both disrupted in the war's [20:36] early months at a time when Egypt had [20:38] very little wiggle room to absorb these [20:41] losses. So you got the Suez Canal hit, [20:43] got the tourism dries up and then you [20:45] have disruptions in Israel providing [20:47] natural gas for a variety of reasons. [20:50] The third hit that that they took was [20:54] the debt and the currency situation. [20:56] That's why I put gas and tourism [20:58] together. They're easy to talk about. [21:00] The same kind of numbers we looked at [21:01] for Turkey. It's just structured a [21:03] little bit differently. Okay, so Egypt's [21:05] external debt is about $169 billion. [21:10] That's how much money they owe to other [21:11] countries. Okay, that's about 40% of [21:14] their GDP. Now on its own that's not an [21:16] alarming ratio of debt to GB of debt to [21:18] GDP. Plenty of stable economies carry [21:21] more than that. But the question is how [21:23] much cash flow do you have to pay, [21:25] right? And what kind of debt it is? This [21:27] is external debt owed in dollars and [21:30] other foreign currencies. It's not an [21:31] Egyptian pounds. Remember what we talked [21:33] about about the about the Turkish [21:34] currency falling. If your Egyptian pound [21:37] is losing value, [21:40] then your debt is basically expanding [21:43] because the currency that you're that [21:46] your own currency is just worth less. So [21:48] without doing anything, your debt is [21:49] rising. So a government that owes money [21:51] in its own currency [21:54] in a pinch you can print more of it or [21:56] lean on domestic banks to help cover the [21:58] bill. Egypt doesn't have that option. It [22:00] has to earn or borrow actual dollars to [22:03] pay this money. or they could buy [22:05] dollars, but that would just make it [22:07] even worse in terms of their currency, [22:09] [snorts] okay? And that's why the Suez [22:12] Canal and tourism, [22:16] okay, are huge, [22:19] huge [22:21] because this is that's foreign currency [22:23] coming into their economy. [22:27] So when the dollar inflows [22:30] dry up as they did after October 7th [22:33] that that debt load of 40% of GD uh 40% [22:37] of GDP which looked manageable got a lot [22:40] harder to service. So debt payments due [22:43] in 2026 alone are close to $29 billion. [22:47] Egypt's foreign currency reserves are [22:49] around $53 billion. [22:53] that that and that only covers about [22:55] five months of the country's imports. [22:57] The pound, the Egyptian pound has lost [22:59] 70% of its value since 2022 through a [23:03] series of devaluations. It's expected to [23:05] keep losing value this year through the [23:07] rest of this year. [23:10] And [23:12] you know, and that's and and that's [23:13] because it's it's now free floating, [23:16] meaning the it's the International [23:18] Monetary Fund is not allowing Egypt to [23:20] prop it up anymore. Anyway, so that's [23:23] what's happening to Egypt. Now, on top [23:25] of all of this, on top of all of these [23:28] economic problems that I just laid out, [23:30] Egypt also has absorbed somewhere around [23:34] 1.2 [23:36] million [23:38] refugees from Sudan's civil war since [23:41] 2023. That's right. While they have the [23:44] border closed, not allowing any anyone [23:46] in from Gaza, around 1.2 2 million new [23:50] arrivals from Sudan from that civil war [23:53] have come into Egypt. So that that has [23:56] caused a refugee problem, a housing cost [24:00] uh shock [24:02] and Egypt was already dealing with a [24:04] problem from the Ukraine war. Now why [24:05] would Egypt be dealing with a problem [24:07] from the Ukraine war? Well, Egypt [24:10] imports about 70% of its wheat [24:15] from Russia and Ukraine, and wheat [24:18] prices from Russia and Ukraine spiked [24:20] like crazy when that war happened. So, [24:23] here's what you got. You have Egypt that [24:25] the economy was already not on the [24:27] firmst foundation. It wasn't doing so [24:29] well. And then you have the Gaza thing. [24:31] You have the Sudin civil war. And you [24:33] have the Ukraine situation. in three [24:35] separate wars that all hit the Egyptian [24:38] economy in roughly the same time period. [24:43] Are you Are you with me? Let's stay [24:45] focused. We're almost done here. Now, a [24:47] rapid assessment from the United Nations [24:50] Development Program, the UNDP, [24:53] tried to model just the Gaza war piece [24:57] of this in isolation. [25:00] Okay? And they they ran [snorts] like [25:03] this study [25:04] uh you know like this projection and in [25:06] their medium scenario Egypt's GDP came [25:09] out about 2.6% below where it otherwise [25:12] would have been if not for the Gaza war [25:15] right unemployment projected to climb [25:18] from 7.8% to 9%. [25:22] So they have real drags on their economy [25:24] here and [25:29] now and that's all before I haven't even [25:31] mentioned the Iran war. I'm talking [25:33] about October 7th, Gaza, all that, [25:36] Ukraine and Sudan, all putting pressure [25:38] on the Egyptian economy. Which brings us [25:40] to 2026. [25:42] Egypt had not recovered from these [25:44] things. And then the US Israel strikes [25:48] on Iran in 2026 added a new shock to the [25:51] system. The oil price spikes. There's [25:53] more shipping disruptions. [25:57] Okay? And that puts even more pressure [25:59] on Egypt. [26:03] Now, [26:05] uh, Egypt's been borrowing money from [26:07] the IMF for a long time. Um, and they [26:11] also have they also, uh, received a this [26:14] this big loan or investment package from [26:16] the UAE [26:18] in early 2024, [26:20] which which was really a lifeline to [26:22] them. [26:25] Now, inflation was coming down a little [26:27] bit. The currency it like I said is [26:30] floating freely but Egypt is still the [26:33] fifth largest borrower in the world in [26:36] terms of borrowing money from the [26:37] international monetary fund and and that [26:40] is not a sustainable situation. Okay, [26:43] because they because their revenues are [26:45] so far down they can't repay these [26:46] loans. They're just borrowing more [26:48] money. Now let's connect this into the [26:49] geopolitics. That's the whole point of [26:51] this video [26:53] with Turkey. We made the following [26:55] argument that the anti-Israel rhetoric [26:58] is cheap, it's free, and Erdogan can [27:01] talk tough on Israel because it doesn't [27:02] cost his government anything [27:04] financially, while actual military [27:06] involvement would severely damage his [27:08] economy. And that's why in that video I [27:12] kind of said like, you know, with all of [27:13] the worry about the rise of Turkey, we [27:16] have to kind of take a deep breath and [27:17] realize that they're not about to take [27:18] any military action. They can't really [27:20] afford it. [27:22] Egypt's situation is actually very [27:24] different because Egypt um physically [27:30] borders Gaza. They officially have a [27:31] peace treaty with Israel. They can't, [27:34] you know, they're trying to play this [27:36] kind of mediator role. They need to have [27:37] good relationships with Israel because [27:39] they also buy Israeli natural gas in [27:42] large quantities. [27:44] So they have to be, [27:47] you know, they can't just spew [27:50] anti-Israel rhetoric [27:52] as, you know, as a way of, you know, and [27:55] saber rattling against Israel. They [27:57] can't just do that. So they have to [27:59] manage. And they also they also are [28:02] terrified of of Palestinians from Gaza [28:05] pouring over the border into Egypt. [28:08] Now, Egypt's revenue depends on the Suez [28:10] Canal running smoothly, on tourists [28:12] continuing to book trips and the [28:15] International Monetary Fund and Gulf [28:16] governments continuing to view Cairo as [28:19] reliable. That's the that's the picture [28:21] I'm painting here. So, Egypt can't [28:24] afford instability on its doorstep. [28:28] And you know, so the options that might [28:31] that might that we might want them to [28:33] take, the actions that that might seem [28:35] to make sense, I should say, politically [28:38] like opening the border to Gaz and [28:39] refugees or something that might make [28:42] sense, you know, that like maybe they [28:44] could take a I wouldn't suggest this, [28:46] but I'm saying it might make you might [28:48] think that, hey, why don't they just [28:49] take uh you know, go the Erdogan route [28:51] and start and start taking a harsh line [28:54] against Israel? [28:56] um you know and deflect attention from [28:59] their collapsing economy to that but it [29:01] would it would cost them way too much. [29:04] Um it's not it's that is those are not [29:07] moves that Egypt can take. So the [29:09] combination of pressures is why Egypt is [29:12] in this kind of they're always playing [29:15] all sides. They're always like the [29:16] mediator. They don't want to be [29:18] confrontational. [29:19] uh you know they want to stay relevant [29:21] in the diplomatic process and you know [29:25] and and and show the International [29:27] Monetary Fund and the Gulf States that [29:28] they're that they're reliable and [29:30] stable, [29:33] but they also want to keep the Suez [29:34] Canal open and they and they don't want [29:38] to commit their already strained economy [29:40] to a conflict that they can't afford to [29:42] be part of. [29:47] So that's the that's the state of that's [29:51] the state of play here. So if you're [29:52] trying to predict Egyptian behavior over [29:54] the next year, [29:56] um [29:59] how is how are they going to continue to [30:00] behave visa v Israel um as factions [30:05] develop within the within the various [30:07] Arab countries, Muslim countries, where [30:09] are they going to who are they going to [30:11] get closest to? [30:14] If we're trying to predict it, what [30:16] we're looking at is an economy that has [30:18] very little room for risk. [30:22] Which brings us all the way back to the [30:24] story that we started this video with. [30:26] The Red Sea Coalition that that Saudi [30:29] Arabia is putting together. Egypt [30:31] hesitating while Turkey, Pakistan, [30:33] Qatar, Jordan are signed on. [30:36] What's Egypt doing? [30:39] So joining a multinational military [30:42] coalition on the Red Sea means that [30:44] Egypt is now a participant in whatever [30:46] comes next out there, right? They're no [30:48] longer neutral. And the moment that [30:51] Egypt looks like a participant instead [30:53] of a neutral party, every ship that [30:56] might otherwise choose the Suez Canal [30:59] has to think twice [31:01] because there's not no shipping going [31:04] through the Suez Canal. But if Egypt's [31:05] involved in a war [31:07] and the Houthis start firing missiles at [31:10] Egypt, because Egypt's right nearby, [31:13] you know, the other countries in this [31:15] coalition, Pakistan, Qatar, Turkey, are [31:18] not as close. Jordan's close, [31:21] but Jordan doesn't stand as much to [31:23] lose. [31:27] Jordan also has US bases where it is and [31:29] has US air defenses there. [31:32] Egypt has to think twice. [31:35] Right. The Suez Canal's already lost 61% [31:38] of its revenue [31:40] and Egypt wasn't even in that war. So [31:43] Egypt has every financial incentive to [31:45] stay out of anything that could make [31:46] that even worse. [31:49] So, we're going to walk. What I'm [31:51] looking for going forward is [31:54] more of this same pattern of Egypt [31:56] trying to dance between the raindrops [31:59] and they're studying the coalition, but [32:01] they're not joining the coalition. And [32:02] they're they put out a statement in [32:04] support of the Saudi coalition, but [32:06] they're not committing any troops to the [32:07] coalition. And they're offering to [32:09] mediate, and they and they don't want to [32:10] send military support. This is just the [32:13] way they're behaving, and it's almost [32:16] the only thing they can do here. So [32:18] that's the Egyptian picture as I see it. [32:20] Uh they uh look they are what they are. [32:24] We have a peace treaty with them but [32:25] it's not really peace. It's really just [32:27] uh hush money to keep them in some level [32:31] of behaving themselves. Um there's a lot [32:34] more to say about Egypt. I've made a [32:36] number of videos in the past over the [32:38] last few years on the Israel 365 news [32:40] channel about Egypt. Uh but I thought it [32:42] was important to get back to this topic [32:44] now and uh and address it. Okay, that's [32:48] it for this one. Thanks for watching and [32:50] uh and we'll see you we'll see you on [32:52] the next video. Make sure you like, [32:53] subscribe, all that. Let me know what [32:55] you thought of this. I hope it made [32:56] sense. If you have questions, put them [32:57] in the comments and I'll try to address [32:58] them as well.
