Egypt stands at a crossroads as it navigates a complex web of geopolitical and economic challenges in the wake of a proposed plan by former U.S. President Donald Trump to displace Palestinians from Gaza to Egypt and Jordan. As the fifth-largest recipient of U.S. foreign aid in 2023, receiving $1.45 billion—85 percent of which is earmarked for the military sector—Egypt's current administration heavily relies on foreign support for its survival. Yet, the potential expulsion of Palestinians carries significant risks, threatening to destabilize internal political peace and further complicate Egypt’s already strained economic situation.
The United States has been a longstanding ally of Egypt, providing over $85 billion in bilateral foreign aid since 1946, including both military and economic assistance. The strategic partnership underscores a statement by Hossam El-Hamalawy: “is a statement that Egypt is a close ally and is a partner for Washington.” However, Trump's proposal to "take over" the Gaza enclave has introduced new tensions into this alliance, with the U.S. threatening to freeze aid funds if Egypt refuses to cooperate with the displacement plan.
“If Trump persists, however, it could put Egypt in a difficult position,” – (unnamed person)
The economic implications of Trump's proposal are daunting for Egypt, which is already grappling with mounting debt and inflation. The country's economic woes make it challenging to fund efforts to rebuild Gaza, despite the Gulf countries' significant role in providing $650 million in humanitarian aid since October 2023. The cost of reconstructing Gaza, with its many destroyed buildings and infrastructure, will far exceed the aid provided thus far. Jacob Eriksson notes that “While any significant economic contribution to the reconstruction of Gaza is likely to prove difficult given aforementioned economic challenges, Egyptian officials … would undoubtedly continue to offer its services as a mediator and a political partner.”
“At a time when Egypt continues to face mounting economic challenges linked to debt and inflation, this could have a significant impact.” – (unnamed person)
Amidst these challenges, Egypt has been proactive in treating injured Palestinians in its hospitals since the start of the war and is expected to continue doing so in larger numbers once the crossing opens. Similarly, Jordan's King Abdullah has expressed willingness to take in 2,000 sick children from Gaza "right away." Abdallah Nasef suggests that “Egypt could, similar to Jordan, offer to take in injured individuals and their families, albeit at a larger rate and number than that proposed by Jordan.”
To address these pressing issues, Egypt is planning an emergency Arab summit on February 27 to discuss a "comprehensive vision for rebuilding Gaza while ensuring Palestinians remain on their land." This initiative reflects Egypt's commitment to working with international partners, including the U.S., toward a just settlement of the Palestinian issue. Furthermore, Egyptian construction companies are developing a reconstruction plan for Gaza that would involve collaboration with 40 to 50 companies from Egypt and other countries.
“a comprehensive vision for rebuilding Gaza while ensuring Palestinians remain on their land” – Egypt
Despite these efforts, Trump's Gaza displacement plan continues to pressure Arab countries to respond effectively. The proposal's complexity raises doubts about its feasibility. Jacob Eriksson remarks, “It’s hard to know how seriously to take Trump’s proposed US takeover of Gaza.” Meanwhile, Hossam El-Hamalawy speculates that “this plan will involve enlisting massive amounts of cash and finances from the Gulf … to speed up the reconstruction process for the Palestinians without displacing them.”
“Any drastic action could endanger important agreements” – Abdallah Nasef
Israel’s refusal to compensate Palestinians or contribute financially to repairing the damage inflicted on Gaza further exacerbates the situation. In light of these developments, Egypt has reaffirmed its commitment to collaborating with the U.S. to reach a fair resolution to the Palestinian issue.
