Potential Rafah raid adds to Egypt’s daunting challenges amid economic woes

Israel’s war in Gaza has brought significant challenges to Egypt with the nation already facing economic difficulties.

Attacks in solidarity with Gaza by Yemen’s Iran-backed Houthi rebels have affected Red Sea shipping and halved Egypt’s revenue from the Suez Canal in January compared with last year. Experts have warned that some of the challenges facing the country will reshape Egypt’s regional and economic policies. “In its entirety, the situation is not in Egypt’s favour,” a senior Egyptian official told The National.

“It’s possibly the worst direct result of the war for Egypt and that’s not just because of the slump in revenue from the canal. The attacks have created a new situation in the Red Sea that could repeat in the future.

“The Gaza war has shown the weakness of the cards held by Egypt … moreover, our economic situation leaves us with limited options and that, one way or another, determines our policies.”

Cairo has warned it will suspend a 44-year-old treaty if Israel begins a ground offensive in Rafah.

An Israeli incursion into Gaza’s southernmost city on the Egyptian border could send many displaced Palestinians into Egypt, an outcome Cairo believes would hurt the Palestinian cause and add a further hurdle to any future peace negotiations.

Egypt has in recent weeks strengthened its forces and increased reconnaissance flights and ground patrols in the area.

A member of Israel’s war cabinet, Benny Gantz, warned a ground offensive in Rafah would be launched if Hamas did not release its remaining hostages by the beginning of Ramadan.

With tensions mounting on its border amid an economic crisis, Egypt could also benefit – albeit not by design – from the Gaza war, which has prompted major donors to realise that action must be taken to avert an economic meltdown.

The International Monetary Fund says it is negotiating an extension of a $3 billion loan it agreed with Cairo in 2022 to help Egypt survive the crisis.

The EU is also preparing a multibillion-dollar rescue package.

“The Gaza war has in many ways eclipsed the economic crisis but did not make people completely forget about it,” said Middle East expert Michael Hanna of the International Crisis Group.

“It did overshadow the crisis but that can only go so far.

“There’s an opportunity for Egypt that’s rooted in its current vulnerability.

“The war has created a new dynamic in its favour and there’s a great deal of appreciation for Egypt’s vulnerability in the IMF, Washington and the

EU. The international community is talking about Egypt differently now, with hardly any mention of democracy or human rights.”

The war has also significantly raised Mr El Sisi’s international standing.

“The war has brought world leaders to Cairo,” said Ammar Ali Hassan, a prominent Egyptian sociologist and author.

“They’ve indirectly propped up the government at a time when millions are struggling because of the economy.

“They have also become reliant on Egypt to deliver aid to the Palestinians in Gaza.”