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Egypt is in the eye of Trump’s Gaza storm

14 February 2025

 

Egypt finds itself on the frontline of international geopolitical developments, with US President Donald Trump’s suggestion in late January that the Gaza Strip’s population should be permanently relocated to Jordan, Egypt and other Arab countries to make way for the US to seize and redevelop the land.

“I’d like Egypt to take people, and I’d like Jordan to take people,” said Trump on 25 January.

He reiterated his position on 4 February, telling a press conference with visiting Israeli Prime Minister Benjamin Netanyahu that Gazans should be moved to a “beautiful area with homes and safety […] so that they can live out their lives in peace and harmony”.

The idea has attracted a wave of condemnation from political leaders around the world, with Egypt being as outspoken in its criticism.

Speaking on 29 January, President Abdel Fattah Al-Sisi said the proposed displacement of Palestinians “can never be tolerated or allowed because of its impact on Egyptian national security […]. The deportation or displacement of the Palestinian people is an injustice in which we cannot participate.”

Egypt’s Foreign Ministry then issued a statement on 5 February, following a meeting between Foreign Minister Badr Abdelatty and Palestinian Prime Minister Mohamad Mustafa in Cairo, in which it said Gaza should be rebuilt “without moving the Palestinians out of the Gaza Strip”.

Trump’s idea threatens to create fresh turmoil at a time when Qatar, Egypt and others have been trying to create a follow-up peace deal between Hamas and Israel, to take the place of the initial agreement that came into effect in January and is due to expire in late May.

Economic instability

The Gaza war has already created huge problems for Egypt, in both security and economic terms. Traffic through the Suez Canal plummeted by more than 75% in 2024, as a result of the attacks on shipping by Yemen’s Houthi forces in the Red Sea. 

In October, Al-Sisi said receipts from Suez traffic were just $870m in the second quarter of the year, compared to $2.54bn for the same period a year earlier. He said Egypt had lost $6bn-$7bn in revenues in the previous 10 months.

According to Alexander Perjessy, a senior credit officer at Moody’s Ratings, the fall in Suez Canal receipts was responsible for “shaving off more than a full percentage point from the overall GDP growth rate”.

The ratings agency expects growth of 4% this year, assuming regional conflicts do not worsen. Even if the neighbourhood remains calmer, growth is likely to remain below the pre-pandemic levels of close to 5% in 2015-19.

Others are predicting similar growth levels for this year. UK-based consultancy Oxford Economics expects the economy to grow by 3.9% in 2025 – in line with Saudi Arabia and just behind the UAE. Inflation should also come down to about 18% – still high, but much lower than the 28% estimated for 2024.

Political stability is crucial for Egypt to attract the support it needs from foreign investors. In late January, Cairo sold $2bn-worth of bonds. The issuance attracted almost $10bn-worth of orders, pointing to healthy levels of investor interest. However, financing costs are rising. Perjessy estimates that interest costs “will increase to about 60% of revenue in 2025, one of the highest levels of the sovereigns we rate.”

The Egyptian economy has been bolstered in recent times by some significant deals, including a major UAE investment in the $24bn Ras El-Hekma project that was announced in February 2024. Cairo also agreed an additional $5bn loan from the Washington-based IMF in March 2024, adding to an existing $3bn IMF package from December 2022.

However, the country’s difficult economic situation has prompted Al-Sisi to warn that the reform package agreed with IMF in return for the loans may have to be reviewed.

“The programme we have agreed upon with the fund … if this challenge will hurt public opinion, that people cannot bear it, we must re-evaluate our situation,” he told a health and human development conference in Cairo on 20 October.

Cairo’s aid cut carveout

Egypt has at least avoided the worst of the cuts to US international aid, which have affected almost every other recipient.

In one of his first acts after regaining the White House, Trump suspended foreign aid payments for 90 days. However, a leaked memo from the State Department said military aid to Egypt and Israel was exempted. Annually, Cairo receives about $1.3bn by this route.

A number of defence deals have also since moved ahead. On 4 February, the State Department approved a $625m programme to modernise the Egyptian Navy’s fast missile craft and a separate $304m sale of a long-range radar system.

Incoming US Secretary of State Marco Rubio has meanwhile offered some soothing words. In a phone call with Foreign Minister Abdelatty on 23 January, Rubio thanked his counterpart for Cairo’s Gaza mediation efforts and also touched on a matter of great importance to Egypt: control of the Nile River.

A State Department readout said that the two had discussed the importance of finding a diplomatic solution to the dispute, which has been prompted by Ethiopia’s building of the Grand Ethiopian Renaissance Dam. Cairo worries the hydroelectric plant will reduce downstream flows that are vital for its survival.

In mid-October, Egypt’s Prime Minister Mostafa Madbouly told a water conference in Cairo that the dam threatened the livelihoods of more than 1 million people and could lead to 15% of Egypt’s agricultural land being lost.

The geopolitical problems to the south of Egypt have been somewhat overshadowed by the Gaza crisis, but could yet rise in prominence and raise tensions in other regional countries too. In September, Egypt sent at least two arms shipments to the Somalian government, which is locked in its own dispute with Addis Ababa over the latter’s recognition of the breakaway region of Somaliland.

Even if the Gaza crisis is resolved, there will be plenty of geopolitical issues for officials in Cairo to worry about.

Image: Displaced Palestinians set up their tents next to the Egyptian border

MEED’s March special report on Egypt also includes:

> ECONOMY: Egypt’s economy gets its mojo back
> POWER & WATER: Egypt’s utility projects keep pace
> CONSTRUCTION: Coastal city scheme is a boon to Egypt construction

READ THE FEBRUARY MEED BUSINESS REVIEW

Trump unleashes tech opportunities; Doha achieves diplomatic prowess and economic resilience; GCC water developers eye uptick in award activity in 2025.

Published on 1 February 2025 and distributed to senior decision-makers in the region and around the world, the February MEED Business Review includes:

> WATER & WASTEWATER: Water projects require innovation
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Dominic Dudley

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    Saudi Arabia’s Public Investment Fund (PIF) has published its audited consolidated financial statements for the year ended 31 December 2025, the first full set of annual results to follow the board’s approval of the fund’s 2026-30 strategy.

    The results show a sharp improvement in profitability last year even as leverage rose and volatility in its listed equity holdings widened. The performance helps explain the strategic shift towards capital discipline and focus on private sector partnerships set out in April.

    In April, PIF’s board, chaired by Crown Prince Mohammed Bin Salman Al-Saud, approved a new five-year strategy structured around three portfolios, the Vision Portfolio, the Strategic Portfolio and the Financial Portfolio, and organised around six domestic ecosystems: tourism, travel and entertainment; urban development and liveability; advanced manufacturing and innovation; industrials and logistics; clean energy, water and renewables infrastructure; and Neom as a standalone ecosystem.

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    The strategy followed a period of reprioritisation across PIF’s gigaproject portfolio and set out a renewed emphasis on private capital, with PIF stating it would “further enable the role of the private sector as an effective partner for sustainable economic development”.

    PIF’s consolidated profit for 2025 rose to SR65.2bn ($17.4bn) in 2025, up 152% from SR25.8bn in 2024. The increase was driven by operating profit more than doubling, to SR78bn from SR34.7bn, as revenue growth outpaced cost of revenue and general and administrative expenses moderated relative to the prior year. Profit attributable to the owner of the fund rose to SR46.4bn, up from just SR1bn in 2024, a swing that accounts for most of the year-on-year improvement.

    Total revenue, comprising SR312bn of operating revenue and SR137.9bn of income from investment activities, rose 8.8% to SR449.9bn. Core operating revenue alone was up 9.9%, from SR284bn in 2024.

    Segment mix                                                     

    The segment breakdown shows where that growth came from, and it lines up closely with the six ecosystems named in the 2026-30 strategy. Banking and financial services remained the largest single revenue line at SR85.3bn, followed by telecommunications at SR76.8bn ($20.5bn), which was down slightly on 2024. Mining revenue rose 19.3% to SR38.8bn, consistent with the strategy’s focus on industrials and logistics, while revenue from electronic gaming and related services held broadly flat at SR15.6bn, an area PIF governor Yasir Al-Rumayyan specifically cited as a sector for strategic investment alongside artificial intelligence and renewable energy. Agricultural and livestock revenue nearly tripled, to SR7.6bn from SR2.5bn, and revenue from events operations rose to SR7.6bn from SR6bn, both pointing to the diversification into domestic ecosystems the strategy describes. Real estate operations revenue and revenue from advanced electronics and aerospace both declined slightly year-on-year.

    Total assets grew 5.1% to SR4.54tn from SR4.32tn, continuing the expansion PIF has reported since 2015, when the strategy document put assets under management at $150bn, against more than $900bn today. The two figures are not directly comparable, since the IFRS consolidated balance sheet captures the full assets of consolidated subsidiaries such as the fund’s banking, telecommunications and mining operations, while PIF’s publicly cited assets-under-management figure uses a different valuation methodology, but both point to the same order of scale.

    Total equity, by contrast, fell 2% to SR2.63tn ($701bn) from SR2.68tn, despite the sharp rise in reported profit. The gap is explained by other comprehensive income, which swung to a loss of SR113.3bn for the year, driven primarily by a SR112.8bn fair-value loss on equity instruments measured at fair value through other comprehensive income. In other words, unrealised mark-to-market losses on part of PIF’s listed equity portfolio outweighed the operating profit improvement, leaving total comprehensive income attributable to the owner of the fund at a loss of SR64.7bn for the year, though this was narrower than the SR154.4bn loss recorded in 2024.

    Total liabilities rose 16.7%, to SR1.91tn from SR1.64tn, driven mainly by loans and borrowings, which climbed 27.2% to SR725.3bn from SR570.4bn. Property, plant and equipment grew 6.3%, to SR429.6bn, reflecting continued capital spending across PIF’s real estate and gigaproject portfolio, including the stadium, hospitality and urban development programmes.

    Strategy context

    The scale of PIF’s investment activity in the run-up to 2025 is set out in the April strategy announcement rather than the financial statements themselves. Between 2021 and 2025, PIF says it invested more than $199bn in new projects in Saudi Arabia, contributed $243bn to real non-oil GDP and spent more than $157bn with the local private sector, alongside growing assets under management six-fold and delivering an annualised total shareholder return of more than 7% since 2017. Read against the 2025 results, the rise in mining, gaming, agricultural and events revenue is an early indication that this domestic ecosystem investment is beginning to show up in operating performance, even as the wider balance sheet shows the cost of that expansion in higher borrowing and greater sensitivity to listed equity markets.

    The results reinforce a theme demonstrated by PIF’s ongoing award of construction contracts for Expo 2030, the 2034 Fifa World Cup and other gigaprojects in the kingdom. Growth is increasingly funded through a combination of retained earnings, debt and, with the new strategy, private co-investment, rather than balance-sheet expansion alone. The explicit retention of Neom as a named ecosystem in the 2026-30 strategy, despite the cancellation of several Trojena contracts and the loss of the Asian Winter Games over the past year, suggests PIF intends to continue funding the project, but within a more disciplined framework most likely centred on industrial development around the Port of Neom, which is also known as Oxagon.

    The 2025 results and the 2026-30 strategy point to a fund entering a new phase: profit generation has improved markedly, but leverage has grown and comprehensive income remains exposed to swings in listed markets, both factors consistent with a strategy that emphasises capital efficiency, institutional excellence and a larger role for private capital rather than a further scaling-up of gigaproject spending on PIF’s own balance sheet.

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  • UAE to add Ajman to its Etihad Rail passenger network

    3 July 2026

     

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    As part of ongoing procurement for the UAE’s national passenger rail rollout, Abu Dhabi’s Etihad Rail is adding Ajman to the planned network, extending coverage to five of the seven emirates.

    Etihad Rail tendered a design-and-build contract in late June to construct a section of the network to Hamriyah in Ajman, branching off from its existing freight network.

    The scope includes civil and track works, the construction of a passenger station and other associated infrastructure.

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    The passenger roll-out marked a major milestone for Etihad Rail, which was established in 2009 and tasked with delivering a roughly 900-kilometre railway linking key cities, ports and industrial hubs from Ghuwaifat to Fujairah on the eastern coast.

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    According to Etihad Rail, passenger services will be introduced in planned phases through 2026 and 2027:

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    • 30 June 2026: Introductory operational phase begins with services between Abu Dhabi and Fujairah only
    • 30 September 2026: Passenger rail services formally commence and expand to include Abu Dhabi, Dubai, Al-Dhaid and Fujairah
    • 30 December 2026: Services extend to Al-Dhafra stations
    • 30 March 2027: Services expand further to include Sharjah

    In response to MEED’s request for comment on the Ajman section, Etihad Rail said:

    “Etihad Rail remains committed to supporting the UAE’s vision for an integrated, efficient and sustainable transport network that enhances connectivity between communities and supports the nation’s long-term economic and social development.

    “As previously announced, Etihad Rail’s passenger services are being introduced in phases, with further expansion planned over time. We do not comment on market speculation, commercial discussions, procurement activity, or projects that have not been formally announced.

    “Any updates regarding future developments will be communicated through official channels in due course.”

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  • IHC deepens India links with $11.5bn aluminium venture

    3 July 2026

    Abu Dhabi’s International Holding Company (IHC) has struck its third major partnership with India’s Adani Group in a year, signing an agreement to co-develop an $11.5bn greenfield aluminium complex in the eastern Indian state of Odisha.

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  • Contractor wins Qiddiya Speed Park package deal

    3 July 2026

     

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    Riyadh-based contractor El-Seif Engineering Contracting has won a contract to build the Exclusive Viewing Lounge (EVL) project in Qiddiya Entertainment City.

    Saudi gigaproject developer Qiddiya Investment Company (QIC) awarded the contract.

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    The EVL is part of the Speed Park project at Qiddiya, which El-Seif Engineering Contracting and UAE-based Alec are jointly executing, as previously reported by MEED. The wider scope includes the construction of buildings around the racetrack.

    The racetrack is being delivered by local United Maintenance & Contracting Company (Unimac). In February 2024, MEED exclusively reported that QIC had awarded an estimated SR1.8bn ($480m) contract for the racetrack and associated infrastructure at Qiddiya’s Speed Park.

    The contract scope includes the track build and all infrastructure works, including electrical networks, storm drainage systems, water and sewer networks, landscaping, and associated underground and above-ground structures, along with related civil works.

    The Speed Park is being built around a Federation Internationale de l’Automobile (FIA) Grade 1 racetrack as part of the resort core in Qiddiya Entertainment City. Once complete, the circuit will be capable of hosting Formula 1 Grand Prix and motorcycling MotoGP races. 

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    The project is a key part of Riyadh’s strategy to boost leisure tourism in the kingdom. According to GlobalData, leisure tourism in Saudi Arabia has experienced significant growth in recent years.

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  • Local contractor wins DIFC tower contract

    3 July 2026

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    Dubai-based contractor Al-Basti & Muktha has been awarded a contract to build the DIFC Heights Tower mixed-use development.

    The state-backed Dubai International Financial Centre (DIFC) awarded the contract.

    The project comprises a 43-storey building with 366 residential units, office space, and retail and food-and-beverage outlets. Construction is expected to commence shortly, with completion slated for 2029.

    Enabling works are under way and are being undertaken by Germany’s Bauer.

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    In a statement, DIFC said the project is being developed on the final remaining plot within its original land bank in the Gate District.

    Earlier this year, Dubai announced a AED100bn ($27bn) expansion of DIFC through the creation of the DIFC Zabeel District. A statement from the Government of Dubai Media Office said the new district will add more than 7 million square feet (sq ft), bringing total gross floor area to 17.7 million sq ft.

    The Zabeel District is expected to more than double DIFC’s capacity to more than 42,000 businesses, support a workforce exceeding 125,000, and allocate more than 1 million sq ft for future technologies and artificial intelligence. Planned in six phases, the expansion is scheduled to open to the public in 2030, with the masterplan due for completion in 2040.

    A bridge will link the DIFC Zabeel District to the existing DIFC Gate District.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
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    Yasir Iqbal