Egypt’s Gaza Dilemmas

Egypt’s Gaza Dilemmas

Crisis Group, 16 May 2024

From the onset of the Gaza war, Cairo has worried about the risks it creates for Egypt, from refugee flight to economic shocks. Foreign partners should keep working for a ceasefire – the best way to prevent spillover – while pushing Egyptian officials toward reform at home.

What’s new? The Gaza war poses several challenges for Egypt – from the prospect that Israeli military operations might end up pushing masses of Palestinians into the Sinai Peninsula to its repercussions for the already precarious Egyptian economy.

Why does it matter? Thus far, Cairo has turned the crisis somewhat to its advantage, leveraging Western fears that what is happening in Gaza could destabilise Egypt. But the risk of spillover remains, and the cash infusions Egypt has received could paper over economic problems whose solutions require structural change.

What should be done? Western capitals should continue rejecting any notion of Palestinians being forcibly displaced from Gaza and pressing the parties to halt hostilities. The international institutions, donors and – ideally – Gulf capitals aiding Egypt should press for reforms, notably loosening the military’s grip on the economy, that are crucial for long-term stability.

I. Overview

The Gaza war has Egypt on edge, as Cairo contemplates the humanitarian catastrophe on its eastern border and worries about spillover at home. Since fighting began, Egyptian leaders have feared that Israeli operations will forcibly displace hundreds of thousands of Palestinians into the Sinai Peninsula, but the conflict poses other challenges, too. It has siphoned hard currency out of the economy, deepening Egyptians’ hardships. The authorities have won a partial reprieve, securing fresh investment from the Gulf and help from other foreign creditors, partly by playing on Western fears of a surge of refugees toward Europe. But not all the dangers have passed.

As Israel ramps up incursions into Gaza’s southernmost city, Rafah, Egypt’s Western partners should continue to warn against displacement from the strip, while pushing both sides to cease hostilities and rushing in life-saving aid. In aiding and investing in Egypt, the European Union (EU), International Monetary Fund (IMF) and ideally Gulf states should press for structural economic reform, while not losing sight of political change, both of which remain vital to the country’s long-term stability.

From the war’s onset in October 2023, Egypt has vehemently rejected the idea broached by several Israeli officials that Gaza’s Palestinians should go to Sinai, keen to avoid a refugee crisis that would threaten its national security and further unsettle the Middle East. Cairo’s attitude stems from principled solidarity with the Palestinian cause and historical suspicions of Israel’s intentions toward the Palestinians.

But Egyptian officials also worry that an influx of Palestinians, including militants, into the Sinai could revive the jihadist insurgency that wracked the peninsula for some years. Western partners have, at least since mid-October 2023, taken a clear stance against such displacement, while the actual threat of it has waxed and waned. But it remains uppermost on Egypt’s list of concerns, particularly given the escalation in Rafah.

Egypt has been actively involved in diplomatic efforts to end the war. Along with Qatar, it has mediated between Israel and Hamas in pursuit of a ceasefire that would allow for hostage/prisoner exchanges and vastly increased humanitarian aid for Gaza. Such diplomacy has, as in previous rounds of fighting in the strip, provided Egypt with the opportunity to demonstrate continued value to the U.S. and others as a potential broker of Middle East stability.

But the war has also forced Cairo to consider possible new political and security arrangements for the Palestinian territory. Though officials are reluctant to talk in detail about this subject absent a ceasefire, they are clear that Egypt hopes, once the war ends, to be able to nudge Israel and the Palestinians toward resuming talks aimed at achieving a comprehensive settlement based on an independent Palestinian state.

The conflict in Gaza has had significant domestic repercussions, particularly as, even before October 2023, Egypt was reeling from high inflation and ballooning debt. In the war’s early months, Egypt saw severe disruptions in revenues from natural gas exports, tourism and Suez Canal transit fees, the last due to anxiety in the shipping industry about attacks by Yemen’s Houthi rebels in the Red Sea. The government, having appealed to foreign partners for relief, won new funding from the EU and the IMF as well as a major investment from the United Arab Emirates. That money bought some respite, staving off economic collapse. Yet it is unclear how long the benefits will last. Nor is President Abdelfattah al-Sisi’s standing among Egyptians certain, as expressions of public outrage about the war may create room for protest directed at the government over increasingly harsh living conditions.

Egypt’s foreign partners should continue rejecting any mass displacement from Gaza and pressing for an end to the war there, while leveraging support for Egypt to encourage reform. The war’s terrible human toll is reason enough to do everything possible to stop it, but it is also true that the risks of spillover for Egypt will endure as long as it continues. To date, Cairo has used Egypt’s predicament to extract aid and investment from partners worried about its stability, but that approach may not hold over time. The economy remains a concern, as Egypt will need sufficient hard currency to meet its debt obligations in the future. Better levelling the playing field between state-owned (especially military-owned) firms and the private sector is essential to boosting business activity. Ideally, too, the government would make moves to open up the public sphere, by allowing civil society and opposition parties to organise freely and releasing political prisoners, for example. Persuading the Sisi government to adopt such economic and political reforms will be an uphill struggle, but doing so is crucial for Egypt’s resilience in the face of present and future shocks.

II. Egypt’s Gaza Red Lines

Since Israel began bombarding Gaza, directly after Hamas’s 7 October 2023 attack, Egypt’s priority has been to forestall any possibility that Palestinians might be displaced en masse into Sinai. From the outset, Cairo feared that Israel might seek to expel Gaza’s people or create conditions inducing their flight through intense, indiscriminate bombing and shelling that destroys civilian infrastructure. In the early stages of the fighting, amid a drumbeat of calls from current and former Israeli officials for pushing Palestinians out of the strip, its anxiety grew.1 A clear stance against such displacement, starting in mid-October, from the U.S. and other Western partners went some way toward calming Egyptian officials, but their fears resurged as ceasefire talks faltered over the following March and April. Israel’s military operation in Rafah, now under way, have exacerbated worries about Palestinians’ expulsion.

Egyptian officials from President Sisi on down repeatedly say any such action would cross a red line.2 They have not spelled out precisely how Egypt would respond should that line be crossed, but doubtless the relationship with Israel would suffer. In private, some Egyptian diplomats suggest Cairo might go as far as suspending the 1979 peace treaty that brought an end to decades of formal hostilities between the countries.3

Egypt’s stance is rooted partly in principle. Cairo does not want to be seen as abetting the destruction of the Palestinian national movement and its political aspirations. Egyptian officials have long feared a repetition of the events of 1948 (known as the Nakba, Arabic for “catastrophe”), when Palestinian refugees were forced to flee their homeland and subsequently barred from returning by the new Israeli state. Another Nakba could compel Egypt to permanently shelter a considerable number of refugees from Gaza.4 It could shift still more of the burden of the Palestinian question onto Arab countries.

The most comprehensive form of burden shifting would be the so-called three-state solution, whereby Israel would seek to return control of Gaza to Egypt and parts of the West Bank to Jordan.5 Far-fetched as these ideas may sound, Egyptian officials suspect that Israel, or at least parts of its body politic, have precisely such long-term plans.6 Another mass expulsion or displacement, finally, would end any hope for Palestinian statehood, a cause with which Egyptians feel heartfelt solidarity.

But within Egyptian officialdom the questions of principle mingle with deep-seated anxieties about security. Egypt lost the Sinai Peninsula to Israel in the 1967 war, recovering it in full only in 1982, following the 1973 war and the diplomacy that culminated in the 1979 peace treaty. During Muslim Brotherhood-affiliated President Mohamed Morsi’s truncated term in office (2012-2013), security agencies suspected that he might collude with Hamas, a Brotherhood offshoot, to create an Islamist alliance in Sinai.7 That did not happen, but a version of the same scenario haunts security officials today.

For decades, a jihadist and at times Islamic State (ISIS)-linked insurgency has roiled the northern Sinai, sometimes cooperating with militants in Gaza – though not Hamas, which opposes ISIS – and officials fear that an influx of Palestinians to the peninsula could embolden it.8 They also worry that a large Palestinian population in Sinai would turn it into a staging area for attacks on Israel, leaving Egypt in the unenviable position of having to suppress such activity or suffer Israeli reprisal.9 From the war’s early days, they took such concerns to Egypt’s Western partners.

For the most part, world powers have adopted clear positions against such displacement. In the first few days of the conflict, media outlets reported that European leaders were dangling financial incentives, such as debt cancellation, before officials in Cairo in exchange for Egypt accepting Palestinian refugees.10 On 15 October, however, U.S. National Security Advisor Jake Sullivan indicated that, “in terms of the larger question of whether those who leave can return, the United States has a very simple proposition on this: it’s [that] when people leave their homes in conflict … they deserve the right to return to those homes. … And this situation is no different”.11 Since then, Western capitals have strongly opposed any notion of Palestinians being forced out of Gaza.

For its part, Cairo fiercely disputes that it could be bribed into taking in Palestinian refugees.12 As a U.S. diplomat said, “there is a clear red line imposed by the Egyptians, and we are going to respect that”.13 Egypt’s rejection of the idea of forcible displacement of Palestinians into Sinai was arguably instrumental in establishing international consensus against such a plan.

Egypt’s worries about mass displacement have deepened with Israel’s incursions into parts of Rafah. On 7 May, Israeli troops took over the Palestinian side of the Rafah border crossing, temporarily closing it (as well as, for a time, Kerem Shalom, a crossing between Gaza and Israel, after a Hamas rocket attack killed Israeli soldiers there). In the following days, the flow of aid into the strip slowed to a trickle, threatening to exacerbate the already dire humanitarian situation.14

A U.S. official described Egypt as “livid” about theses Israeli moves.15 The Egyptian foreign ministry issued a statement of protest, in particular condemning Israel’s occupation of the Palestinian side of the Rafah crossing.16 In his remarks cautioning Israel against launching a full-scale military invasion of Rafah, President Biden sounded a similar note, noting that Israeli operations were “right on the border. And it’s causing problems with, right now, in terms of – with Egypt”.17As Israel’s incursions into Rafah expanded, Egypt announced its intention to formally intervene in support of South Africa’s case against Israel at the International Court of Justice.18

Egypt has also refused Israeli requests to allow aid shipments already in transit to be diverted to Kerem Shalom, fearful that this step will constitute de facto acceptance of Israel’s garrison at the Rafah crossing and ease international pressure on Israel to halt its operations.19 The standoff threatens to deepen Gaza’s humanitarian distress, alarming U.S. and aid agency officials, who hope to persuade Egypt to alter its approach, at least temporarily.20

The Rafah incursions have likewise magnified fears that Palestinians in Gaza might make a panicked push toward the border. Already, Israel’s offensive has killed over 34,000 Palestinians and displaced 75 per cent of the 2.2 million population inside the strip.21 Many of these people have sought shelter in Rafah. An Egyptian official suggested that by forcing Palestinians to mass in the south, Israel could in effect compel Cairo to accept refugees as the only means of avoiding an even greater humanitarian catastrophe.22

A U.S. diplomat seemed to share this concern, musing that given Gaza’s limited capacity to shelter internally displaced people and the inadequacy of the humanitarian aid getting into the territory, Egypt might feel increasing pressure to take in large numbers of refugees to alleviate horrible conditions inside the strip.23 Scenes of Palestinians already uprooted from their homes fleeing tent cities in Rafah seemed to evoke this spectre.

Already in February, Egypt seemed to be taking preparatory measures for this scenario. It appeared to quietly start building a buffer zone along the Gaza border to accommodate up to 100,000 refugees, though authorities are understandably vague about its purpose.24 The North Sinai governor initially denied reports about the buffer zone, presumably to avoid embarrassment, saying workers were constructing a logistical hub for humanitarian aid.25 Separately, Foreign Minister Sameh Shoukry indicated that, while Palestinian displacement into Sinai was unacceptable, Egypt was ready to deal with any arrivals “humanely”.26

Likewise, an Egyptian official denied that the construction was meant for displaced Palestinians, but promptly added that “this is not to say we won’t cater to the displaced if an offensive on Rafah causes an influx”.27 Presumably, officials fear that publicly admitting that they are preparing for eventualities including mass displacement risks seeming to give Israel an implicit green light, but at the same time they cannot afford to get caught off guard by an event that would have wide-ranging repercussions for Egypt’s stability.

Events in Rafah highlighted a related Egyptian red line regarding the Philadelphi Corridor (also known as the Salah al-Din Axis), a narrow strip of land running along the border between Egypt and Gaza.28 At various times during the war, Israeli officials have signalled their intent to take over the corridor, suggesting that Egypt is unable or unwilling to stop the weapons smuggling that takes place underneath it.29 When Israel withdrew from Gaza in 2005, it agreed to new security arrangements along the border as military deployments in Sinai are governed tightly by the 1979 treaty.30

As part of these arrangements, Egypt was permitted to station 750 lightly armed guards in the corridor. Egypt has characterised potential Israeli encroachment on the corridor as violating Israeli treaty obligations.31 Officials in Cairo have privately expressed unease with having Israeli soldiers near sensitive Egyptian installations.32 Lastly, should Israel reoccupy the border, it would have complete control of all crossings into and out of Gaza.

All the above scenarios sharpen Egypt’s sense of vulnerability, which has been growing for years as its regional influence, though still considerable, has declined. Both trends – the heightened threat perception and the waning clout – accelerated following Egypt’s 2011 uprising, which led to the ouster of President Hosni Mubarak, who had held power since 1981. The turmoil continued with the military’s removal of Morsi, whose Muslim Brotherhood had won the first post-Mubarak elections. Today, the war in Gaza, and attacks by Yemen’s Houthi rebels on commercial shipping in the Red Sea, which have greatly reduced traffic through the Suez Canal, have accentuated Cairo’s feeling of insecurity.

Unable to marshal the resources that regional powers such as Israel, the Gulf Arab states and Türkiye can muster, Egypt has had to appeal to outsiders, including Western governments, to drive home the message to Israel that a breach of the Gaza border and/or occupation of the Philadelphi Corridor would unacceptably endanger Egypt’s national security, with implications for the broader region.

III. Cairo’s Diplomatic Efforts

Besides worrying about a refugee influx, Cairo is actively involved in diplomatic efforts to end the war in Gaza or at least bring about an extended pause. Despite its diminished regional status, Egypt retains a central role in Gaza-related matters by dint of geography and its longstanding linkages to the strip. In the first years of the Sisi presidency, Cairo pursued a hard line against Islamist movements, both within Egypt and elsewhere in the Middle East, and sought to deepen Hamas’s isolation by enforcing a stringent blockade on Gaza. In 2016, however, it modulated its approach to Islamists, including Hamas, as it sought the Palestinian group’s cooperation in countering the jihadist insurgency in the Sinai.33 This shift enabled Egypt to retake its place as mediator in the various rounds of fighting between Israel and Hamas in subsequent years.

Egypt’s efforts this time around have been most visible since December 2023, when it put forward a ceasefire initiative that hinged on Hamas and Islamic Jihad yielding control of the strip to a group of Palestinian technocrats distant from the main political factions in return for a lasting cessation of hostilities.34 The proposal outlined a phased ceasefire to enable the release of Israeli hostages and Palestinian prisoners, as well as the return of displaced Palestinians to Gaza’s north. Cairo has hosted continued discussions since then, seemingly working closely with Qatar, which has also mediated, and carrying messages among the various parties.

With Qatar’s ties to Hamas coming under increasing scrutiny in Washington – the movement has its political office in Doha – Egypt has taken on a more central role in the latest rounds of talks.35 Crucially, Egypt, along with Qatar, has conveyed various guarantees from the U.S. to Hamas about the eventual permanence of a ceasefire if it complies with the terms of a phased agreement.36 On this basis, Hamas said it accepted a phased ceasefire on 6 May, just before Israel moved into Rafah.

Beyond this plan, Egyptian officials – like many of their Arab counterparts – are reluctant to talk about long-term arrangements for the strip absent a ceasefire and even, some say, a clear vision for how to get to Palestinian statehood. They argue that the focus should be on ending the violence, as conditioning a ceasefire on a new dispensation in Gaza would allow Israel more time to prosecute the war, rendering a political resolution even more difficult.37 In the words of an Egyptian official, “The details of the ‘day after’ are negotiable and manageable, but first we need a ceasefire and a two-state solution, not just the ‘horizon’ for one, as [U.S. Secretary of State Antony] Blinken likes to put it”.38

Egyptian officials are also loath to openly discuss the idea of an Arab force deploying to Gaza to provide security guarantees – an option repeatedly floated by Western officials. Cairo and other Arab capitals are wary of this scheme, not least because Arab soldiers would likely be portrayed as occupying the strip on Israel’s behalf, perhaps even coming under attack, but the prospect of a security vacuum in Gaza and the lack of viable alternatives has meant that it continues to circulate.

In January, U.S. officials indicated they did not see any option involving Egyptian forces as viable.39 But recent discussions of post-war options, which continue alongside the ceasefire talks, have broached the possibility, which a U.S. official described as “hard but not dead”.40 In early May, another U.S. official noted that Cairo may be more willing to consider such a “radical change to policy” because other options are not readily clear and because, without a multinational force, “Israel may take the Philadelphi Corridor and stay”.41

For Egypt, it is important that future security arrangements not come at the expense of a political solution, which Cairo believes cannot happen absent reform of Palestinian political institutions. Former Egyptian diplomats, journalists and researchers with access to government officials agree that the Palestinian factions should unify in a renewed national movement before the Palestinians resume negotiations with Israel.42 Expressing a consensus view among these peers, an Egyptian analyst argued to Crisis Group that:

The PLO [Palestine Liberation Organisation] needs to be reformed to include Hamas and other groups. The reform of the PLO will be one of the main tasks for Egypt after the war, the first step to encourage a moderate evolution of Hamas, to include it in the Palestinian resistance movement and eventually leading to a new PA [Palestinian Authority] and a unified government.43

An Egyptian official stressed that it is not Cairo’s place to mediate among the various Palestinian factions to bring about national reconciliation, though Egypt has done so before, for instance hosting talks between Fatah and Hamas. Still, many see reconciliation as a necessary precursor of negotiations with Israel, with only a reformed PLO and PA able to engage with Israel to hammer out a settlement based on the two-state solution. Past months have seen little movement toward such reconciliation, and the prospects for reform of Palestinian institutions are hardly auspicious.44 Egyptian researchers tend to argue that some form of transitional period between the end of the current war and a new round of negotiations might be necessary for any progress on this complex issue.45

IV. An Economic Lifeline for Egypt

The Gaza war has also had significant economic repercussions for Egypt. In the war’s first weeks, Israel suspended natural gas extraction from its offshore Tamar field and blocked the subsea pipeline to Egypt, worrying that Palestinian armed groups would target this infrastructure.46 Egypt uses the Israeli gas for both re-export and domestic power generation. It is unclear what volume is earmarked for what purpose, but Egyptians felt the effects of the shortage, as Cairo extended rolling blackouts it already had in place from one to two hours a day in order to free up more of its own gas for export.47

Even though Israel resumed its gas exports to Egypt in November, blackouts have continued, except for a short respite during the month of Ramadan from mid-March to mid-April.48 Fears of a wider Middle East war also pushed many tourists to reconsider plans to visit Egypt, particularly southern Sinai, with cancellations reaching 25 per cent in early November.49

The economy suffered also from a sharp drop in revenues from Suez Canal transit fees, a key source of foreign currency. Houthi attacks on commercial shipping in the Red Sea pushed up insurance costs and encouraged a growing number of shipping companies to avoid these waters – and thus the canal, which connects them to the Mediterranean.50 In April, an Egyptian official claimed that canal revenues had dropped by 50 per cent in the first quarter of 2024.51 While Western warships in the Red Sea have intercepted the vast majority of the Houthi missiles and drones, the attacks have escalated. In January, the U.S. and UK began carrying out counterstrikes on Houthi military sites in Yemen, but thus far these have failed to restore commercial traffic.52

These shocks to the Egyptian economy came in the midst of a major debt and cost-of-living crisis that erupted in 2022. The IMF, which had loaned $3 billion to Egypt in late 2022, suspended disbursement of the money in 2023 when it became obvious that Egyptian authorities would not follow through with agreed-upon reforms. These included floating the national currency’s exchange rate and reducing the military’s footprint in the business sector.53 In particular, tackling the military’s vested interests proved too sensitive for the authorities.

Under Sisi, military-owned and military-linked firms have come to dominate many sectors of the economy by taking advantage of tax breaks and conscripts’ cheap labour, among other things, often crowding out private business. For instance, they have won most of the construction contracts in Sisi’s ambitious infrastructure program. The president saw this arrangement as a way to secure the military’s loyalty and rely on trusted associates to get all the building done swiftly. He is now reluctant to take remedial measures, fearing a destabilising backlash.54

The Egyptian government also worried that a currency devaluation would drive up inflation, pushing millions of Egyptians to spend less while working several jobs to make ends meet.55 In June 2023, Sisi declared:

Many people demand a flexible exchange rate. We are flexible on this. But when the matter concerns Egypt’s national security and the Egyptian people are affected? No, no, no, no.56

The authorities chose to postpone devaluation of the Egyptian pound until after the country’s December 2023 presidential election, raising foreign currency in the meantime by selling state-owned assets to create a buffer that could cushion the blow of a future exchange rate devaluation. In July, the government announced asset sales of $1.9 billion, saying it expected more transactions in the following months.57 Meanwhile, it continued to support the value of the pound, which was hovering at around 30 to the dollar, while on the black market it stabilised at around 40. But the Gaza war’s impact shattered this precarious balance, as the black-market rate jumped to 50 pounds to the dollar in November and hit 70 in January.58

Seeing Cairo’s predicament, and its reluctance to make unpopular reforms, Western capitals began to be more accommodating, as they knew socio-economic collapse in Egypt could only compound the crises elsewhere in the region. In late October, the EU Commission began work on a financial package for Egypt without conditions.59 “The EU funds promised to Egypt are linked to the fear of instability”, explained a European diplomat.60 The Europeans seemed particularly concerned about the prospect that deteriorating conditions could prompt mass migration. EU Commission President Ursula von der Leyen stated in an October letter to EU leaders: “[Egypt] hosts a growing number of refugees, and we have a responsibility to support it”.61

Europe made good on this pledge the following spring. On 17 March 2024, a delegation led by von der Leyen and comprising the Austrian, Belgian, Greek and Italian prime ministers met with President Sisi in Cairo to announce €7.4 billion in proposed new assistance for Egypt. The mix of concessional loans, investment and grants will target budget support, mobilise funds for the green and digital transitions, and improve cooperation on migration and security.

The IMF took a similar path. Like the Europeans, it softened its stance toward Egypt late in 2023, signalling that it was ready to negotiate a bigger loan.62 In November, IMF Managing Director Kristalina Georgieva confirmed that her institution was considering an increase in view of the Gaza war’s impact.63 Shortly thereafter, it became clear that the Fund’s largest shareholder, the U.S., stood behind her. In December, a U.S. official expressed support for a new IMF approach, saying Washington recognised Egypt’s “changed circumstances and environment”. The official went on to explain that, while the Biden administration still believed that economic reforms were necessary, their pace would be affected by events.64 Eventually, in late March, the IMF and Egypt reached a deal that granted Cairo a significantly larger financial envelope, which went from $3 to $8 billion.65

But an even bigger contribution to Egypt’s financial stability had come before the EU and IMF announcements in late February, when the UAE’s Abu Dhabi Developmental Holding Company agreed to pay $35 billion for rights to build residences, tourist resorts, hotels, entertainment venues and service facilities in a 170 sq km area in Ras al-Hekma on the Mediterranean coast. The mega-deal will unlock an enormous investment, with $15 billion disbursed within two weeks of signing it and the remaining $20 billion to be transferred soon.66 This agreement alone will plug Egypt’s external financing gap for 2024 and inject significant liquidity into the economy. In the announcement’s immediate aftermath, the black-market exchange rate recovered to around 50 pounds to the dollar.67

The Ras al-Hekma deal reflects the Gulf states’ insistence on moving from donor to business logic in supporting Egypt financially, even though their engagement continues to be guided by concerns about the country’s economic stability. An Emirati official said Egypt had first sought a grant, and then a loan to be repaid with Suez Canal revenues, both of which requests the UAE rejected.68 The UAE views construction on the Mediterranean coast, by contrast, as a sound investment that will see real returns. Likewise, media outlets indicated in the following days that Saudi Arabia is ready to strike a similar bargain to develop land around Ras Gamila in the southern Sinai.69

The financial boosts from the IMF and UAE – and the promise of another from the EU – enabled the Egyptian government to devalue the pound while limiting the impact on the economy. On 6 March, Cairo raised interest rates by 600 basis points to 27.75 per cent and allowed the pound to float freely, leading to devaluation. The official exchange rate fell from around 30 to 50 pounds to the dollar, where it subsequently remained.70 This new level was on par with the black-market rate. The injection of money contributed to stabilising the economy and allowed Egypt to enact a much smaller devaluation than would have been possible otherwise. Still, the exchange rate adjustment fuelled inflation and affected millions of Egyptians, who continued to struggle with rising living costs.71

Questions remain, however, about the economic and political reforms tied to the IMF and EU packages, both of which are key to the country’s long-term stability. Some worry that the authorities’ commitment to measures negotiated with the IMF might be only partial. The new plan focuses on fiscal consolidation, slowing the pace of infrastructure spending and levelling the playing field for private firms competing with state-owned enterprises, including those run by the military. The IMF expects the government to eliminate tax breaks and preferential treatment for all state-owned companies.72

But Cairo’s State Ownership Policy does not encompass sectors where military firms are dominant, such as cement, automobile manufacturing and real estate, while it explicitly protects “strategic” sectors in which these companies are market leaders.73 NGO activists are sceptical that the government will extend the policy to military-owned companies, as that might destabilise the political system.74 With international pressure on Egypt declining, the IMF may be unable to muster the will to suspend loan tranches should Cairo delay or water down these measures.

Also unclear is how much reform European capitals will get – in fact, how much they expect – in exchange for the additional assistance announced in March. In the joint declaration that followed the summit, the EU underlined its commitment to backing reforms, namely implementation of Egypt’s National Strategy for Human Rights and the IMF program, with its funds.75 EU officials underline that they first sought to shield Egypt from the economic impact of the Ukraine war, with the conflict in Gaza only hastening the new support.

They portray the partnership as only the first step, leaving to further memoranda of understanding to specify the measures that Brussels expects to see in return for this money. At the same time, they recognise the challenges in making some of these reforms and that progress on sensitive files, such as human rights, is likely to be piecemeal at best.76 Media outlets and European civil society groups have highlighted that the deal mirrors similar EU arrangements with Tunisia and Mauritania, which aim mainly to beef up these countries’ migration controls.77

Increased foreign credit and investment should suffice to support the Egyptian economy in the short term, reducing the fiscal and external pressure it faces, but in the long term the same problems could return without reform. The inflow should bridge Cairo’s financing gap until 2027, when loan repayments are expected to decline.78 But the extra funds may leave certain structural imbalances, such as the advantages military-owned companies hold over the private sector, unaddressed, as Egypt is no longer in such desperate need of hard currency.

Indeed, the Western and Gulf bailouts may reinforce Egyptian officials’ unhealthy perception that the country is too big to fail. Without reforms to boost private-sector activity and exports, the long-term risk is that Egypt may again find itself on the brink of economic meltdown and in need of emergency external support, as it did after an IMF loan in 2016, which brought no structural improvement in the country’s economic outlook.

V. Popular Solidarity with Gaza

The conflict in Gaza has resonated deeply with Egyptians, reinvigorating grassroots mobilisation in support of the Palestinians. President Mubarak often allowed pro-Palestinian demonstrations – albeit tightly controlled ones – as a way for people to vent their frustrations. Sisi and his advisers have generally kept such activities locked down, believing that they would create a platform for broader opposition to the government.79 Yet the groundswell of solidarity with Palestinians in Gaza – which began at the outset of Israel’s post-7 October campaign and has increased as the death toll mounts – has forced the authorities to permit occasional protests, albeit under the security forces’ watchful eye.80

This about-face was reflective of the depth of public sentiment, but it also discomfited authorities torn between their desire to ride the wave of popular anger and their instinct to keep a lid on political expression. In the initial days of the Israeli offensive, spontaneous demonstrations took place in Cairo and Alexandria, though security forces intervened to cordon them off.81 As they had often done under Mubarak, pro-government institutions tried to channel the fury.

On 20 October, they organised a major gathering in Cairo “in support of the political leadership” after Sisi remarked that he – like millions of Egyptians – opposed pushing Palestinians into Sinai.82 It somewhat backfired. Thousands of protesters, incensed by what they saw as the authorities’ attempt to exploit what was happening in Gaza for political purposes, broke through police lines to reach Tahrir Square, centre stage for the 2011 movement that toppled Mubarak, shouting anti-Sisi slogans.83 Security forces arrested around a hundred people.84

A gap between state and society was also evident in the response to calls for an anti-West and anti-Israel commercial boycott. Starting in early October, a grassroots campaign to stop buying products associated with the Israeli occupation of the Palestinian territories spread rapidly through Egypt, hurting sales for companies such as Starbucks, McDonalds and Pepsi, despite local business associations warning that Egyptian workers might lose their jobs.85 Unwilling to approve or condemn this mobilisation, the authorities avoided comment.

The December 2023 presidential election was something of a non-event amid all the tumult, neither sparking unrest nor addressing public frustration. Sisi won comfortably – an outcome that was never in doubt. The authorities appear to have hoped to stage-manage the race to make it look more competitive than the one in 2018, when Sisi received 97 per cent of the vote. Still, they did not feel comfortable allowing his challengers to mount genuinely independent campaigns. Presidential hopeful Ahmed Tantawi, a former parliamentarian, had emerged as the most popular of them, energising supporters with outspoken criticism of Sisi’s policies.

But harassment and administrative hurdles prevented Tantawi from gathering the required endorsements, forcing him to abandon his candidacy and ending any semblance of an open contest.86 Sisi wound up running against a handful of others with small followings, garnering 89.7 per cent of the vote. The preceding repression got little scrutiny abroad, thanks to Egypt’s prominent role in diplomatic efforts to bring the Gaza war to a close.

Six months into the war, there is considerable public horror at the scale of Palestinian suffering and strong desire among opposition figures to express solidarity with Gaza.87 Many Egyptians, especially younger activists, are frustrated at Egypt’s perceived weakness in the face of Israel’s military campaign.88 Some have accordingly speculated that activism related to Gaza could breathe new life into anti-government agitation.89

Pro-Palestinian protests during the second intifada in the early 2000s provided a training ground for the anti-Mubarak movement. The current mobilisation may offer opportunities for younger Egyptian activists to exchange ideas and test tactics. The generation that has come of age since Sisi rose to power in 2013 could lead the way: these young people did not suffer the bitter disappointment that has coloured the views of their elders, who led the uprising against Mubarak and then watched as the country’s democratic experiment collapsed.

Such possibilities are not lost on the authorities themselves. They continue to act with a heavy hand to suppress pro-Palestinian mobilisation. Following an early April protest at the Journalists’ Syndicate in Cairo, for example, the authorities arrested ten participants, perhaps triggered by anti-government slogans and chants.90

VI. Steps to Preserve Egypt’s Stability

The war in Gaza has had costs and benefits for Cairo. It has cast Egypt’s exposure to regional turmoil in sharp relief, creating a humanitarian catastrophe on the country’s eastern border that could threaten national security. The war has also highlighted Egypt’s structural economic weaknesses, hitting its main sources of foreign currency. The government has struggled to control popular mobilisation, as protesters refuse to play by its rules. Yet Cairo has leveraged Western fears of instability to extract concessions from its main foreign partners.

While unable alone to counter Israeli threats of Palestinian mass displacement, its firm rejection of that option (along with other Arab governments) helped hammer home the dangers, as Egyptian officials intimated that they might suspend or revoke the 1979 treaty were Palestinians expelled from Gaza. It has also retained a central position in negotiations about a Gaza ceasefire and, possibly, the future of the Israeli-Palestinian conflict. It has secured new funds from the UAE, IMF and EU that should help the country weather the war’s repercussions, despite refusing to comply with IMF-mandated reforms.

In the medium to long term, however, Egypt’s weaknesses are likely to come back to haunt the authorities. The economic situation remains precarious, as the authorities have not yet presented a development model for the future. Politically, it is unclear whether the impact of the exchange rate devaluation and rising living costs will trigger unrest, though there was no such sign in the immediate aftermath of the March devaluation. Nor has the danger of a Palestinian exodus from Gaza into the Sinai entirely subsided, particularly if the Israeli operation in Rafah expands.

Against this backdrop, Egypt’s Western and Gulf partners should continue to amplify Cairo’s uncompromising opposition to any suggestion that Palestinians be displaced from Gaza and support an immediate ceasefire. Washington and European capitals should continue to support Egyptian and Qatari mediation efforts, which remain the best option for ending hostilities in Gaza. Likewise, Western partners should signal clearly to both Egypt and Israel the need for diplomacy to find a compromise on the Philadelphi corridor that neither impinges on Cairo’s sovereignty nor neglects Israel’s security concerns. The solution should include immediate steps to re-establish the humanitarian aid access that has been disrupted by Israeli military operations in Rafah.

As for financial help, the EU and IMF should strive to balance their understandable wish to provide support for Egypt with continuous pressure to enact much-needed political and economic reform. Both institutions should still press Cairo to fully implement its State Ownership Policy and apply it to those sectors that were left out of this measure to level the playing field for the private sector. While these reforms are undoubtedly sensitive, they would, as the IMF stipulated in the updated program agreed with Egypt, help strengthen the country’s long-term political and economic stability.

In particular, the EU should clearly define what it expects to see from Egypt on the economic front, including streamlining trade requirements and simplifying regulations for the business sector. In addition, the EU should make sure that the trade and investment opportunities afforded by its financial aid package to support Egyptian firms in the renewable energy and digital sectors do not end up reinforcing the military’s grip on the economy.

The EU should also press the Egyptian authorities to make the governance reforms highlighted in the EU-Egypt joint declaration, such as Egypt’s National Strategy for Human Rights. While this policy includes some positive recommendations, such as curbing pretrial detention and reducing the number of crimes punishable by death, the EU should try to go beyond its limited scope.91 In particular, the Europeans, with support from the U.S., should encourage Cairo to introduce measures to protect Egyptians’ right to demonstrate peacefully and organise in political parties. Given how U.S. and European authorities have dealt with pro-Palestinian protests during the war in Gaza, the Egyptian government is likely to be less receptive to such admonishments than usual. Its Western partners are aware of this problem. In explaining U.S. silence on the conduct of Egypt’s presidential election campaign, a U.S. official said, “We know the Egyptians really don’t want to hear from us on any of this at the moment”.92 Still, the West should not simply drop the subject altogether.

Since ousting President Morsi in 2013, the military has worked assiduously to squelch independent political life, but this approach has cost Egypt considerable international good-will, spurred an alarming brain drain and walled off the leadership from salutary public debate. Systematically excluding civil society and political opposition groups from policy discussions has stoked frustration throughout Egyptian society and made decision-makers often unable to incorporate the concerns of constituencies like the private sector, civil society and labour unions, fuelling the risk of destabilising unrest in the near or distant future. Beginning the process of political reform – potentially including the release of political prisoners, allowing peaceful protests and laying out transparent rules for establishing parties and running news outlets – would build a sturdier foundation for getting through future crises.

VII. Conclusion

The Gaza war is a reminder of Egypt’s historical and political enmeshment in the question of Palestine. In 1979, when Egypt signed the first treaty between Israel and an Arab state, it antagonised the PLO and people around the Arab world by forging what amounted to a separate peace. Cairo’s priority in coming to terms with Israel was to regain control of the Sinai. In putting this interest first, Egypt realigned regional politics but without insisting on a just, lasting solution for the Palestinians – an approach that, in some ways, foreshadowed other Arab states’ normalisation deals with Israel. Since the 1979 treaty, Egypt has striven to balance its national interests, particularly related to insecurity in the Sinai, with support for the Palestinian cause. Concretely, this effort has meant rejecting any direct responsibility for the plight of people in Gaza while backing attempts to reach a diplomatic settlement based on the two-state solution.

Today, with the Gaza war entering a new and dangerous phase, Egypt once again finds itself in a precarious position. It has shored up global opposition to forcible displacement from Gaza, while securing aid and investment to deal with the economic repercussions of the crisis. But serious risks remain. It is imperative for Western and other partners to reaffirm their own stance against displacement, while simultaneously exerting pressure on Israel and Hamas to halt hostilities and getting more aid into Gaza. At the same time, they should balance their understandable concerns with Egypt’s stability in the short term with a focus on reforms that could boost the country’s longer-term resilience.

Cairo/Washington/New York/Brussels, 16 May 2024

For footnotes, download the PDF version here: https://www.crisisgroup.org/sites/default/files/2024-05/b091-egypt-gaza-dilemmas_1.pdf

The Maghreb maze: Harmonising divergent European policies in North Africa

The Maghreb maze: Harmonising divergent European policies in North Africa

By Anthony Dworkin, The European Council on Foreign Relation, 30 January 2024

Summary

- The Maghreb policies of the four most influential EU member states are diverging, driven by national politics and their interaction with developments in the region.

- Italy is pushing an ‘engagement-first’ strategy for Tunisia and building energy links with Algeria, while Spain has tilted strongly towards Morocco.

- France’s relations with Maghreb countries are complicated by historical legacies and regional expectations, Germany is pulling back as hopes for democratic reform have faded.

- These divisions risk allowing Maghreb leaders to set the agenda of relations with Europe, frustrating longer-term European interests in promoting stability, reform, and effective governance.

- A better European approach would use strong bilateral relationships as entry points to pursue a more coordinated policy, building on areas in which EU interests converge.

Introduction

The countries of the central Maghreb – Algeria, Morocco, and Tunisia – are increasingly difficult partners for Europe. Over the past few years, their leaders have become more assertive in trying to set the terms of relations with the European Union and its member states, using both their countries’ strengths and vulnerabilities to win concessions. They have turned energy assets, the threat of migration, and even the risk of economic collapse into tools to secure diplomatic goals, deflect international criticism, and extract financial support without burdensome conditions. Instead of standing together in the face of these moves, European countries have presented a fragmented response.

Following the 2011 pro-democratic uprisings across the Arab world, the EU and its member states coalesced around a policy of backing reform and supporting transitions. But after 2015, a surge in migration and rising concern about terrorism – both issues that played strongly in European domestic politics – led to a more transactional approach. More recently, the war in Ukraine and the need to fight climate change have prompted Europeans to focus on both gas supplies and renewable energy. EU member states have thus gravitated towards enhancing relations with those Maghreb countries that serve their national interests. At the same time, tensions between the two most powerful Maghreb countries – Morocco and Algeria – have increased sharply, making it more difficult for European countries to maintain close ties with both.

Against this background, the policies of the most influential EU member states in the region – Italy, France, Spain, and Germany – are diverging, shaped by the different concerns and priorities of each country. Migration concerns mean Italy has pushed an ‘engagement-first’ strategy with Tunisia, prioritising dialogue with President Kais Saied over criticism of his turn against democracy.

It has also boosted energy links with Algeria. France was traditionally the leader on European Maghreb policy, but tensions with Morocco and Algeria have limited its influence in the region. Spain has doubled down on its close relations with Morocco, provoking a diplomatic break with Algeria. Germany became influential in Tunisia particularly as a supporter of reform after 2011, but has now stepped back and focuses largely on renewable energy investments in the region.

This policy brief maps the new landscape of European policy towards the Maghreb, by examining the sources and objectives of the policies of the four most influential member states. National relationships have always shaped European policies towards the Maghreb: Italy, France, and Spain have close ties to countries in the region, based on history, diaspora populations, commercial links, and security cooperation, while Germany’s newer interest in reform and the green transition have underpinned its engagement.

But, as the choices facing Europeans in the Maghreb have become more acute, and as Algeria and Morocco have embraced a zero-sum logic in which any move to deepen relations with one is treated as a snub by the other, national interests have become particularly influential and European policy less coordinated.

Europe weakens itself in its relations with the Maghreb by pursuing this fragmented approach. It is inevitable that EU member states have their own interests to pursue, but if they framed them within a broader European vision, it would give them an advantage. The current approach risks allowing North African leaders to claim the upper hand in bilateral, interest-driven relations.

But France’s, Italy’s, Spain’s, and Germany’s varying relationships with Maghreb countries could become a source of strength for Europe if they were more effectively harmonised. This would help them achieve a set of goals they broadly share: to encourage better economic policymaking and governance in Tunisia, to foster progress towards greater openness in Algeria, and to deepen cooperation with Morocco while resisting diplomatic pressure over the disputed territory of Western Sahara. This policy brief thus sets out how a better balance between bilateral ties and European coordination would be the most effective foundation for the EU to achieve its long-term goals in the region.

Developments in the Maghreb

In the Maghreb, the last five years have been marked by democratic backsliding, economic strains, and growing intra-regional tensions, as well as by a sense of empowerment in the three states’ dealings with Europe. Europeans need to view the evolution of member states’ policies towards the region against this backdrop.

Tunisia

In July 2021, Saied suspended Tunisia’s parliament and seized essentially unlimited power, ending an era of democratisation in the country. Since 2011, Tunisia had seen a series of competitive elections and a blossoming of civil society and press freedom. But successive governments made little progress in tackling the country’s significant economic and social inequalities.

This fomented popular frustration with the political class and helped Saied, a university lecturer in constitutional law who ran on a populist anti-corruption platform, to win the presidential election in 2019. His move to seize unchecked power 20 months later prompted large demonstrations – but his programme of centralising power has seemingly been met with increasing public indifference.

Saied initially ruled by decree, but in July 2022 he pushed through a hastily drafted new constitution that redrew Tunisia’s post-revolutionary political settlement. Expert in constitutional law, Zaid al-Ali, has described the new system as “hyperpresidential”, with the executive enjoying virtually unchecked power. The country’s parliament has been reduced to a rubber stamp; its judiciary is no longer independent. Saied has also locked up several of his most prominent political opponents, as well as journalists, lawyers, and trade union officials, accusing them of plotting against state security. He has combined these repressive moves with xenophobic rhetoric and a sovereigntist nationalism.

As Saied focused on consolidating his power, Tunisia’s economy continued to deteriorate. Following years of slow growth and deferred economic reforms, the impact of the covid-19 pandemic and increases in commodity prices triggered by Russia’s war on Ukraine brought on a balance of payments crisis. The private sector is constrained from large-scale job creation by entry barriers and a high cost of doing business, meaning state employment has acted as a safety valve to limit public hardship. But the country’s debts have mounted: public debt stands at 77 per cent of GDP and debt service payments of $2.6 billion are due in 2024, a sum that outstrips the public sector wage bill for the first time.

The International Monetary Fund (IMF) and Tunisian officials reached a staff-level agreement for a $1.9 billion deal in 2022, but Saied declined to move forward with this. He said Tunisia will not submit to “diktats that come from abroad”, sacking his finance minister after the latter argued that an IMF deal would make it easier to obtain other financing.

The last few months of 2023 saw Tunisia’s financial situation improve slightly, thanks to an increase in tourism revenues and remittances from workers abroad. Nevertheless, without an IMF deal, Tunisia faces a very challenging year. The budget for 2024 relies on obtaining substantial new financing from overseas, including €470m from Saudi Arabia, €286m from Algeria, and around €3 billion from unspecified sources. Tunisia’s finance minister claims the money will come from the country’s “relations with sisterly and friendly countries”.

Last year also saw a sharp increase in the numbers of irregular migrants crossing from Tunisia to Europe, with almost all of them arriving in Italy. More than 150,000 people arrived in Italy via the central Mediterranean route in 2023, compared to 105,000 in 2022. More than 97,000 of these are thought to have departed from Tunisia, and almost all of the rest from Libya. Many of these migrants had transited through Tunisia from sub-Saharan Africa – particularly Côte d’Ivoire and Guinea. But since 2020 significant numbers of Tunisians have also been travelling to Italy.

In response both to Tunisia’s economic problems and the increase in migration, the EU concluded a memorandum of understanding with Tunisia in July 2023. The agreement wrapped together some EU funding that had already been allocated to Tunisia for border management with further budget support. This was supplemented by the promise of an additional €900m in macro-financial support to be delivered following the signing of an IMF deal. The agreement also outlined a broader agenda for cooperation, covering people-to-people exchanges, economic development, investment and trade, renewable energy, and migration.

But the deal was controversial in Europe. Its announcement coincided with revelations that Tunisian security forces had taken large groups of sub-Saharan migrants to desert regions on the country’s borders and expelled them without food or water – a practice Tunisia has continued. And in October 2023, Saied announced he would reject a €60m payment from the EU, arguing it was too small and failed to show the “respect” that should be the foundation of the partnership.

Algeria

Algeria has benefited from Russia’s war in Ukraine. The spike in oil and gas prices and European countries’ search for alternative suppliers to replace Russian gas resulted in a boon for Algeria’s leaders, allowing them to reinforce a social contract that uses hydrocarbon revenues to buy off public discontent. The country posted a $19 billion current account surplus (9.8 per cent of GDP) in 2022. And, though gas prices fell in 2023, Algeria still enjoyed a current account surplus of $2.9 billion for the first half of that year.

The country’s budget for 2024 lays out how this surplus is being used to bring down the escalating cost of living, including through a big rise in public wages and spending on housebuilding. Algerian gas, delivered both through pipelines and in the form of liquefied natural gas, played an important role in allowing the EU to reach its target of filling gas storage facilities to 90 per cent of capacity ahead of a November 2023 deadline. Algerian gas exports to the European Union rose from 41.8 billion cubic metres (bcm) in 2021 to 55.2 bcm in 2022.

The economic benefit of the oil and gas boom has allowed Algeria’s president, Abdelmadjid Tebboune, to consolidate his regime’s position at home. This followed the massive anti-elite ‘Hirak’ protests in 2019 that drove the country’s longstanding leader, Abdelaziz Bouteflika, from office. But Tebboune’s election in December 2019 represented a reassertion of the power of the country’s ruling class, an opaque network of the military and economic elites, rather than the change of political system the protesters were calling for.

Protests were nevertheless suspended in 2020 due to the covid-19 pandemic; Tebboune has prevented any resurgence through a combination of public spending and increased repression. Authorities have cracked down on opposition activists and critical voices, subjecting them to repeated judicial harassment and arrest. Activists estimate that more than 200 people have been imprisoned for political activity, including such high-profile figures as the journalists Ihsane El Kadi and Mustapha Bendjemaa.

Yet, Algeria’s economic future remains precarious. The country’s gas industry continues to suffer from poor infrastructure and the limited capacity of the gas fields that are now in use. In an Autumn 2023 update on Algeria, the World Bank argued that “continued reforms to foster private sector investment, growth and diversification are needed [to] improve the performance and resilience of the economy”.

But these reforms are proceeding (at best) slowly, as Tebboune tries to build his public support and reinforce his position with the oil- and gas-affiliated army and political establishment ahead of elections next year. The government has repeatedly postponed planned reforms to reduce fuel subsidies and improve the functioning of the tax system. Despite Algeria’s potential to generate renewable energy, including green hydrogen, the regime has been hesitant to take decisive steps towards this transition.

Tebboune has also embraced a more assertive foreign policy, designed to boost Algeria’s regional and international profile and to improve his public standing. This has included a forceful response to what Algerian officials describe as a “series of provocations” from Morocco, leading to a sharp increase in tensions between the two leading Maghreb countries in recent years. Their rivalry centres on the disputed territory of Western Sahara, which Morocco claims (and has largely occupied), but where Algeria supports the right to self-determination of the local Sahrawi people and the Polisario Front movement that represents them.

Algeria cut diplomatic ties with Morocco in September 2021. It did this not only in response to Moroccan military action in Western Sahara, but also to the country’s alliance with Israel and some Moroccan officials’ statements in support of separatist movements in Algeria. While the dispute has not escalated into any direct military confrontation between the two countries, it has led them to adopt a zero-sum logic in their relations with third countries.

Morocco

Morocco now treats Western Sahara as “the prism through which [it] views its international environment”, as King Mohammed VI said in a speech in 2022. He added that the issue was the “clear and simple measure for the sincerity of friendships” between Morocco and its international partners. The country has engaged in an escalating diplomatic offensive to win international recognition for its claims on the territory in recent years.

These efforts received a huge boost when US president Donald Trump agreed to recognise Western Sahara as part of Morocco in December 2020, in exchange for Morocco normalising relations with Israel. The Biden administration has not reversed that decision, though it has also not moved forward with any action to build on it, such as opening a consulate in the territory; US officials have avoided repeating Trump’s statement.

While EU member states have expressed different views on the most desirable outcome in Western Sahara, they subscribe to a common position of support for the UN-backed process to achieve “a just, lasting and mutually acceptable political solution”. However, the EU has repeatedly been forced by its own courts to make clear that it does not regard Western Sahara as Moroccan territory, and that Morocco cannot lawfully enter into agreements that include the territory without the genuine consent of the Sahrawi people.

In the most recent decision, issued in September 2021, the General Court of the European Union determined that agreements between the EU and Morocco on trade and fisheries did not extend to Western Sahara. The European Commission and Council have appealed the decision and the court will likely rule on the appeal in the first half of 2024.

After earlier court rulings, the EU worked with Morocco to revise the agreements in question. However, if the European Court of Justice (ECJ) upholds the General Court’s decision, it would seemingly exhaust the options available to include Western Sahara in the agreements. This would provoke a major crisis in relations between Morocco and the EU. Indeed, Morocco briefly suspended ties with the EU after an earlier European court decision in 2016.

The king has said that Morocco will never agree to any economic or commercial initiative that excludes Western Sahara – though since 56 per cent of Moroccan exports go to the EU, it would likely be prohibitively costly for the country to follow through on this threat.

The reluctance of the EU to provoke a crisis with Morocco testifies to the country’s diplomatic skill in making itself an effective partner for Europe. Apart from its close ties to Spain and France (discussed below), Morocco has gone further than its neighbours to diversify its economy, attract European investment, and embrace renewable energy.

Morocco signed a green energy partnership with the EU in October 2022, the first between the EU and any partner, and one intended to act as a template for future agreements. The partnership aims to strengthen policy coordination and foster green projects. Morocco is already home to one of the world’s largest concentrated solar power plants.

Despite its economic progress, Morocco still faces problems in deepening and spreading the benefits of growth across its society. The IMF summarised these difficulties in October 2023 as “a high share of inactive youth, large gaps in economic opportunities for women, a fragmented social protection system, and remaining barriers to private sector development”. Moroccan leaders have set out a plan to tackle these shortfalls through a new development model that was announced in 2021.

The country also maintains tight control over freedom of speech, using prosecution on questionable charges and other forms of intimidation to try to close down critical voices. Finally, Moroccan relations with some European institutions have been strained by allegations that the country deployed Pegasus spyware to monitor the communications of European targets and ran a bribery campaign in the European Parliament.

These developments in the Maghreb countries interact with the concerns and drivers of policy in the four most influential EU member states to foster European divergence.

Italy: A newfound leader on Mediterranean policy

It is somewhat unusual for Italy to take an active role in trying to shape European foreign policy. Over 2023, however, its government made a determined effort to set the EU’s policy towards Tunisia. Italian leaders have pushed for a policy of pragmatic engagement focused on migration and the economy. The memorandum of understanding that European Commission president Ursula von der Leyen signed with Saied in July 2023 resulted from an Italian initiative.

Indeed, Italian prime minister Giorgia Meloni has prioritised building ties with Saied: in June 2023 she travelled to Tunisia twice within a week, the second time alongside von der Leyen and Dutch prime minister Mark Rutte. The same three leaders returned to Tunisia for the signing of the memorandum.

According to Italian analysts, the initiative was not the result of strategic planning, but rather an improvised response to a crisis.[1] The arrival in Italy of 27,000 migrants in March and April 2023 – more than five times the number that had arrived in those months the year before – created an urgent need to be seen to act. Italian officials describe migration from Tunisia as an issue that could have a direct impact on Italian national security.

On top of this, Meloni was faced with the public failure of one of her signature policies – to curb migration. Her need for a symbolic demonstration that she was taking decisive action to address migration from Tunisia accounts for the peculiar nature of the memorandum, which did not contain any new and binding commitments. The symbolism of an enhanced partnership was for both parties the main benefit of the agreement.

The ambiguous nature of the memorandum has apparently given rise to some disappointment on the Tunisian side. Saied implied this, for example, in his claim that the sums the commission was releasing were too small. But the Italian government has continued to push for the EU to move forward with the document’s agenda. Italian officials recognise that Saied is a complicated partner, but they argue that the best way to work with him is by winning his trust and putting forward a package that demonstrates Europeans are listening to his concerns, including about domestic stability in Tunisia.

They see no alternative to working with Saied, as he is the only person who counts in Tunisian politics and remains the least unpopular political figure in the country. Italian officials contend that engagement with Saied may give them a small opening to moderate his authoritarian drift – but it is clear that they will persist in their approach to Saied even if this does not happen. Some officials believe that Meloni and Saied have a good understanding: as Saied said to Meloni when she visited Tunis, “You are a woman who says out loud what others think in silence.”

The importance of the links between Italy and Tunisia gives the Italian government a strong incentive to maintain good relations. Italy overtook France as Tunisia’s leading trade partner for the first time in 2022.

Most significantly, Italian leaders fear the consequences of a further deterioration of the economic situation in Tunisia, which could result in widespread unrest and lead even more migrants to leave for Italy. As Tunisia’s economic problems deepened, Italy pushed for the IMF to adopt a “pragmatic” approach and reportedly suggested the IMF could advance funds before its agreement with Saied was confirmed.

Italian officials accept for now that large-scale EU financial assistance for Tunisia remains conditional on the IMF agreement. But they want the EU to explore more creative options to continue supporting the country if the IMF deal definitively falls apart. As one official put it, Italy “has no plan B in case of an economic collapse in Tunisia, and the consequences are too dire to contemplate”.

Beyond Tunisia, the Italian government sees itself as pioneering a new model for relations with North Africa more broadly. Italy has long enjoyed good relations with Algeria, based in part on the role played by the founder of the Eni energy company, Enrico Mattei, in supporting Algerian independence. The gas pipeline that runs from Algeria through Tunisia to Italy is named after Mattei. In 2022, Italy’s then-prime minister Mario Draghi signed a series of agreements with Algeria that turned the country into Italy’s largest gas supplier, replacing Russia.

Gas imports from Algeria to Italy rose from around 20 bcm in 2021 to 22.4 bcm in 2022, an increase of 12 per cent. In January 2023, Giorgia Meloni visited Algeria alongside Eni executives, and the company signed agreements with the Algerian state-owned gas company Sonatrach to cooperate on improving Algeria’s energy efficiency and export capacity, as well as to develop green energy projects.

To build on these developments, Meloni in January 2024 unveiled a broad plan for Italy-Africa cooperation on energy, migration, and development, also named after Mattei. The much-trailed “Mattei plan” centres on a vision of a “cooperation on an equal basis” that fits well with Italy’s ‘engagement-first’ approach. It also has a strong migration rationale: for example, Meloni set out in a speech at the United Nations that the Mattei plan would provide “a serious alternative to the phenomenon of mass migration, made up of work, training, opportunities in the countries of origin, and legal and agreed migration paths”.

As my ECFR colleagues Lorena Stella Martini and Tarek Megerisi have written, Meloni seems to be trying to balance her short-term need to stem migration with a longer-term vision of migration management through development. The plan’s priorities will include education and training, health and agriculture, and water and energy. Much of the investment envisaged in the Mattei plan serves Meloni’s ambition to establish Italy as an energy hub for supplies from Africa to Europe, with a focus both on gas and on green electricity and hydrogen.

Yet, Italy will need European backing for the plan to succeed. Meloni revealed that the initial funding allocation will be around €5.5 billion – an amount that will only make a real difference if it is harmonised with broader European policy.

Algeria and Tunisia thus occupy a central place in Italian policy. But Italy has also maintained ties with Morocco and considers the country a strategic partner. Italian industry has made significant investments in Morocco, particularly in the country’s automotive value chain. Italy’s relationships with both Algeria and Morocco endure perhaps because the latter does not consider Italy a close enough partner to press on the matter of Western Sahara.

Nevertheless, Italy would likely oppose any steps that could jeopardise its relations with Algeria, such as a European attempt to evade a legal obligation to differentiate between goods from Morocco and Western Sahara, if the ECJ rules against Morocco later this year.

France: The burden of expectations

As the former colonial power in Tunisia, Algeria, and large parts of Morocco, France has a legacy of deep economic, social, and cultural ties in the Maghreb. Indeed, no other country in Europe can match the density of French ties across the three countries. The bulk of the Algerian and Tunisian diasporas in Europe are based in France, as well as a significant part of Morocco’s. In 2021-22, more than 46,000 Moroccans were studying in France, accounting for the largest group of foreign students in the country; 31,302 Algerian students accounted for the second largest group. Moreover, 51,000 French nationals lived in Morocco in 2023, rising to twice that number if dual nationals are included.

These ties have not translated into easy political relationships in recent years. Because its ties and interests extend across the central Maghreb, France has no alternative but to pursue an approach that balances relations with all three countries. For that reason, it has traditionally favoured formats that integrate the countries of the Maghreb in larger organisations, such as the Union for the Mediterranean.

But the strength of France’s interconnections and historical relationships also means that it is the object of high expectations and demands from the countries of the Maghreb. These have become more difficult to manage as intra-regional tensions rise. Moreover, the persistence of nationalist sensitivity in Algeria and the sovereigntist ideology of Kais Saied in Tunisia pose a challenge for France in light of its past colonial role.

French relations with Morocco in particular have undergone a period of turbulence in recent years. One reason for this is France’s position on Western Sahara. After Trump changed the US position on the territory, France crystallised as the next prize for Morocco to chase in its campaign to entrench its claim to sovereignty. France has long been one of the strongest European supporters of Morocco’s proposed solution for its dispute with the Sahrawis, which would see Western Sahara as an autonomous region under Moroccan sovereignty.

French leaders have consistently described this plan as “a serious and credible basis” for resolving the dispute. But this choice of words, which once appeared to tilt towards Morocco, now looks weak in comparison to the positions of the US and, as discussed below, Spain. As a result, Morocco has mounted a sustained pressure campaign: as one French official said, “Morocco wants more because of what Trump did.”[2]

But Western Sahara is not the only source of tension. In September 2021, France announced that it would cut back on all types of visas for all three central Maghreb countries – setting a refusal rate of 50 per cent for applications from Morocco and Algeria, and 30 per cent for Tunisia. The measure was a response to an alleged lack of cooperation from these countries in accepting the return of irregular migrants from France. The move aroused particular resentment in Morocco, whose elites are accustomed to travelling regularly between the two countries. After the outcry it provoked, France abandoned the restriction for all three countries in December 2022 – a move first unveiled by the French foreign minister, Catherine Colonna, in Rabat.

Another irritant was an initiative launched by President Emmanuel Macron to improve French relations with Algeria. Macron entered office in 2017 having committed to address France’s colonial legacy more directly than previous governments. And the following year he became the first French leader to formally acknowledge France’s use of torture during the Algerian war of independence. But the president then antagonised Algerians in 2021 by commenting that the country’s “politico-military system” lived off the history of the colonial war as a “memorial rent” to legitimise its rule. To repair ties, Macron conducted a high-profile visit in August 2022.

However, Macron’s attempt to deepen France’s partnership with Algeria was costly for relations with Morocco, as French officials acknowledge. French attitudes to Morocco were also affected by revelations of Morocco’s extensive spying programme, which reportedly targeted Macron’s phone for hacking. But there are signs that France’s relations with Morocco are improving. In October 2023, Morocco named a new ambassador to France, filling a post that had remained unoccupied since the beginning of the year. King Mohammed VI also accepted the credentials of France’s ambassador to Morocco, nearly a year after his appointment.

Meanwhile, Macron’s initiative to improve relations with Algeria is advancing at best slowly. His attempt to reset relations was not only motivated by interest in Algeria’s extensive gas reserves, officials say, but also by a political goal of finally moving past the legacy of the war of independence. However, officials believe that, while Macron has established good relations with Tebboune, he may initially have overestimated the Algerian president’s room for manoeuvre within the closed system of the Algerian regime.

One of the central initiatives was a joint commission of Algerian and French historians as part of Macron’s efforts to confront the colonial era that has now held three meetings, though progress on access to archives has been sporadic and inconsistent. Any hope of better cooperation between France and Algeria on security in the Sahel has been hampered by the fact that both countries have experienced diplomatic setbacks in the region. This is most obvious in the case of France, whose forces were asked to withdraw by military governments in Mali, Burkina Faso, and Niger; but Algeria too has lost influence as the negotiation processes it sponsored, notably the 2015 Algiers Peace Agreement for Mali, have been derailed by coups.

French politician, Frédéric Petit, published a critical report on Franco-Algerian relations in autumn 2023, arguing that state-to-state bilateral relations remained essentially blocked, and that France should concentrate on a non-governmental diplomacy that increased links between French and Algerian societies. Nevertheless, officials say that Macron is committed to the project of improving official ties, and that the Algerian regime may continue to evolve towards greater flexibility in the next few years.

French policy on Tunisia is still taking shape. Like Italy, it has a strong interest in the stability and economic health of the country: over 1,000 French businesses operate in Tunisia, employing between 140,000 and 150,000 people. France also wants to limit migration, as many Tunisian migrants make their way through Italy to France. French ministers have clashed with their Italian counterparts over whether Italy is allowing some of these migrants to pass through the country without being registered.

To ease tensions, officials say Macron is disposed to support Meloni’s efforts to reinforce Tunisia’s border security and bolster the country’s finances. But internal debates continue within the French system over how far it is possible and desirable to work with Saied on migration, and how much economic support Europe should give Tunisia if the IMF agreement is not finalised.

Spain: A tilt towards Morocco

In March 2022, the Moroccan palace revealed that the king had received a private letter from Spain’s prime minister, Pedro Sánchez, in which he described Morocco’s autonomy plan for Western Sahara as “the most serious, realistic and credible” basis for resolving the conflict. This marked a clear step by Spain towards Morocco’s position. It also went beyond anything French leaders or those of any other European country had said by elevating the Moroccan plan above other possible solutions.

Spain’s change of position was an attempt to repair relations with Morocco following a prolonged dispute between the countries that began after Madrid allowed the leader of the Polisario Front, Brahim Ghali, to receive medical treatment in Spain. By taking this step, Sanchez showed he was willing to prioritise relations with Morocco above a more comprehensive vision of policy towards the Maghreb.

Spain’s relationship with Morocco has always been of crucial importance. Two semi-autonomous Spanish cities, Ceuta and Melilla, lie inside Morocco; their boundaries are the only land borders between Europe and Africa. Just 14 kilometres separate the main territories of Spain and Morocco across the Strait of Gibraltar. Since the 2004 train bombings in Madrid, carried out by a group of predominantly Moroccan immigrants, Spanish authorities have viewed cooperation with Moroccan intelligence services as vital to Spain’s security.

Nevertheless, after joining the European Community in 1986, Spain had tried to situate its policy towards Morocco within a larger framework of European policy towards the Maghreb. As the historian Miguel Hernando de Larramendi has argued, Spain hoped that, by Europeanising its relations with the Maghreb in the 1980s and 1990s, it could secure European resources to help promote stability and prosperity in the region, as well as encourage integration. Hopes for regional integration dissipated thanks to tensions between Maghreb countries, but Spain benefited from putting the contentious issues of trade and fisheries into a European framework.

Alongside this, Spain pursued bilateral relations with both Morocco and Algeria, signing treaties of friendship with both countries. Spain established itself as Morocco’s leading trade partner, with commerce increasing at an average of 10 per cent each year since the turn of the century. Meanwhile, Algeria has been Spain’s leading supplier of natural gas, providing 40 per cent of Spain’s needs in 2021, mostly through the Medgaz pipeline that directly links the two countries.

Moroccan pressure on Spain had been growing even before March 2022. While the decision to treat Ghali was the immediate cause of the breakdown in relations the previous year, it came against the backdrop of increasing Moroccan demands for a revision of Spain’s Western Sahara policy. The consequence was a surge of 8,000 migrants attempting to enter Ceuta and Melilla over two days in May 2021, with Moroccan police doing nothing to stop them.

Spanish officials complained that this was an act of blackmail by Morocco. Even so, the incident seems to have played a part in ultimately persuading Spain that it needed to restore relations, leading to the change in position. Spanish officials also say Spain was conscious that in a new geopolitical context, Morocco had other options for alliances, weakening Spanish leverage.[3]

Spanish officials defend the shift on Western Sahara as a gesture that does not alter their fundamental commitment to the UN negotiation process. They also say it has allowed Spanish relations with Morocco to advance to a new level. In April 2022, Sánchez and King Mohammed VI signed a declaration of principles that laid out a roadmap for future actions, including the launch or restarting of a series of working groups covering all the main areas of mutual concern, such as migration, the definition of maritime boundaries, trade, education, science, and culture.

Moreover, they agreed to work towards full normalisation of trade between Morocco and Ceuta and Melilla: Ceuta has never had a customs post, while the customs post for Melilla was closed by Morocco in 2018.

Officials say the working atmosphere and trust between the two sides are much improved. But there have been few tangible results to date. On customs, Morocco’s foreign minister said recently that there was no problem of commitment or politics, but that there remained “a problem of technical implementation”. Sánchez’s letter to the king represented a concrete gain for Morocco in exchange for the promise of future benefits for Spain. The fact that Morocco announced the terms of the letter without Spain’s agreement or advance knowledge suggests that Morocco has emerged empowered from the episode.

Spain’s change of position also marked a clear end to the policy of maintaining some balance in its relations with Morocco and Algeria. Algerian leaders had not been informed of the letter – and were particularly infuriated when Spain’s foreign minister José Manuel Albares, caught out by Morocco’s revelation, suggested that they had been aware. In response, Algeria suspended its treaty of friendship with Spain and announced it was cutting off trade in almost all sectors.

Algerian purchases of Spanish goods fell from €329m in June and July 2021 to €94m in June and July 2022 – and have fallen further since. In an indication of the growing renationalisation of Europe’s Maghreb policy, no other European country was informed in advance about Spain’s change of position, and none came to Spain’s defence over trade with Algeria, even though trade is a European competence. Instead, other member states, particularly France and Italy, reaped a commercial benefit by increasing exports to Algeria.

But Algeria did not cut off gas supplies to Spain. In a press release in October 2023, Sonatrach officials underlined the company’s “essential role in supplying gas to Spain and Europe in general, as a secure and reliable supplier”. However, as the dispute coincided with a scheduled contract renegotiation, it appears that the price Spain paid for gas increased significantly.

At the end of 2023, there were signs that the dispute might be easing, as Algeria announced that it was naming an ambassador to Spain after an interval of 19 months. One reason may lie in the Spanish election of July 2023. Algerian officials may have been waiting to see if a new Spanish government would come into office, to replace the prime minister who they felt had betrayed them, but decided to draw a line under the dispute after the results showed that Sánchez was likely to keep his position.

Germany: From reform to renewables

Germany did not take a great interest in the Maghreb before 2011. As one official said, German governments were content to defer to the EU’s southern member states, particularly France.[4] But that changed with the Arab uprisings. German politicians and public alike were inspired by the pro-democratic movements, and the region moved to the forefront of German policymaking. Within German government and civil society, there was strong engagement in favour of supporting democratic transitions, with a central focus on Tunisia’s as the most promising. Germany established a “transformation partnership” with Tunisia as early as 2012.

The GIZ development agency greatly expanded its work in the country, employing more than 500 people in Tunisia by 2022. All six German political party-affiliated foundations had offices in Tunisia after the revolution. A study of Tunisian political party views published in 2014 quoted activists as saying Germany was “very present”, “active”, and “very dynamic”; one said that Germany had been “more visionary and faster than others” in responding to the transition.

Germany’s investment in Tunisia’s democratisation meant that Saied’s counter-democratic regression has come as a bitter blow. As one German official said, the sight of tanks positioned outside the suspended parliament in Tunis damaged support for the country more in the German parliament than in France’s or Italy’s because of the high expectations that Germans had entertained. Following Russia’s invasion of Ukraine, Germany has also faced an urgent strategic threat closer to home – and the German political system has been intensely focused on that. While Italy conducted high-level shuttle diplomacy in Tunisia during 2023, few senior German officials have visited since February 2022.

As a result of these developments, Germany has maintained a policy of critical distance towards Tunisia, opposing some of the proposals advanced by other countries but offering no alternatives of its own. A letter from German foreign minister, Annalena Baerbock, to the European Commission, later reported in the press, sharply criticised the European Commission’s lack of consultation before signing the memorandum of understanding with Tunisia last July, at a time when Tunisia’s abusive treatment of migrants was under scrutiny.

Parliamentarians from Baerbock’s Green Party were particularly vocal in attacking the agreement: “Democracy, human rights and the rule of law must guide us in our cooperation - something that was not given suitable consideration, in the agreement with Tunisia,” Baerbock wrote. Germany has also emerged as a leading opponent of any suggestion that additional European financial assistance should be given to Tunisia in the absence of a new IMF agreement with the country.

Disillusioned with reform in the region, Germany now looks at the Maghreb through a more transactional lens, but without the sense of urgency of France, Italy, and Spain. In the words of one German parliamentarian, the country’s position towards these other member states is like that of a disengaged parent whose children are fighting amongst themselves.[5] Germany supports a more coherent European policy but lacks the ability and commitment to bring its own interests to the table. Moreover, while the Greens remain hesitant to work too closely with Saied in Tunisia, migration from North Africa is a highly contentious issue in Germany.

It has, for example, been a prominent issue in the rise in support over recent months for the far-right Alternative for Germany party. But the dominant focus for the German government in North Africa is the search for renewable energy. In August 2022, Germany and Morocco agreed to set up a strategic dialogue with climate policy as the first item on the agenda. Shortly afterwards, Germany agreed to commit €243m to cooperation with Morocco on sustainable development and climate measures, including the construction of the first green hydrogen plant in Africa.

To facilitate this cooperation, Germany had to overcome its own diplomatic crisis with Morocco. It stemmed from a German move to call a UN Security Council meeting to discuss the implications of Trump’s recognition of Moroccan sovereignty over Western Sahara, which the Moroccan foreign ministry described as “antagonistic activism”.

The crisis ended after Germany issued a statement calling Morocco’s autonomy plan “serious and credible” and a good basis for a mutually agreed solution. In a kind of calibration of leverage, Morocco settled for a weaker statement from Germany than it later demanded from Spain. Nevertheless, Germany attaches significant weight to relations with Morocco, given the latter’s stability and relative openness to commercial cooperation.

Germany was able to issue its statement on Western Sahara without jeopardising its relations with Algeria, which also centre on renewable energy. German leaders look to Algeria as a key supplier of green hydrogen in particular, hoping to import this by upgrading the existing gas pipeline network in cooperation with Italy and Austria. German officials believe Algeria is ready to move forward with the project, despite some hesitation in embracing renewable energy up to now.

Some policymakers and industrialists in Germany also hope to increase its weapons sales to Algeria, which may be reconsidering its reliance on Russian arms after the Russian forces’ poor performance in Ukraine. But this comes with legal complications, since Germany cannot by law sell weapons to a country engaged in a current conflict. An internal government assessment of whether Algeria’s involvement in Western Sahara meets this threshold is under way.

Towards greater European coherence

The European divergence explored in this paper reflects developments in the Maghreb and the varied political drivers of policy among member states. Domestic political concerns and pressure from Morocco, Algeria, and Tunisia mean that EU member states have to some degree renationalised their policies towards the Maghreb. But this approach comes at a cost.

It hands power to Maghreb leaders to secure cooperation on their own terms by striking deals with the member states over whom they have most influence. This tilts European policy towards the short term. The result is that it becomes more difficult for Europeans to balance support for Tunisia with pressure to improve its treatment of migrants and undertake meaningful economic reforms, to prevent Morocco from using its leverage to extract concessions over Western Sahara, and to encourage Algeria towards greater economic openness.

Nevertheless, an opening now exists for the renewal of a more coordinated European approach. Some of the tensions of recent years are diminishing: relations between France and Morocco, and Spain and Algeria appear to be thawing. And the longer-term interests of EU member states are more convergent than current policies might suggest. The four most influential European countries all have a stake in promoting stability, opportunity, and energy transitions across the region.

There is a broad inclination towards the ‘engagement-first’ approach, avoiding direct focus on human rights and democratic backsliding – but also an interest in encouraging more effective, inclusive, and accountable governance. Above all, Europeans have a shared interest in defining a form of engagement that gives member states greater influence. Greater coordination would help Europeans find a way of working with the difficult partners in the Maghreb that does not cede all initiative.

In the case of Tunisia, Europeans need to find a way to support the country while persuading Kais Saied to address some of its underlying problems. The EU must do what it can to prevent economic collapse in Tunisia, but will not benefit from simply maintaining the failing system that is now in place. The IMF deal remains the best way forward.

But, if Saied is unwilling to sign up, the EU should offer only temporary support in exchange for steps to tackle public finances and increase opportunities. Saied might be more willing to sign an IMF agreement following Tunisia’s presidential election later this year. The EU should calibrate its cooperation on migration so that it does not support practices that violate basic rights.

In Algeria, a common European interest exists in maintaining supplies of gas in the short term while encouraging progress towards economic diversification and the transition to green energy. European countries are already working together on this, as with the German, Italian, and Austrian cooperation on a planned green hydrogen pipeline. Algeria remains a difficult country to influence. But Europeans should present a common message that will carry more weight than a series of uncoordinated approaches.

With Morocco, Europeans need to prevent the country from pursuing a constant campaign to ratchet up concessions on Western Sahara. The ECJ’s forthcoming appeal ruling on the inclusion of Western Sahara in trade and fisheries deals with the EU could provoke a crisis if the decision goes against Morocco and the European Commission.

It could, however, also present an opportunity to put an end to the dynamic of Moroccan pressure and European accommodation. An adverse ruling would lead to Moroccan pressure on Spain and France to find a way to work around its terms, but the rule of law must be a red line for Europe. Europeans should also look for ways to amplify Moroccan cooperation by helping to improve economic inclusion in the country.

In all these cases, the centre of gravity common to European national policies represents a beneficial landing point for the EU’s engagement with the countries of the Maghreb. Europe should leverage the relationships that member states have built up, using them as the starting point to engage with regional leaders in support of an agenda that is coordinated within the EU. Such coordination would provide support for member states facing pressure from partners in the Maghreb.

It would also help balance their short-term priorities with more structural goals, reinforcing a common message. A more coherent policy that takes account of member states’ imperatives but also of the EU’s longer-term interests is the most productive approach to a region whose importance for Europe will only continue to grow.

About the author

Anthony Dworkin is a senior policy fellow at the European Council on Foreign Relations. He leads the organisation’s work in the areas of human rights, democracy, and multilateralism. Among other subjects, Dworkin has conducted research and written on European and US frameworks for counterterrorism, European policy towards North Africa, and international cooperation in an era of geopolitical competition.

Acknowledgements

This paper is based on a series of conversations with officials in France, Germany, Italy, and Spain, as well as in EU institutions. All references to official views in the report are based on these conversations unless otherwise indicated. I am very grateful to the following experts from the different countries studied who shared their insights with me: Canan Atilgan, Ignacio Cembrero, Haizam Amirah Fernandez, Miguel Hernando de Larramendi, Andrea Dessi, Akram Ezzamouri, Mattia Giampaolo, Nadim Houry, Hamza Meddeb, Azzurra Meringolo, and Isabelle Werenfels. Within ECFR I am grateful to Lorena Stella Martini and Irene Sanchez for their help. Thanks to my colleagues Julien Barnes-Dacey, Tarek Megerisi, Jana Puglierin, José Ignacio Torreblanca, and Arturo Varvelli for advice and comments on an earlier draft, to Nastassia Zenovich for designing the graphics, and to Kim Butson for skilful editing.

This paper was made possible through a grant from the Compagnia di San Paolo.

Footnotes

[1] All references to Italian analysts and officials in this section are based on the author’s off-the-record interviews, Rome, June 2023.

[2] All references to French officials in this section are based on the author’s off-the-record interviews, Paris, October 2023.

[3] All references to Spanish officials in this section are based on the author’s off-the-record interviews, Madrid, October 2023.

[4] All references to German officials in this section are based on the author’s off-the-record interviews, Berlin, September 2023.

[5] Author’s interview with German parliamentarian, held off the record, Berlin, September 2023.

Disclaimer

The European Council on Foreign Relations and CEMAS Board do not take collective positions. ECFR and CEMAS publications only represent the views of their individual authors.

After Mutiny: Russia’s Wagner Group in North Africa and Why It (Still) Matters

After the Mutiny: Russia’s Wagner Group in North Africa and Why It (Still) Matters

By Andrea Cellino, Middle East Institute, sqwitzerland, 29 June 2023

Europe and the United States need an urgent strategy to address Russian policies in the Mediterranean and Africa.

While much of recent media attention has rightly focused on the mutiny by the Wagner Group in Russia, questions linger about the future of the Russian private military company’s engagement in the African continent. On 26 June, Russian Foreign Minister Sergey Lavrov confirmed that Wagner operations in Africa “will continue”. In a rare, though indirect, admission that the mercenary outfit is part and parcel of the Russian security machine, Lavrov added that they were doing “a good job” in countries with strong relations with Moscow.

Given that Wagner’s role in the Ukraine conflict will most likely be reduced as a result of recent developments, there are good reasons why policymakers in Europe and the United States should be concerned about the group’s influence on the security of key countries in North Africa and the Sahel region. European countries in particular have an interest in taking seriously the Wagner presence there since the security of North Africa has a direct impact on theirs. There is a risk that Wagner's activities contribute to creating failed states across the Mediterranean southern rim (and beyond), potentially generating serious security challenges such as conflicts, illegal trafficking, and other criminal activities. More worryingly, Western neglect of Wagner’s role in North Africa, in parallel to multiple other challenges. may open opportunities for Russia’s aggressive anti-Western actions in Europe’s backyard.

Wagner as a Tool of Russian Statecraft

The Russian regime has relied on Wagner for many years, and in countries where it did not want to commit official resources or troops but sought to maintain a presence, exert influence, or disrupt Western policies. While the origin of the group is almost certainly related to the first Russian intervention in the Ukrainian Donbas in 2014, the template of Wagner’s modus operandi in the Middle East and North Africa was established in Syria. As of October 2015, the Russian government used Wagner mercenaries to support Bashar al-Assad’s army, rather than risk directly committing the Russian military.

In Africa, Wagner could rely upon a historic presence established by criminal gangs and organizations in post-Soviet Russia in the 1990s and early 2000s, focused on established criminal activities such as trafficking and arms smuggling to Africa. Under Putin’s regime, Russian criminal organizations had to increasingly align themselves with Moscow’s political goals and strategies. In fact, Russian organized crime has been influenced by domestic political developments – from its proliferation after the collapse of the Soviet Union to increasing integration with the official business sector.

The Wagner Group exemplifies a broader trend of convergence of private and state foreign policy interests. Not surprisingly, its alleged head, Yevgeny Prigozhin, emerged from the Russian criminal underworld in the 1990s. Although generally described as an oligarch due to his climbing the echelons of Russian power with his catering company Concord, Prigozhin may be a member of a Russian intelligence branch. Recognized as the founder of Wagner, he controls a series of companies and through them, highly profitable businesses related to Wagner, or to the closely affiliated Europolis (or Evro Polis), a company frequently used as a front for Wagner in Syria and in Africa.

Some observers believe that military activities were led in the past by Dmitri Utkin. Utkin is a veteran army and special services officer, was many times decorated by the Russian state, and was a known Nazi sympathizer (hence the name “Wagner”, inspired by the German Romantic composer Richard Wagner).

In its operations across the African continent, Wagner has focused on either autocratic regimes or on countries with weak governance. Such involvement has been aligned with Russian political goals, as well as business interests in the mining sector such as gold and diamonds, as well as in arms smuggling. The most successful cases of Wagner’s involvement are in Sudan and the Central African Republic, where Russian security personnel appeared in 2017-18 and now have a large footprint.

With a presence ranging between 1,000 and 2,500 personnel, Wagner has been able to provide security, train and control national security forces, and fight (or alternatively support) rebel forces in these countries. In exchange, it obtained substantial political influence and, more importantly, access to mining resources through rights of exploitation granted by local governments to Wagner-controlled companies.

Active at different levels of involvement in about half a dozen countries across the African continent, Wagner has been expanding its range of activities, depending on the specific demands. In addition to its involvement in security services and mining, the group has successfully provided leaders in Africa with influence and disinformation campaigns, political strategy, and advice, as well as interfering with election processes. In most of these cases, Wagner’s operations have been conducted against Western interests and influence. This has been the case most notably in Mali, where Wagner was instrumental in the ousting of the French-EU mission to support the government against jihadist rebels. In this case, Wagner also benefited from direct Russian military assistance.

Libya: A Wagner’s Stronghold

In North Africa, Wagner has established its stronghold in Libya, where Russia started supporting eastern-based field marshal Khalifa Haftar as early as 2015. Wagner’s fighters appeared in Libya in April 2019 when they joined Haftar’s forces in their unsuccessful attack on the UN-backed government in Tripoli. Following that defeat, the group began to diversify its activities, still keeping its support for the authorities in the east but enlarging to more multi-faceted operations: military hardware maintenance, political advisory services, as well as social media disinformation and influence operations.

They have established themselves in military bases in the east and south but also installed near oil fields and other infrastructure projects. Mining facilities and gold have also been targeted, although to a lesser extent, due to Libya’s limited resources with respect to other African countries.

Between 1,500 and 3,000 Wagner “musicians” (Музыканты), as they are called, are estimated to have been present in Libya depending on specific circumstances and needs. Most of them originate from Russia and other former Soviet bloc countries. According to Russian sources, these mercenaries are offered an initial salary equivalent to between 1,500 and 1,700 euros per month, which can double for officers and specialists possessing key military or security skills, including pilots of airplanes or drones, tank or anti-aircraft operators, and snipers.

While the role of Wagner in Libya remains primarily military, unconfirmed Italian intelligence reports indicated that Wagner may have been involved in human trafficking with the specific purpose of disrupting the security of NATO ally Italy. Such allegations do not seem reliable, as human trafficking is an important source of revenue for Libyan armed criminal groups, who can hardly be imagined wanting to leave room for Wagner to make gains at their expense. Besides, human trafficking characterizes not only eastern and southern Libya but also Tripolitania, where Wagner is not very much present.

A recent concerning factor related to Wagner’s presence in Libya is the country’s proximity to Sudan, ravaged in recent weeks by violent conflict between different factions within the military. The mercenary group’s presence and extensive activities in Sudan have a strong connection with Libya. Although both Sudanese warring factions have benefited from Russia’s support, one of them, the Rapid Support Force (RSF) – originally stemmed from a militia group in Southern Libya and still maintaining rear bases there – is actively supported by Wagner.

Similarly, Haftar’s Libyan Arab Armed Forces are known to provide material support to the RSF. As a further complicating factor, Haftar and one of its regional supporters, Egypt, are finding themselves supporting opposing factions in the Sudan conflict, with Cairo leaning more towards the RSF opponents, the Sudanese Armed Forces. Therefore, risks of spillovers from the Sudan conflict into neighboring Libya are extremely high.

Opportunities for Russia?

The services Wagner offers to autocratic leaders and warlords across Africa have naturally found fertile ground in anti-colonial environments, something which is perfectly in line with the Russian de facto policy of supporting authoritarian conservatism. In Mali and the Central African Republic, Wagner has been able to ensure the weakening and then the demise of the role of France in its former colonies, as well as reducing the role of international actors such as the United Nations.

Countering Wagner’s presence in Libya should be a priority for Western policy makers but by no means their sole concern. The statement by the Russian foreign minister reported above is only a confirmation that Wagner operates in coordination and in support of Moscow’s official policies across the African continent. Therefore, if we combine the Wagner Group’s presence across the continent with Russia’s official economic, military, or political ties with North African countries in particular, the picture of a larger Russian strategy becomes clear.

In addition to Libya, both Algeria and Egypt are relevant, for different reasons, for their links with Moscow. Although Algeria and Egypt have both strong ties to Europe and the latter is a main recipient of secret US military support in the region, they maintain solid relations with Moscow. Based on its past friendship with the Soviet Union, Algeria still relies mainly on Russian weapons and military imports. During a recent visit to Moscow, Algerian president Abdelmadjid Tebboune reiterated in extremely warm terms the two countries’ close and friendly relations.

Egypt’s president, Abdel Fattah el-Sisi, has never made a secret of his sympathy for Vladimir Putin and was recently suspected in the United States of planning to provide military support to Russia. In addition, Egypt’s overall arms imports from Russia have increased by 44 percent between 2017 and 2022, making it Moscow’s third largest recipient, behind India and China.

To this picture should be added Tunisia’s fragile situation, as an increasingly authoritarian leader has difficulties addressing the multiple challenges related to a financial and economic crisis, increased migration from Sub-Saharan Africa, and European demands related to both. A Tunisian default, resulting from the ever more anti-Western stances of its president and his refusal to accept the IMF’s conditions for a vitally needed loan, would certainly contribute to the region’s instability and play into Russia’s hands.

In sum, all the above points to significant opportunities for Russian diplomacy, considering its continued war of aggression against Ukraine and efforts to thwart Western support for Kyiv. And while the United States seems to have in part understood the challenge – at least judging from its growing diplomatic and security attention to the North African region –European leaders appear much more concerned about halting swelling migration flows from the south or securing contracts for new oil and gas routes and supplies. This is happening chiefly through deals with the region’s leaders, often at the expense of economic reform, respect for the rule of law and human rights, and better governance – the contrary of the kind of reforms that would help dry up the fertile ground where Wagner has been able to thrive.

Recommendations

- Coordinated sanctions by both the US and European countries will weaken Wagner’s capacity to fund its operations. With time, the combined effect of Ukraine-related sanctions against Russia, and direct sanctions on Wagner and its leaders, are going to have an impact.

- The Sudan conflict needs urgent and increased diplomatic efforts by both the EU and the US, with the goal of achieving a ceasefire and re-establish the country’s political process.

- An additional element that Western countries must consider tackling is the fact that funding for Wagner comes in part from Haftar’s coffers. Financial oversight needs to be strengthened in Libya. A neutral country such as Switzerland may play a key role in this.

- As Wagner thrives in the gray zone – offering its services of military security, troops training, information/disinformation – the EU and the US need to limit this lawless soil by stabilizing Libya, strengthening the country’s governance, especially in the security sector, on the basis of respect for the rule of law. This should also signal a novel approach by Western countries, whose divisions and stumbles in Libya had often helped create the ground for such gray zones.

- Supporting the new UN process toward elections in Libya should be accompanied by efforts to isolate all potential national and international spoilers from the design of any UN-led process. This must take into account the potential Wagner role in disinformation and manipulation of the electoral process.

- Strong coordination and targeted cooperation between the United States and European allies would be crucial. In fact, while facing its most vital challenge in Europe since the end of the Cold War, NATO cannot ignore the security threats lurking in its immediate Southern neighbourhood.

- Furthermore, a stronger and wide-ranging European strategy (closely coordinated with Washington on specific issues) to address the challenges of North Africa, from the political, economic, and social points of view will be critical. Value-based support to improve welfare and governance across Europe’s Mediterranean neighborhood can be provided by Switzerland, which is widely seen as an impartial and trusted actor.

- Finally, European countries, including Switzerland, should step up investments in sustainable economic progress, helping to tackle the impact of climate change, upholding a culture of rule of law and human rights (including by supporting free media and independent civil society), and consider migration as an opportunity for a gradually depopulating European continent.