EU Promises 700 Million Euros to Egypt (9/26)     Print

By Erik Peterson, “European Affairs" Editorial Assistant

Undeterred by its economic crisis, the European Union has stepped forward with a sizeable aid package for Egypt, the key nascent democracy emerging from the Arab Awakening.

During a visit to Brussels earlier this month by Egypt’s new President, Mohamed Morsi, the European Union announced a package of up to €700 million for Egypt.  See press release of the European Commission. The EU is Egypt’s largest trading partner and main source of foreign direct investment and as such is important to the new government’s ability to build a sustainable economic recovery and attract foreign investment. During his visit President Morsi met with European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso and European Union Foreign Policy Chief Catherine Ashton.

The EU is preparing to offer €500 million in macro financial assistance, subject to Egypt’s agreement with the IMF on financial assistance. In addition there will be €150-200 million euros for an agreed economic recovery plan. Said Commission President Barroso, “We are fully aware of (the) new Egypt’s challenges. Egyptian people have high expectations for the democratic revolution to deliver socio-economic benefits in the short term. (…) the expectations and transitions are very difficult to fulfill.”

The EU has already allocated €449 million euros to Egypt for 2011-2013.

In addition, Egypt has sought a $4.8 billion dollar loan from the International Monetary Fund, to help rebuild the economy, reduce government spending and increase job growth. The IMF has said that it is sending a team to Cairo to work with the Egyptian government on financial assistance.