"Ras El Hekma: The New 'Egyptian Dubai' or Sovereign Risk".

In a bold turn, the United Arab Emirates (UAE) is leading an investment consortium that will commit $35 million to key projects in Egypt, following meetings between the two governments that ended in this agreement in February. The epicenter of this initiative is Ras El Hekma. This coastal region is emerging as the new “Egyptian Dubai”, a mega tourism project that aims to develop an environment similar to Dubai, with investment zones, technology centers, amusement parks, and residential areas to attract 150 billion dollars in investments and generate 8 million additional tourists to Egypt, marking a before and after in the diversification of the flow of investment beyond that of the hydrocarbons that have been found on its coast.

The possibility of modifying the coastal area to accommodate other types of cargo and oil vessels that require a different type of port area than the one currently available in the region is also being studied.

However, this agreement is not without controversy because Dubai has previously made economic moves in the Red Sea to acquire Egyptian territories and set up military bases from which Egypt did not benefit in any way beyond being able to pay its excessive state debt caused by the great impulse in urban investment in its governmental city, among others.

It is well known that Egypt faces several very significant economic challenges. Its currency is not at its best, tourism is still in decline, and its external debt is very high, making it overly dependent on foreign investment, its debt crisis and lack of foreign exchange reserves are forcing the state to try to find a balance between its financial commitments and its sovereignty, and there is a high food shortage due to an uncontrolled population increase.

The injection of capital and long-term investments could be a stabilizing balm for its financial situation while generating employment so the UAE agreement.

The promise of attracting investment to Ras El Hekma looks tempting, due to the tourism potential and increased foreign investment, making it a possible financial and business center in the Eastern Mediterranean. However, it is still unknown, and it is hard to measure the environmental and cultural costs it may generate. This project will compete with similar initiatives such as Saudi Arabia's NEOM project, which does not seem to be evolving as expected and will contract its initial claim, so it is not a geopolitical vacuum, but this could affect the power dynamics in the Arab world. It also raises the possible sovereign commitment of Egypt to foreign investment for its development. What is certain is that Iran and Yemen are currently posing a thorn in the side of both Saudi and UAE business due to the conflict in the Strait of Hormuz and the Gulf of Aden. This development could perhaps be developed through both allied countries to ship oil to Egypt in another, safer way through allied countries to the Suez Canal where there is no Yemeni or Iranian influence.

Concluding, the agreement between the two countries may prove to be a risky gamble, but it may offer economic opportunities, although such a high investment raises sovereignty questions, it could result in some fresh water for the economic desert that Egypt has been suffering from for approximately more than four years.

Striking a balance between progress and protecting sovereignty is key. Only time will tell whether this pact is a bold step taken by Egyptian Prime Minister Mostafa Madbouly into the future or a calculated risk.

Ion Jauregui