Yves here. Not long after the October 7 attacks, a friend with very strong Democratic party connections was pretty confident that Egypt would soon admit very large numbers of Gaza refugees, for the reasons suggested below: that they would be bribed via debt relief.
The fact that this development has yet to happen makes me think it is less, rather than more, likely to happen now. World opinion is hardening against Israel. From the New York Times on November 7:
Israel has quietly tried to build international support in recent weeks for the transfer of several hundred thousand civilians from Gaza to Egypt for the duration of its war in the territory, according to six senior foreign diplomats…
The suggestion was dismissed by most of Israel’s interlocutors — who include the United States and Britain — because of the risk that such a mass displacement could become permanent. These countries fear that such a development might destabilize Egypt and lock significant numbers of Palestinians out of their homeland, according to the diplomats, who spoke anonymously in order to discuss a sensitive matter more freely.
The idea has also been firmly rejected by Palestinians, who fear that Israel is using the war — which began on Oct. 7 after terrorists from Gaza raided Israel and killed roughly 1,400 people — to permanently displace the more than two million people living in Gaza.
With more Gazans badly injured, suffering from disease, and starving, it would be even harder to treat and house them. Again, never say never but I would not bet on this outcome.
By Alfons Pérez, a researcher at ODG and Nicola Scherer, a researcher on debt and financialisation; @NicolaKSch. Originally published at openDemocracy
A leaked document written by Gila Gamaliel, the Israeli intelligence minister, came to light in late October amid the devastating war in Gaza.
It set out a proposal to relocate the residents of Gaza to Sinai (Egypt) as a solution “which will produce positive long-term strategic results”. But how could Egypt accept such a solution when most of its population appears to be pro-Palestinian?< The answer can be found in the world of macroeconomics: debt. After being revealed by the Israeli newspaper Calcalist and WikiLeaks, the proposal is getting attention in the Israeli and Egyptian critical press. Tel Aviv appears to be in talks with Egyptian president Abdel Fattah al-Sisi about Egypt taking in Gazans and settling them in Sinai, in exchange for the cancellation of all its debts to the World Bank.
This could mean the Israeli government would take on the debts Egypt owes to multilateral creditors (such as the World Bank, the International Monetary Fund etc.) or that (with the support of the United States) it would convince allied Western countries to write off Egyptian debts to national institutions.
Meanwhile, potential financial aid for specific measures is being negotiated, such as US secretary of state Anthony Blinken’s proposal to fund a tent city (later to be upgraded to residential buildings), which he proposed to the Egyptian government on his October tour of the region.
Opening Egypt’s doors to the Palestinian population under the pretext of humanitarian relief veils the real objective of the Israeli government’s “solution to the crisis”: ethnic cleansing and the colonisation of territory in return for financial favours, in this case writing off the debt of a neighbouring country.
Egypt, Suffocated by Debt
From a macroeconomic perspective, the proposal could be a godsend for Abdel Fattah al-Sisi’s government. Egypt, a nation of 105 million people, is currently facing a historic debt crisis barely noticed by the West. Bloomberg Economicsranks Egypt in second place worldwide behind Ukraine in terms of its vulnerability to becoming unable to repay its debts. Two of Egypt’s principal sources of revenue, tourism and Suez Canal transit fees, have increased, but not sufficiently to repay its external debts, which total $164.7bn as of June 2023. Part of this debt is owed to local creditors, such as Egypt’s Gulf allies, the United Arab Emirates. The rest is owed to less forgiving creditors: Egypt needs to pay $2.95 billion to the International Monetary Fund (IMF) and $1.58 billion to foreign bond holders by the end of 2023.
Egypt, which is one of the world’s largest wheat importers and also relies on imports of other basic foods and fuel, continues to face the impacts of the war in Ukraine, growing inflation, unprecedented price increases and limited access to affordable finance. As a result, the country is completely reliant on international loans from the IMF and the rich Gulf states. This dependency limits Egypt’s foreign policy options, making it difficult and unlikely that Egypt would act independently of the United States which, along with European countries, dominates decision-making in multilateral institutions such as the IMF and the World Bank.
There had been speculation that Abdel Fattah al-Sisi’s government yielding to the far-right Israeli government’s proposal for the forced displacement of the Palestinian people in exchange for the cancellation of its debts, would harm its popularity even further and al-Sisi’s chances at the ballot box. But he was announced winner of the elections today, although this “solution” clashes with the largely pro-Palestinian stance of the Egyptian population, which took to the streets on the 18th October in solidarity with the Palestinian people, shouting “No displacement, no resettlement, the land is the land of Palestine”.
The opposition and the Egyptian population are well aware that Egypt is an ally of the United States, and that the United States’ support of the authoritarian Egyptian government and its repressive measures largely comes down to the existence of Israel. The US counts on the Egyptian government acting as a containing dam against its overwhelmingly anti-Zionist population. If the country’s economic circumstances do not improve and Israel continues to bombard the Palestinian population in Gaza with the brutality it has shown over the past weeks – killing thousands of children and civilians – it is possible that Egypt will have no other choice than to accept de facto the displacement of refugees into its territory in exchange for financial aid and partial relief from its debts.
Debtocracy, a (Not Very) New Colonial Tactic
The principles behind the Israel government’s proposal – to offer debt cancellation in exchange for political favours – are not new. Sadly, this is an example of a practice frequently used by the rich countries of the Global North in a world characterised by neo-colonial financial power structures. This means that the impoverished countries which take out loans with the Global North and multilateral financial institutions (such as the IMF, World Bank etc.) are still largely identical to the ex-colonies. This means that debt is not merely a financial issue but can also be used as a tool of oppression and extortion: the creditor is able to wield power over the debtor, influencing their political decisions.
Taking Egypt as an example, this would not be the first time that the United States has used debt cancellation as a lever to make Egypt comply with the US’ political demands. In 1991, the US and its allies – rich governments from the Paris Club – wrote off half of the $20.2 billion that Egypt owed to them in exchange for Egypt’s participation in the second Gulf War as part of the anti-Iraq coalition.
Many social movements (starting with the Jubilee movement in the 2000s) began to denounce “debtocracy” and say that debt is a mechanism for subjugation and for spreading neoliberal policies which are severely harmful to the environment and human rights. As people living in rich Western countries, we should not stay silent in the face of financial proposals which support ethnic cleansing and the colonisation of Palestinian territories by the far-right Israeli government.
Luckily, not everyone in the international community is staying silent in the face of the massacre in Palestine.
Countries including Bolivia, Colombia, Brazil, Argentina, and Mexico, South Africa and Algeria have taken robustly critical positions against the Israeli attacks. Bolivian President Luis Arce has broken off diplomatic relations with Netanyahu’s government, and Colombia, and Chile and South Africa have recalled their ambassadors from Israel. This has accompanied Argentina and Mexico’s condemnation of the attack on Jabalia refugee camp in Gaza. Furthermore, Colombian President Gustavo Petro announced on November 9 that Colombia would support Algeria’s case in the International Criminal Court (ICC) against Israel. There are also critical voices inside the European Union. Three weeks ago, Spain’s president Pedro Sanchez and Belgium’s Prime Minister Alexander De Croo spoke up during their visit to the Rafah border crossing between Egypt and Gaza, against Israel’s killing of innocent civilians, including thousands of children, which led to an ongoing diplomatic crisis.
Belatedly, the UK, Germany and France have also joined calls for a ceasefire in Israel. On 12 December, the United Nations passed a non-binding resolution calling for a humanitarian ceasefire in Gaza, with 153 countries voting in favour, 23 abstaining and 10 against. Ukraine, a country at war, fighting Russian invasion abstained from the vote. Israel and the United States, were among the countries who voted against ceasefire.
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I doubt that this will ever happen. The Hamas movement are the implacable enemies of those in power in Egypt so why invite in people that would seek to destabilize the government. Supporting over two million people for who knows how many decades would add up to more than what the US would forgive in loans – providing that that promised money was not reneged on. And of course Israel will keep on bombing the Gazan camp from time to time to terrorize those people and kill any potential leaders. But by this, they would be actually bombing Egyptian territory which would be unsustainable. This idea creates far more problems than it solves.
We’ll forgive 2 billion in debt then loan you 20 bilion to deal with the problem it creates, and the leadership can zelensky a few boltholes off the top…ever seen that lamborghini suv?Sure is nice, that…probably can get it with bulletproof glass even.
Sounds like what Trump would do.
The Nakba of 1948 really did so much to make Israel safe and secure and improve relations with its neighbors, so why not rinse and repeat? /sarc
If you push the Gazans into the Sinai, that is only going to inflame neighbors and provide a convenient casus belli for anyone who wants to pick it up. Besides, who do we anticipate sweeping over the borders to attack Israel in 3-5 years, and then you have a war between Israel and Egypt when Israel responds. Isn’t Egypt their best partner in peace?
I guess the idea is that the Palestinians are just going to go away, like the Kurds, or the Irish or the Poles. Read a history book, or even look at the history of the Jewish people, who were in diaspora for 2000 years and suffered all mode of historic oppression.
Now it looks like Israel wants to get into it with Hezbollah, that one worked well last time as well. /sarc
If Israel wants to survive, it needs to drastically change its course. The population relocations, the settlers, the subjugation of the Palestinians, the rest of it has completely failed as far as a strategy of security. The US won’t help Israel with getting its head out of its behind, the US is just in for Israel’s assisted suicide. Israel needs to help Israel while there is still time on the clock, which requires a 180 degree turn.
I wonder if Egypt’s debt is such a problem as portrayed. 25% of Egypt’s budget is debt servicing ($36.3 billion), whereas their budget deficit is 6.2%, and their trade deficit is only $3.2 billion. So defaulting on the debt would not impair their balance of payment or their ongoing budgetary obligations, likely not even their trade as they are currently “exporting” $36 billion in cash per year.
Basically, the only reason Egypt needs access to foreign borrowers is to roll over their debt obligations. Its strategic position and ownership over the Suez canal makes it difficult to financially isolate, so I don’t think Egyptians are in such a difficult position.
Not enough water in Egypt for a few million more people.
Money is not the constraint. Water is.
Yves Smith makes a fundamental semantic error when she says, “terrorists from Gaza raided Israel and killed roughly 1,400 people.”
First, there might have been some Gazans who could be classified as ‘terrorists’, but frankly, there is little in the accepted definition of terrorism that applies here, except that politically, the foundation of Israeli society was badly shaken by the October 7 attack. The soldiers from Hamas are resistance fighters, struggling against a Zionist occupation of Palestine that began in 1948. That other Gazan residents escaped when the fence went down is incontrovertible, and when one considers that the kibbutz where the Rave was held was formerly occupied by Gazans, and that noise from the Rave was audible in Gaza, it is likely some revenge actions were carried out. But, not by Hamas who had a political motive of securing live hostages to trade for Palestinians held in Israeli prisons.
Second, we have learned over time that many if not all of the civilian deaths due to the attack were caused by the Israeli army, either out of confusion, exuberance, or commitment to Israel’s Hannibal Doctrine of not allowing prisoners. Beyond that, many of the dead in the kibbutzim were armed settlers, not distinguishable from regular IDF in their political nature.
Finally, the numbers of dead already contain more than 300 regular army soldiers, and the total number of Israelis killed is reduced regularly.
The stories of atrocities during the attacks have been revealed as blatant hasbara. So, a large number of deaths of Israeli citizens, a large number of atrocities, serve the propaganda purpose of deeming Palestinians ‘animals’ worthy of nothing more than death.
Yves is not claiming anything, it’s a quote from the New York Times and it’s clearly delineated from Yves’ own words. The quote is used to make a point (shift in public opinion against Israel) unrelated to terrorist vs. freedom fighter debate and the line is a throw-in by the NYT author unrelated to the broader point of the paragraph. So you are barking up the wrong tree here.
She is, if I am to read the intro correctly, quoting from the New York Times article for which she provided a link.
Impressive! You’ve managed to compile a plethora of outrageous lies and conspiracy theories into a remarkably concise paragraph. Quite the feat!
Care to point them out and respond with information to counter them?
Thank you for pointing out how many of the Israelis were likely killed by the IDF. The consideration of this possibility, like many other things, seems to be absent from most US media (with the caveat that I have little stomach for US media and, therefore, might miss it). Max Blumenthal at the Grayzone has been writing a lot about this.
Interesting theory. Having endured one of those “festivals” within earshot of my home, I can certainly sympathize with the potential for several days and nights of electronic music sparking homicidal rage.
Spreading the population of Gaza between Gaza and Sinai is a win-win for everyone. Gaza will be less crowded and more secure. Egypt will benefit financially.
I am sure that the largely Bedouin population of the Sinai would beg to differ.
Huge amounts of international aid that will be flowing into the area may actually benefit the bedouins and that’s in addition to Egypt’s own improved economic situation.
The way things are going in the West, there won’t be much free money in near future and one of the first things on the chopping would be aid to Palestinians. And that’s before the novelty of being bombed out refugees in tents in desert worn out and they again start firing some toy rockets into Israel. Then Egypt will be told in no uncertain terms they will lose all their money unless they somehow pacify them. It would be insane for Sisi to agree to take over two millions angry Palestinians in exchange for some Western promises of financing it.
The Islamic world alone has plenty of money to make every Palestinian a millionaire with some left for the people of this blog.
Egypt may or may not consider this deal based on its own interests. But for the Gazans it could be a great option and we should not dismiss it.
It’s always easier when somebody else picks up the tab. What if the US was asked to pick up that tab? Would you be saying ‘Let’s not go getting crazy now’?
Ideally, should be same people who paid for the tunnels.
That would be Netanyahu who came out in 2019 and said that Israel was helping finance Hamas to stop a 2-State solution. Israeli tax Shekels at work.
Benjamin Netanyahu and the Israeli govt?
Problem is, it’s as much “option” for Gazans as were all the other previous and current ethnic cleansing of Palestinians by Israel optional and voluntary. Otto wouldn’t make this mistake.
America will end up paying for this, you’ll find out.
Bedouin shopping malls, golf courses, Starbucks… the list of potential improvements is endless.
ethnic cleansing noun
: the expulsion, imprisonment, or killing of an ethnic minority by a dominant majority in order to achieve ethnic homogeneity
Why would Gaza be more secure? Less people to be killed per km2?
Complete nonsense. Do you have any info to back this irrational claim?
For those of you here who want to continue using the people of Gaza as human shields protecting Hamas terrorists, this is “complete no sense”. For those of us who care about Palestinians this a life saving opportunity.
Are Israeli civilians also human shields protecting the fascist, genocidal, terrorist Israeli government?
Asking for a fiend…
Forced displacement of populations is a crime against humanity, legally, no matter if states agree to it or not.
How many are you prepared to have killed in the forced marches?
That also applies to the seizure of farmland by Israel over the years.
The WWII Jews had no option of marching to safety. You are denying such option to the people of Gaza. It’s like Hamas shooting at people escaping from Gaza city.
You frame the argument as though Palestinians will have an option. Nonsense, it will be a forced displacement under (IDF) gunpoint, illegal under international law. Framing such forced population transfers as a “humanitarian” move has been the tried and trusted excuse of third world dictatorships for decades. Arguing it is a kindness to push the person you set on fire into a river overlooks the important details.
Civilian population always leaves the areas affected by wars. Always and everywhere. In this case you want the people of Gaza to be in the epicenter of the war. The more civilians are killed the better it is for the Hamas cause which you represent here.
If an agreement with Egypt is reached, Palestinians will definitely have an option to leave the areas affected by the war, and to come back when the war is over.
That last sentence is in total opposition with absolutely everything that Netanyahu and his government has been saying for the past ten weeks. They covet that land too much as well as it’s offshore gas & oil deposits so will never let the Palestinians back.
Israeli government promised to eliminate Hamas from Gaza and elsewhere. That is what I heard. That should be good for the Palestinians. They suffered from Hamas too. In any case, an option for the civilians to leave the war zone cannot be bad.
Or – stay with me here – Israel could stop bombing and killing Palestinians by the tens of thousands. What is the kill count for Palestinian children alone at the moment. About 6,000? Maybe more? Can you imagine visiting a children’s cemetery that has 6,000 children buried there?
A war implies a conflict between two or more armies. I have yet to see evidence that the Palestinians are fielding an army and doubt I ever will considering they don’t have one. Your apologia for the crimes of Israel are weak sauce, if not outright laughable.
https://en.wikipedia.org/wiki/War
War is an intense armed conflict between states, governments, societies, or paramilitary groups such as mercenaries, insurgents, and militias. It is generally characterized by extreme violence, destruction, and mortality, using regular or irregular military forces.
You got the link wrong. Here is the correct one-
https://en.wikipedia.org/wiki/Massacre
‘A massacre is an event of killing people who are not engaged in hostilities or are defenseless. It is generally used to describe a targeted killing of civilians en masse by an armed group.’
You’re welcome.
Palestinians use human shields
Israel is once again using Palestinians as human shields
Hamas uses human shields. Hamas is certainly barbaric in the sense of “savagely cruel; exceedingly brutal”. There is not much need to demonize or dehumanize Hamas. They did it themselves on Oct 7.
Israel Says That Hamas Uses Civilian Shields, Reviving Debate
Human Shields
I just watched “Killers of the Flower Moon.”
No matter how often a colonizer/invader/settler displaces a population, they are always ready to remove them again, by any means necessary, for more.
“Banks replacing tanks” only works for within the US/UK/EU theatre of operations – see Greece v Troika. So I’m sorry, but Egypt is not gonna get the “banks” option. They’re on the wrong side of the Mediterranean.
As long as it includes funding and equipment for Egypt to create a new 100 000 + member volunteer peacekeeping force, it should work.
Yet another argument for making Odious Debt an explicit part of international law.
Even if Egypt accepts this deal and its debt is erased, will it stay erased? I doubt it – the debt will start to accumulate again.
The Egyptian Republic would not survive such a sell out.
Global debt jubilee. Wipe the slates clean. Start over with people-friendly rules.
How many wish for this to occur?
Strangely, the most important thing – the actual sum on offer – doesn’t seem to be mentioned.
Maybe Israel can use boxcars to ethnically cleanse the people out of Gaza
Is IMF’s Suez moment coming? What if Egypt defaults and nothing happens because it has solid and numerous army and political backing of BRICS? Who would be next? Ethiopia? Even now Egyptian companies have to pay in advance for everything and getting L/C confirmation on Egyption banks is not easy.
“Israel has quietly tried to build international support in recent weeks for the transfer of several hundred thousand civilians from Gaza to Egypt for the duration of its war in the territory, according to six senior foreign diplomats…”
As if the Palestinians and Egyptians don’t notice Israel is in bed with the makers of “forever wars.”
I remember when the Sisi military coup was cheered and then afterwards I could have sworn there was a “be careful what you wish for” realization.
Didn’t he rain on the Arab Spring parade?
“who fear that Israel is using the war — which began on Oct. 7 after terrorists from Gaza raided Israel and killed roughly 1,400 people”
Why does the NYT do this? It’s so blatant, irritating and repugnant. The war obviously did not begin on Oct 7 and saying it did won’t change this fact. Why ignore all that went before this date, including the multiple invasions and ongoing occupation by Israel?
These news outlets have become so utterly useless.
Sulzerberger who owns the NYT is Jewish and has always been a reliable Blob mouthpiece?
I am letting this through to scold you for your implicit claim that US Jews are of course Israel supporters. The Times has actually run some stories that give pretty unvarnished accounts of the slaughter in Gaza.
The real issue is the second part, that the Times has long been a loyal mouthpiece of the US military-security apparatus. There was a great piece in the 1970s, IIRC by either I.M.Stone or Seymour Hersh, in which the author got on the record statements of fealty and the importance of the Times playing that role. So this is very long standing.
Higgins: Hey Turner [Condor]. how do you know they’ll print it?
A summary of the relationship between the CIA and the NYT in five minutes. One example: in ’04 when the NYT suppressed the revelations about warrantless surveillance.
There was always that Pilish terrorist attack at Gleiwitz and Germany’s right to defend itself… (/S)
Surely Egypt is in a prime position to demand a lot, and the U.S. just might deliver. How about $10,000 per refugee plus housing that meets midde class Israeli standars plus infrastructure including educational and hospital facilities, etc. Egypt needs to think outside the box!
The demand should be made explicitly to US and EU: they pay the bills, not Saudis, not UAE, not Qatar, and the promise should be embodied in a treaty formally ratified by the Senate AND an act of Congress passed by both Houses. (Yes, of course that’s not gonna happen.)
On second though make that $200K per refugee. Oh what the heck, make it a round $500K of good old US fiat.
Either the Palestinians or the Israelis need to move farther away. I would have no problem with all Israelis being moved to Los Angeles or Las Vegas if it would bring peace. Perhaps Germany could work a deal and take all of the European Israelis (25% of the Jewish population) in return for sending back a similar number of Palestinian Muslim refugees now in Germany. And the majority of Jews, the Mizrahi, in Israel are descended from Arab Jews driven out of Arab countries like Iraq, So would they go to Europe or the US? You can’t let a warring husband and wife stay together in a house during a divorce when there is a real threat of violence on both sides. Certainly the entire Jewish population would be a real asset wherever they ended up. And if Saudi Arabia or the US wanted to they could give 100,000 to every Palestinian man woman and child and that would run about 200 billion which is what we have blown in Ukraine. And then they could all go to Europe or the USA. I guess Saudi Arabia does not want to share this burden. There is no way they are going to live together. Listen to the Israelis. Listen to the Palestinians. Both want the other dead.
I think you need to get up close to the Haredi before making generalizations like that.
On third thought, incentives should be structured in a way that goes beyond today’s need for a band aid (settlement of Gaza refugees somewhere). Rather, this crisis provides an opportunity to create incentives for repatriating Palestinians back into Israel and for ultimate peace. Debt relief alone doesn’t do this. Debt relief gives the U.S. and Israel an incentive to continue kicking the can down the road to the Palestinians’ ultimate ruin. That’s probably why it’s being floated in the first place.
A step in the right direction would be to move the $162B of Egyptian debt to Israel’s balance sheet. Interest would then be paid by Israel until such time as all Palestinians are repatriated back into Gaza or Israel. That may not be enough. In that case, Egypt should insist on a pretty steep annual rent per refugee.
Even this may not be enough. Egypt and Jordon both have the greatest incentive to avoid being used as Israel’s safety valve for future crises. It’s in their interest to use this crisis to require even more carrots and sticks toward a long term peace.
A punitive “kick-the-can” penalty on Israel and/or the U.S. could provide a needed incentive to seriously negotiate and ratify a final peace treaty. This penalty could go into a Palestinian account and held in trust for a future Palestinian State, giving Palestinians an incentive to conclude a treaty as well. This would speed up diplomacy toward a solution to the Israel-Palestine conflict once and for all.
In the U.S. (and Israel), money talks. Let’s let money talk for peace, for a change!
Pipe dream?
Even if an “agreement” is reached, there’s no legal requirement that it would be honored when it becomes politically inconvenient. There are no real treaties that US govt is formally bound any more. No one should agree to anything that obliges US to do something unless US actually goes through all the legal steps, at the very least.
Before a “poor” country is handed a lot money (mostly printed stuff, but that’s another subject for another day) to put bandaids over its fiscal wounds, how about taking a look at the local oligarchs’ holdings. Why not demand that the Egyptian or Israeli billionaires (or multi millionaires – I haven’t got a scorecard) are obliged to chip in some of their own wealth. But of course this is silly, as that might inspire malcontents in America to start to wondering why the holdings of our own oligarchs are so sacrosanct whilst all the “little people” are forced their belts.