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EU greenlights the first of our funds: The European Council has approved releasing EUR 1 bn in short-term financial assistance as the first tranche of a EUR 5 bn package of concessional loans to provide macro-financial assistance agreed to in March, the bloc said over the weekend in a press release. The EU is looking to deliver the first tranche before next summer, EU Ambassador to Cairo Christian Berger said last month.
Conditions apply: “A precondition for granting the assistance is that Egypt continues to make concrete and credible steps towards respecting effective democratic mechanisms (including a multi-party parliamentary system) and the rule of law and guaranteeing respect for human rights,” the council said without elaborating any further.
Remember: The EU announced that it will provide Egypt with a EUR 7.4 bn package of loans, grants, and investments through 2027, after the two sides signed a joint strategic and comprehensive partnership in March.
Expedited delivery: The EU will deliver the short-term funds by applying an emergency funding mechanism that side-steps the EU Parliament’s approval as well as an evaluation of the funding’s effects, a letter penned by European Commission President Ursula von der Leyen to the parliament last month said. The plan is part of the bloc’s efforts to “make sure that a first significant contribution” reaches Egypt before the end of 2024.
Why the rush? While it’s unusual for the bloc to bypass financing safeguards, European Parliament elections scheduled for 6-9 June mean that upholding these controls would slow the delivery of funds. In her letter Von der Leyen cautioned of a “rapidly deteriorating economic and fiscal situation” triggered by “a very large exposure to the economic effects of Russia ’s full-scale war of aggression on Ukraine, the wars in Gaza and Sudan, and the Houthi attacks in the Red Sea.”
It’s not without controversy: Fast tracking the package bypasses the oversight of the EU Parliament and does away with the need for impact assessments. Following the EU elections, the EU parliament will be “fully involved” with the remaining EUR 4 bn of macro-financial assistance that will be given out after Egypt commits to “more comprehensive” reforms, Von der Leyen added.
