PLAN - Article - There Are Billions For Needy Egypt To Take, But It Has Not

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Egypt is one of the three lynchpins of the PEIS Plan to end the Israeli-Hamas War and resolve the Israeli-Palestinian Conflict once and for all. In the meantime, Egypt is in dire economic strait.

On March 7, 2024, Egypt struck a deal to borrow $8bn from the International Monetary Fund (IMF), adding to the $70bn of external debt that Egypt has to pay back by 2026. Egypt is now one of the most indebted countries in the world. All these loans come with strings attached. The Egyptian president, Abdel Fattah Al Sisi, resisted a devaluation of the Egyptian pound, but to no avail. On the same day of the new loan announcement, under pressure from foreign investors and the IMF, the Egyptian central bank allowed the pound to float freely, causing it to drop 38% and eminently exacerbating the already high inflation since critical imports became more expensive. But there is a way out for Egypt. It is on all over the news lately: the Gaza War between Hamas and Israel. The War is hitting Egypt hard, economically and politically. Out of this lemon of circumstance, Egypt can make lemonade: It can stop the Gaza War, resolve the long-standing Israeli-Palestinian Conflict, and earn tens of billions now and a multi-billion payment every year with no strings attached. This is the PEIS Plan.

THE PEIS PLAN

The PEIS Plan stands for the Palestinian-Egyptian-Israeli-Sinai peace plan. It proposes that Egypt sells the northern and eastern parts of the Sinai Peninsula to the Palestinians, the Palestinians sell the West Bank to Israel and use the remittance to pay for its Sinai purchase, which they will combine with the Gaza Strip to form a New Palestinian state that is 50% bigger than Greater Israel, six times larger than the landlocked West Bank, contiguous from the Mediterranean Sea on the North to the Gulf of Aqaba on the South, free-standing with an unrestricted air space, and ample enough to welcome home the returning diaspora with homestead resettlement and additional land compensation. The Israelis buy the West Bank from the Palestinians and finally fulfill their immemorial yearning for the "Land of Israel" with Judea and Samaria under full international recognition.

The PEIS Plan was introduced to the Blogs of the Times of Israel with the first overview article. The Israeli-Palestinian Conflict is already intractable with only two namesake parties; adding the Egyptians as a third party with their own agenda seems to be a recipe for more deadlock. One way to untangle the PEIS Plan is to approach each party separately and ask the question, "What's in it for you?" without this party taking into account what the other parties may think or do. Once each party sees its own benefits, there will be explorative talks and, eventually, a formal negotiation to merge the individual positions into a peace agreement that mutually benefits all three parties. A second article followed, asking the Israelis if they wanted to buy the West Bank. Now, the "what's in it for you" question is posed to the Egyptians: Do you want to sell part of Sinai?

THE PEIS SINAI

The Sinai Peninsula is the tale of two parts. The "good" part is the western and southern Sinai hosting the eastern bank of the Suez Canal and the famous Red Sea Riviera on the coastline from the Gulf of Suez to the Gulf of Aqaba. This part makes money for Egypt: by controlling both banks of the Suez Canal, it levies transit fees on ships to the tune of over $9bn in 2023; then the thousands of miles of the Riviera, with warm water and cool air, and numerous natural and archaeological points of interest, both underwater and on land, add billions more from the tourism industry. Whenever Egypt announces a grand plan to develop the Sinai Peninsula, this is the part that receives most, if not all, of the scarce investment money. This "good" part of Sinai is not for sale.

The "bad" part of Sinai is the northern Governorate, with its Sinai desert of little use and the sparsely populated mountainous central hinterland. This is the money-pit Sinai. There is a restive Bedouin uprising since 2011 now taken over by Islamist insurgents that sabotage any economic initiative from the central government; a military garrison that so far fails to eradicate the insurgency while costing lives and treasuries; and lately, the troublesome border crossing with Gaza, where the persistent problems of militant incursions and smuggling have exploded in intensity by the destructive Israeli-Hamas War: By June 2024, two Egyptian soldiers already lost their lives maintaining the security of this border stretch. This is the part that Egypt will sell to the Palestinians under the PEIS Plan - let's call it the PEIS Sinai.

The selling of the PEIS Sinai comes with many benefits. This article explores the economic, military, and political ramifications. Before jumping into such a discussion, let's have this conversation: How much? How much will Egypt get for its PEIS Sinai? Note that the buyer of the PEIS Sinai is the Palestinians, and they don't have the money. To pay the Egyptians for the PEIS Sinai, the Palestinians will sell the West Bank to the Israelis. Although the PEIS Sinai is about six times bigger than the West Bank, the prices of each will be in the same ballpark. The ultimate payer for the whole PEIS Plan is Israel, and Israel only funds its West Bank purchase, and this funding will be the Egyptian take for the PEIS Sinai. Looking from the other side, Egypt will only part with the PEIS Sinai for a certain price; this price is the amount of money the Palestinians have to raise from selling the West Bank; to get the West Bank, Israel has to pay this price. In other words, the prices of the PEIS Sinai and the West Bank will converge into a single number, referred to as the PEIS number. Since the Palestinians' role is just of a pass-through middleman, it will be Egypt facing Israel across the table of a peace conference to haggle at this PEIS number.

Like the purchase of real estate in the U.S., the PEIS number consists of two buckets. The first bucket is the down payment, payable while the ink on the peace agreement is still drying. The down payment will be substantial, in the tens of billions, but it will be a one-time payment. With the down payment to the Palestinians, Israel will begin to transform its debatable occupation of the West Bank into an undeniable legal ownership fully recognized by the world all over--as described in the PEIS Book. The Palestinians will remit these proceeds to the Egyptians as the down payment for the PEIS Sinai and start the legalized immigration to their new home, not only from the West Bank and Gaza Strip but also from the refugee diaspora dispersed throughout the Middle East.

The second bucket of the PEIS number is the recurring mortgage payments. It will be a multi-billion payment every year for a negotiated number of years. The Israelis pay the mortgage to the Palestinians and get legal ownership of additional land in the West Bank. The Palestinians pay the mortgage to the Egyptians and get legal ownership of some more land in the PEIS Sinai. At the end of those years, the West Bank will be fully part of Greater Israel and the PEIS Sinai will completely belong to the New Palestine state. The terms of the two concurrent mortgages will obviously be the hot topics of a PEIS peace negotiation: The Egyptians will want more from the Palestinians, citing the bigger size of the PEIS Sinai, and the Palestinians will want to pay the Egyptians less, citing their need to keep some Israeli money to fix up the run-down PEIS Sinai, and the Israelis will insist their low-ball offer is what their treasury could support. While the Israeli-Palestinian Conflict and the Israeli-Hamas War are unique in human history, the PEIS peace negotiation may feel like any real estate haggling that occurs, say, in the U.S., hundreds of times every day.

By the way, what is Egypt really selling? Egypt will sell to the New Palestine state the sovereignty of all the lands in the PEIS Sinai and the ownership of all governmental lands and infrastructure. The owners of private lands, underground assets, and dwellings on top of the lands will keep their ownership; due to the change of sovereignty, they will pay tax to and receive regulations and benefits from the New Palestine administration instead of the Egyptian government. If later on, the New Palestine administration or citizens want to own the private properties, they have to buy from the current Egyptian owners with market pricing.

Egyptian owners include the Egyptian Bedouins. As part of the PEIS Plan process, Egypt will make sure that all Bedouins in the PEIS Sinai have titles of their lands, especially the nomad Bedouins. The current simmering insurgency in the Sinai started from the disgruntlement of the disenfranchised and neglected Bedouins. The rise of the New Palestine nation will give the PEIS Sinai Bedouins a fresh start to a new and equitable future. They will be offered New Palestinian citizenship or permanent residency if they choose to remain Egyptian; in either case, the land titles will give them the same economic standing to propel themselves into prosperity as other residents in New Palestine. (The PEIS Book dedicates a whole chapter on the Bedouins due to their millennial roots in the PEIS Sinai.)

With the nuts and bolts of the PEIS Sinai transaction out of the way, let's get to the benefits, namely, "What's in it for Egypt?" The economic, military, and political ramifications have been mentioned earlier. Let's discuss each one in turn.

ECONOMIC BENEFITS

The accounting for the economic benefit has two columns: expenses and revenues. On the expenses column, there will be cost-saving: no more civil and military expenses to assuage the Bedouins, fight the Islamist insurgents, push back the Gazan refugees, or maintain border security with the Israelis - let the New Palestinians deal with those issues. These pesky troubles on that remote and forlorn corner of Egypt undermine the strong-man image of President Sisi, and with a stroke of a pen on the peace agreement, he will be Alexander the Great cutting the Gordian Knot; then, wearing the crown of Dedun, the Egyptian god of wealth, he will distribute the millions saved to the welfare of mainland Egypt - along the Niles River and its teeming delta where 95% of Egyptians take residence.

On the revenues column, there will be two lines of entries: revenues from existing assets and new revenues. For the first line of revenues, Egypt's two most consequential existing assets have been mentioned: the Suez Canal and the Red Sea Riviera. The never-ending Israeli-Palestinian Conflict begot the October 2023 Israeli-Hamas War, which begot the Red Sea shipping attacks one month later by the Houthi rebels in Yemen in solidarity with their Hamas ally. The frequent drones and missiles targeting the container ships and some vessel boarding and seizures have caused them to bypass the Suez Canal and take the long route around Africa. The revenue from the Suez Canal plummeted, squeezing the already teetering Egyptian economy. By agreeing to sell the PEIS Sinai, Egypt will kickstart the peace process for the West Bank, which will induce a ceasefire talk for Gaza, which will remove the rationale for the Houthi attacks, which will restore the Suez Canal's use and transit fees for the Egyptian treasury. "Restore" may be too tame a word: With peace taking hold, the preoccupation of the Middle East will shift from warring estrangements to competitive prosperity; commerce will be the name of the new game; as more goods are transported in the region, the Suez Canal will be as busy as ever making money for Egypt.

An industry that looks very different from canal operation but has the same characteristics is tourism. Wars and insurgencies are bad for business, while peace and prosperity will bring the world to visit the pyramids and tombs along the Nile River and the resorts and national parks of the Red Sea Riviera. They do not exist now, but a future of friendship between the Egyptian, New Palestinian, and Israeli countries (the EPIc states) will see cruise itineraries start from an Israeli seaport with Mediterranean stops in New Palestine and Egypt, transit through the Suez Canal for the Red Sea Riviera and Gulf of Aqaba ports of call of the three countries. On land, the old hajj routes between Cairo to Jerusalem and Mecca will be re-opened for pilgrims to rediscover many forgotten holy sites in the Sinai. The travel and tourism industry contributes something that the efficient operation of the Suez Canal cannot: lots of jobs. It is employing about 2.5 million now and will need more with the peace dividend. People with jobs remember the politician who leads them there.

The second line of revenues is new revenues. Standing tall above all is the Egyptian take on the PEIS number. President Sisi will receive on behalf of the Egyptian people an initial tens of billions for the down payment of the PEIS Sinai and every year a multi-billion check for the mortgage payment. Unlike foreign loans and grants that come with strings attached, this money is for him to use in whichever way he likes. He can pay down debts to strengthen the pound, lower inflation, revive the economy, and help the people pull out of poverty by themselves. He can restore and increase bread subsidies and other governmental giveaways - measures that are popular with the working-class and poor Egyptians and make them dependent on the government more than ever. He can spend on pharaonic projects, such as the continued development of the $58bn New Administrative Capital. The best part of all is that this money will come from Israel, Egypt's historical nemesis and now regional competitor.

Some of the PEIS money will undoubtedly go to assist Egyptian businesses because there is a nation-building next door. Six million Palestinian refugees will "return" to their new homeland; a substantial portion of the three million Palestinians living in the West Bank will choose to emigrate to New Palestine; and the two million Gazans will need to rebuild after the disastrous War. Financial assistance from international institutions, the Western, Eastern, and Muslim blocs, and fundraising contributions from people around the world will pour into the New Palestinian economy. Egyptians already in the PEIS Sinai will be able to expand their businesses to tap this sudden market, and Egyptians across the border will receive preferential treatment for investment in New Palestine. The PEIS Plan includes a preferential clause for Egyptian and Israeli companies in the development of New Palestine with the goal of creating an EPIc neighborhood of mutual support that binds the three countries together via economic ties.

MILITARY BENEFITS

The Egyptian military will be the first entity to benefit from the cessation of military concerns. With the selling of the PEIS Sinai, Egypt will not share any border with Israel: The two countries went to war for much of the three and a half decades after WWII, but now there will be a buffer country slotting in between - New Palestine. Any issues coming out of the Israeli conflict with the Palestinians will not be of concern to the Egyptians anymore. The troublesome Rafah crossing? It will be inside the New Palestine state, composed of the PEIS Sinai and the Gaza Strip. It will be up to the New Palestinians to abolish the crossing or maintain it to isolate Hamas. The troublesome Hamas? It will be up to the New Palestinians to weave this organization into the fabric of the new state or to isolate it in Gaza until the Gazans are fed up with its nihilist ideology.

The other military concern is Egyptian very own: the North Sinai insurgency. It started out from the Sinai Bedouin grievances but has been taken over by the Islamist radicals. Tongue-in-cheek, this will not be an Egyptian concern anymore since North Sinai is part of the PEIS Sinai; therefore, it will also be up to the New Palestinians to take care of the insurgency. The reality is that the anarchist insurgents do not care about national borders. The Egyptian military has been using the inhospitable Sinai Desert in the North and the arid mountainous range in the center of the peninsula to keep the insurgency out of the "good" part of Sinai - the Suez Canal bank and the Red Sea Riviera. As part of the PEIS Sinai, these two natural barriers will belong to New Palestine. If the New Palestinians, preoccupied with nation-building in the urban areas, were to neglect their remote western border with Egypt, the Egyptian military would have a big insurgency-at-the-gate problem. The PEIS Plan envisions a different outcome: the Sinai insurgency will be defeated.

Beyond a small core of radicals, insurgency needs new recruits, and recruits emerge from grievances. The PEIS Plan will elevate the Sinai Bedouins to first-class citizens either of New Palestine or Egypt; grievances will be doused out from this corner of the population. The peace tenor from the conclusion of all conflicts between the Israelis and Palestinians, and the bustling nation-building activities in New Palestine will instill a new FOMO mindset among all Sinai residents - the fear of missing out on the opportunities of prosperity, now achievable. Between being hunted and killed vs. having a normal family and getting rich, people tend to make the right choice. Without popular support, a fish-out-of-water insurgency will asphyxiate on its own.

Even if the asphyxia takes some time, the Egyptian military will have the time on its side. It will help train the nascent New Palestinians armed forces to combat the insurgency, and it will not find more eager learners since, as the proud owners of the latest new country in the world, the New Palestinians will not want it to come infested. The two militaries will coordinate to pacify the borderland by leveraging the indigenous participation of the native Bedouins, then squeezing the insurgents with modern counterinsurgency warfare. In the early years, the Egyptian army may not even need permission from the New Palestinians - a courtesy heads-up will suffice. The PEIS Plan has Egypt agree to sell the PEIS Sinai to the Palestinians, but the sovereignty "title" will be transferred piecemeal on the receipt of the mortgage payments. The border regions will be the last territories to be turned over, which may take decades.

The Egyptian military budget officially teeters around $5bn or 1% of GDP - which seems low for a country of Egyptian stature. By gradually reducing its military footprint on the Sinai, Egypt can use the savings for ... well, whatever it wants. It can use it for more resources fighting the brooding insurgency in its Western border with Libya; it can increase the pay for the conscripts or spend on trophy weapons such as the latest generation of jet fighters; it can siphon some of it to the army's substantial side business of construction, consumer goods, real estate and other activities that are estimated to control about 40% of the Egyptian economy. It can also make the savings permanent, which means a formal reduction of the military budget. In a future where peace reigns in the Middle East for years, there will be less need for conscription or the newest shiny objects in the sky.

POLITICAL BENEFITS

The political payoff to the Egyptian President Sisi will be immediate. While the Gaza War has elevated Egypt's stature as the go-to mediator, several demonstrations in Cairo have erupted due to the increased Gazan casualties and destruction without Egypt having the leverage to make Israel hold back, and the recent unreciprocated deaths of a couple of Egyptian border soldiers. While small, these demonstrations called into question President Sisi's ability to respond to Israeli belligerence and could grow to include other domestic grievances. The PEIS Plan will change the tune of the War. A previous article describes how the PEIS Plan for the West Bank can instigate a ceasefire and resolution to the War in Gaza. Suddenly, President Sisi will become a hero to many.

Will President Sisi be accused of selling a piece of matrimony if he agrees to the PEIS Plan? Egypt has done it before. In 2017, in a hush-hush tone, Egypt ceded two strategic islands in the Red Sea to Saudi Arabia to secure the latter's financial assistance. Lately, due to one of the worst cash crunches in history, Egypt has been selling state assets to private parties - such as a reported $1.9bn privatization in 2023, and giving control of natural resources to foreign entities. In March 2024, Egypt announced a $150bn land deal with the United Arab Emirates regarding Ras Al-Hekma, one of the few remaining unscathed heavens on the shore of the Mediterranean Sea. The price tag was evidently huge, but it was based on conjectures, optimistic valuations, and unrealized profits (if any) without taking into account the significant expenses of developing this remote area. In other words, the eye-watering $150bn is not money in the bank for Egypt. The proceeds from selling the PEIS Sinai are different: they are guaranteed by an international treaty and come in full and directly into the Egyptian treasury with no strings attached.

What President Sisi will do with this unexpected windfall can make him the father of a "New Egypt". Egypt gained independence from Britain in 1922 and then got mired in perpetual poverty over the ensuing century and counting: around 40% of Egyptians still earn as little as $2 a day. Singapore gained independence from Malaysia in 1965, and in the decades since then, it has emerged as one of the world's richest countries based on national GDP and individual wealth (over $300,000 per person). Between the arcs of two nations, there are lessons to be learned and stories to be told. One of them is the story of the pockets.

Any PEIS agreement will be the big story around the world, most of all in Egypt. All Egyptians will know about the PEIS number, and the consuming question in their minds will be, "What's my cut?". President Sisi will ensure that the common people's pockets will be lined, and his popularity will be secured for the rest of his six-year term. The arcing story is how the common people's pockets will be lined and what happens to the rest of the money. If the people's pockets are lined up with subsidiaries and handouts to make people in perpetual dependence on the government, and the rest of the money goes into the pockets of military men and the inner circle of family members and acolytes, then it will be the familiar story of Egypt now and for decades to come - but at a grander scale, until the money runs out and it will be the "Old Egypt" again.

From a country without natural water resources to the premier water-intensive semiconductor manufacturer of the world, Singapore has invested in a meritocratic government and private enterprises. Paying more for the people working for the government while reducing their number is a wash to the national budget but results in efficiency and transparency, with less bureaucracy, papers to be stamped, and a side of bribery. By investing in private enterprises through friendly regulations and financial assistance, Singapore has created a path of self-sufficiency for all and enrichment for many. Meanwhile, President Sisi has been in a bind. Without a private path for Egyptians to elevate themselves through hard work and risk-taking, he has to allow his subjects to make extra money through the positions they occupy or the close connections - in other words, a business-as-usual corruption system that preserves monopolies for the few and high prices for the rest. President Sisi will be in the history book of Egypt, but will he be remembered as the leader who missed the chance to transform the old Egypt or as the founder of a "New Egypt", democratic and prosperous, as he imagined Egypt would be in his early days of an idealistic military officer.

No matter what will be in the Egyptian history books, by agreeing to let go of the PEIS Sinai to secure the proverbial peace that has stymied generations, President Sisi will have a place in the pantheon of the greatest peacemakers of human history, along with his Israeli and Palestinian counterparts.

THE DECISION

What's in the PEIS Plan for Egypt? This article presents an overview of the economic, military, and political ramifications—the PEIS Book goes deeper into some details. It is now up to the Egyptians, especially President Sisi, to convince themselves whether the PEIS Plan is good or not for Egypt.

There is an earlier concern that the Israeli-Palestinian Conflict is already intractable with two antagonists; adding a third party would be the recipe for more deadlock. This ain't so. With only the Israelis and Palestinians facing each other, the only thing they can discuss is the West Bank; both of them want this territory fully for themselves - emphasize the term "fully", and any two-state solutions proposed over almost eight decades that attempted to divide this piece of land among the two peoples that want all of it, automatically failed. Adding Egypt does not mean mindlessly adding a third party; it means the deus-ex-machina addition of a new piece of land - the PEIS Sinai. Now, suddenly everybody can get what they cherish the most, mutually exclusive of the other parties. The Israelis can have the West Bank all for themselves (with exceptions); the Palestinians can have a viable nation that they can build whichever way they want without Israeli meddling while still keeping access to the West Bank; the Egyptians can get rid of a problematic and forlorn territory and receive a multi-billion windfall to make Egypt great again. In this novel three-state solution, the seemingly overlapping point is the PEIS number. Once the three parties have negotiated this number to their satisfaction, the rest is secondary and will fall into place. And this is how the intractable Israeli-Palestinian Conflict will be resolved, and how this corner of the Middle East will shred the tatters of wars and hostilities for the mantle of peace and prosperity.

For the PEIS number to be negotiated, Egypt must first agree to sell the PEIS Sinai. What will be the Egyptian decision?

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