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(1) Relations between the Union and the Arab Republic of Egypt (‘Egypt’) are developed within the framework of the Euro-Mediterranean Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Arab Republic of Egypt, of the other part (the ‘Association Agreement’), in force since 2004. The Union and Egypt adopted the latest EU-Egypt Partnership Priorities (2021-2027) at the ninth EU-Egypt Association Council, established by the Association Agreement, on 19 June 2022 (the ‘Partnership Priorities’). The Partnership Priorities reconfirm the joint aim of addressing common challenges facing the Union and Egypt, promoting joint interests and guaranteeing long-term stability and sustainable development on both sides of the Mediterranean. The shared commitment to the universal values of democracy, the rule of law and respect for human rights continues to underpin the Partnership Priorities, as is also reflected in the EU-Egypt Multi-Annual Indicative Programme for the period of 2021-2027 (the ‘EU-Egypt MIP’).

(2) The Partnership Priorities reflect the shared commitment of the Union and Egypt to reinforce cooperation in support of Egypt’s ‘Sustainable Development Strategy Vision 2030’ and the Union’s determination to act on a renewed impetus to strengthen the partnership with its Southern Neighbourhood. In particular, in the conclusions of the European Council of 10-11 December 2020, the Union identified a democratic, more stable, greener and more prosperous Southern Neighbourhood as a strategic priority. The EU Agenda for the Mediterranean, and the Economic and Investment Plan for the Southern Neighbours set out in the Joint Communication of the Commission and of the High Representative of the Union for Foreign Affairs and Security Policy of 9 February 2021 entitled ‘Renewed partnership with the Southern Neighbourhood: A new Agenda for the Mediterranean’ present the Union’s objectives of achieving long-term, sustainable socioeconomic recovery and resilience and of advancing the twin green and digital transitions in the region.

(3) On 17 March 2024, Egypt and the Union jointly decided to upgrade their relations to a strategic and comprehensive partnership, based on the values of equity and mutual respect and trust in order to strengthen their common stability, peace and prosperity.

(4) In line with the Partnership Priorities, the Union and Egypt are committed to ensuring accountability, the rule of law, full respect for human rights and fundamental freedoms, as well as promoting democracy, gender equality and equal opportunities as constitutional rights of all their citizens. Those commitments contribute to the advancement of the partnership and to Egypt’s sustainable social and economic development, good governance and socioeconomic stability. The increased and constructive engagement between the Union and Egypt in the last period has opened the path to more meaningful dialogue on human rights-related issues. In the framework of the Association Agreement, the subcommittee on Political Matters, Human Rights and Democracy – International and Regional issues and the Association Committee provide the institutional platforms to exchange views on an array of human rights issues, which the Union would like to continue and build upon. The steady future improvement of the human rights situation in Egypt in key areas related to civil, political, economic, social rights and fundamental freedoms regularly addressed by both partners in bilateral and international fora will have a positive impact on relations between the Union and Egypt.

(5) Assistance to Egypt is funded mainly through the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI-GE), established by Regulation (EU) 2021/947 of the European Parliament and of the Council . The Union’s indicative allocation for Egypt under the NDICI-GE for the first period (2021-2024) of the EU-Egypt MIP was EUR 240 million. This is in addition to the ongoing cooperation portfolio of EUR 1,3 billion and other budget support and emergency measures in response to the COVID-19 pandemic and to Russia’s war of aggression against Ukraine amounting to EUR 307 million. The Partnership Priorities for 2021-2027 are reflected in the EU-Egypt MIP, which has been prepared in close consultation with all relevant stakeholders, and cover three broad areas:

(i) Sustainable Modern Economy and Social Development;

(ii) Partnering in Foreign Policy, and (iii) Enhancing Stability. The NDICI-GE replaces the European Neighbourhood Instrument under which the Union’s bilateral assistance to Egypt for the period 2014-2020 amounted to EUR 756 million.

(6) The Union recognises Egypt’s key role for regional security and stability, and has a strong interest in preventing short-term economic instability in Egypt that could have broader consequences and a negative impact on the geopolitical landscape. Terrorism, organised crime, such as human trafficking, irregular migration, disinformation and conflicts, are common threats against common security and the social fabric of nations across both sides of the Mediterranean. The Union acknowledges Egypt’s contribution to addressing such issues. Furthermore, energy security is one of the most pressing challenges facing countries on both sides of the Mediterranean. Energy cooperation between the Union and Egypt could not only offer a source of economic prosperity for the region, but also strengthen energy security by diversifying energy supplies and encouraging regional collaboration. Therefore, the Union and Egypt have a common interest in strengthening cooperation highlighted in the Partnership Priorities, in full compliance with international law, including human rights and international humanitarian law, as well as in promoting joint interests and addressing common challenges.

(7) Recalling the global and regional geopolitical challenges, such as the humanitarian crisis in Gaza, resulting from the aftermath of the Hamas terrorist attacks across Israel on 7 October 2023, the escalating tensions in the Horn of Africa and the safety of navigation in the Red Sea, as well as migratory pressure from the conflict in Sudan, uncertainties in Syria, the instability in Libya, Egypt’s role as a host to large numbers of refugees and migrants, and the strategic importance of Egypt as the largest country in the region and a pillar of stability for the whole Middle East, the Union has embarked on a strategic and comprehensive partnership with Egypt as outlined in the Joint Declaration of the Union and Egypt, signed in Cairo on 17 March 2024 (the ‘Joint Declaration’).

(8) The objective of the strategic and comprehensive partnership with Egypt is to elevate the political relations of the Union and Egypt to a strategic partnership and to enable Egypt to fulfil its key role of providing stability in the region, the Middle East and North Africa. That partnership aims to contribute to supporting Egypt’s macroeconomic resilience and enabling the implementation of ambitious socioeconomic reforms in a manner that complements and reinforces the reform process provided for under the International Monetary Fund (IMF) programme for Egypt. As outlined in the Joint Declaration, the strategic and comprehensive partnership will address a wide set of policy measures clustered across six pillars of intervention, namely political relations, economic stability, investment and trade, migration, security and law enforcement cooperation, demography and human capital. The strategic and comprehensive partnership should be developed in line with initiatives at Union and Member State level.

(9) Underpinning the strategic and comprehensive partnership is a financial package of EUR 7,4 billion consisting of short- and longer-term support for the macro-fiscal and socioeconomic reform agenda, as well as increased amounts available to support investments in Egypt and targeted support for the implementation of the different strategic priorities, which include renewable energy and migration, amongst others. Part of the support package is the Union’s macro-financial assistance package of up to EUR 5 billion in loans, composed of two macro-financial assistance operations, a short-term operation of a maximum amount of EUR 1 billion and a medium-term operation of a maximum amount of EUR 4 billion. That financial package also includes financial instruments, such as guarantees and blending instruments, aimed to mobilise public and private investments with the objective of generating substantial new investments with positive economic impacts which can benefit all Egyptians. This will be complemented by programmes to support specific priorities under the strategic and comprehensive partnership through individual projects and technical assistance implemented under the NDICI-GE.

(10) Egypt’s macro-fiscal situation has faced significant challenges and has deteriorated substantially over recent months, as external pressures have intensified and public debt has increased further, with substantial downside risks to the economic outlook persisting. The repercussions of Russia’s war of aggression against Ukraine and the geopolitical tensions and conflicts in the Middle East have led to protracted capital outflows and lower foreign currency receipts, in particular due to sharply easing income from tourism, Suez Canal proceeds, and gas production amid volatility of confidence among foreign investors. This is particularly challenging in Egypt’s difficult fiscal situation, which is characterised by constant fiscal deficits and high and growing debt-to-GDP ratios. Despite that difficult external context, in 2024 Egypt was able to implement reforms, such as the unification of exchange rates and making progress in tightening monetary policy, to help preserve its macroeconomic stability.