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Will peace in the Middle East come from a booming Egyptian tourism industry?

Its swift execution, large scale and the immediate fund availability surprised financial markets. Until discussions were well advanced, the IMF, expected to be Egypt's main source of emergency funding, didn’t even know about it.

Abu Dhabi's investment exceeded usual UAE engagements. It could have been smaller if the goal was to stabilise Egypt's economy. The $24 billion for Ras El-Hekma's rights and $11 billion for other projects equalled Egypt’s total foreign reserves.

ADQ's investment is significant, representing about 17.5 per cent of its assets. If you haven’t heard of it, ADQ is one of Abu Dhabi’s sovereign wealth funds. It’s a younger, more geopolitically orientated fund than the older and significantly larger Abu Dhabi Investment Authority (ADIA).

So what’s this investment about?

Ras El-Hekma's development plan is ambitious. The area is times the size of Manhattan and known for its beaches and is a popular summer spot for wealthy Egyptians. ADQ plans to turn it into a globally recognised tourist destination with luxury tourism infrastructure.

Construction will start in 2025, aiming to attract 8 million tourists to Ras El-Hekma annually. Regarding the investment, it's as much geopolitical as economic. It will extend the Emirates' influence over Egypt, potentially countering Qatar's ambitions (a topic for another time).

It could also help stabilise Egypt’s economy, the Arab world's third-largest. Egypt's cultural impact and widely understood Arabic dialect, thanks to its film industry, are also significant. Despite not being as wealthy as its GCC neighbours, Egypt's significant cultural influence on the region suggests the investment may be very tactical.

Source: Bloomberg

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