Qatar Weighs $3.5 Billion Tourism Deal on Egypt’s North Coast

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(Bloomberg) — Qatar is in advanced talks to invest $3.5 billion in a tourism project on Egypt’s Mediterranean coast, the latest potential Gulf backing for the North African nation’s economy that’s been roiled by regional conflict.

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The deal to develop land in one of Egypt’s prime vacation areas may be signed by the end of 2025, according to people familiar with the matter. They didn’t specify the exact location or size of the site, and asked not to be identified as the negotiations are private.

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The potential pact follows a landmark $35 billion investment from the United Arab Emirates that included developing a vast swathe of the same coastline. The early 2024 deal was crucial in helping Egypt tackle a two-year economic crisis and the shockwaves from Israel’s war against Hamas in Gaza.

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Qatari talks come as Israel’s direct conflict with Iran risks piling fresh pressures on Cairo, underscoring the importance of securing a steady flow of foreign investment. Egypt’s dollar bonds dipped, its currency has weakened and the stock market plunged the most in five years in the wake of Israel launching unprecedented airstrikes on the Islamic Republic last week.

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Cuts in Israeli gas supplies forced Egypt to sever flows to some industries and switch to using diesel at power plants to avoid the kind of blackouts that plagued the country in recent summers. Israel says some exports may restart as early as Thursday.

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Under the envisaged Qatari agreement, Doha would provide $1 billion to Egypt immediately after the signing, then deliver the balance over the following 12 months, the people said. 

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Egyptian and Qatari officials didn’t respond to requests for comment. The two countries in April announced they’d “work toward” a $7.5 billion investment package for Egypt over an unspecified period. 

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Such a deal would stake out a yet-bigger role for the energy-rich Gulf nation in Egypt’s recovery, as the government pledges to revamp the import-heavy economy after securing a $57 billion bailout that also brought in the International Monetary Fund and the European Union. 

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Authorities have previously said they’re seeking to replicate the UAE’s $24 billion deal to develop Ras El-Hekma, a headland three times the size of Manhattan where a new city and airport are among the facilities planned.

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Egyptian President Abdel-Fattah El-Sisi last week issued a decree allocating 174.4 square kilometers (67 square miles) of state-owned land on the Red Sea coast to the finance ministry.

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The plot will be used as collateral to issue sovereign Islamic bonds and will involve tourism and real-estate projects, the government said, without giving further details.

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The UAE’s 2024 deal included converting Emirati deposits in Egypt’s central bank into investments, while Bloomberg has reported that Kuwait is planning a similar move with $4 billion held by the regulator. In contrast, the $3.5 billion under discussion from Qatar would be fresh liquidity, according to the people.

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Meanwhile, Saudi Arabia — the Middle East’s largest economy — doesn’t appear ready to join in. Egypt said last year the kingdom’s sovereign wealth fund was poised to invest $5 billion, but no deals have yet materialized.

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People familiar with the deliberations said there aren’t any deals with Saudi Arabia on the horizon, likely ruling out any movement this year.

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—With assistance from Fiona MacDonald.

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