Egypt vs. Israel

The regularity and richness of the annual Nile River flood, coupled with semi-isolation provided by deserts to the east and west, allowed for the development of one of the world's great civilizations. A unified kingdom arose circa 3200 B.C., and a series of dynasties ruled in Egypt for the next three millennia. The last native dynasty fell to the Persians in 341 B.C., who in turn were replaced by the Greeks, Romans, and Byzantines. It was the Arabs who introduced Islam and the Arabic language in the 7th century and who ruled for the next six centuries. A local military caste, the Mamluks took control about 1250 and continued to govern after the conquest of Egypt by the Ottoman Turks in 1517. Completion of the Suez Canal in 1869 elevated Egypt as an important world transportation hub. Ostensibly to protect its investments, Britain seized control of Egypt's government in 1882, but nominal allegiance to the Ottoman Empire continued until 1914. Partially independent from the UK in 1922, Egypt acquired full sovereignty from Britain in 1952. The completion of the Aswan High Dam in 1971 and the resultant Lake Nasser have reaffirmed the time-honored place of the Nile River in the agriculture and ecology of Egypt. A rapidly growing population (the largest in the Arab world), limited arable land, and dependence on the Nile all continue to overtax resources and stress society. The government has struggled to meet the demands of Egypt's fast-growing population as it implements far-reaching economic reforms, including the reduction of select subsidies, large-scale infrastructure projects, energy cooperation, and foreign direct investment appeals.

Inspired by the 2010 Tunisian revolution, Egyptian opposition groups led demonstrations and labor strikes countrywide, culminating in President Hosni MUBARAK's ouster in 2011. Egypt's military assumed national leadership until a new legislature was in place in early 2012; later that same year, Muhammad MURSI won the presidential election. Following protests throughout the spring of 2013 against MURSI's government and the Muslim Brotherhood, the Egyptian Armed Forces intervened and removed MURSI from power in July 2013 and replaced him with interim president Adly MANSOUR. Simultaneously, the government began enacting laws to limit freedoms of assembly and expression. In January 2014, voters approved a new constitution by referendum and in May 2014 elected former defense minister Abdelfattah ELSISI president. Egypt elected a new legislature in December 2015, its first Hose of Representatives since 2012. ELSISI was reelected to a second four-year term in March 2018. In April 2019, Egypt approved via national referendum a set of constitutional amendments extending ELSISI's term in office through 2024 and possibly through 2030 if re-elected for a third term. The amendments would also allow future presidents up to two consecutive six-year terms in office, re-establish an upper legislative house, allow for one or more vice presidents, establish a 25% quota for female legislators, reaffirm the military's role as guardian of Egypt, and expand presidential authority to appoint the heads of judicial councils.

Democratic Union [Nitzan HOROWITZ] (alliance includes Democratic Israel, Meretz, Green Movement)
Joint List [Ayman ODEH] (alliance includes Hadash, Ta'al, United Arab List, Balad)
Kahol Lavan [Benny GANTZ] (alliance includes Israeli Resilience, Yesh Atid, Telem)
Labor-Gesher [Amir PERETZ]
Likud [Binyamin NETANYAHU]
Otzma Yehudit [Itamar BEN-GVIR]
Religous Zionist Party [Belzalel SMOTRICH, chairperson]
SHAS [Arye DERI]
United Torah Judaism, or UTJ [Yaakov LITZMAN] (alliance includes Agudat Israel and Degel HaTorah)
Yamina [Ayelet SHAKED]
Yesh Atid [Yair LAPID]
Yisrael Beiteinu [Avigdor LIEBERMAN]
Zehut [Moshe FEIGLIN]

Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but opened up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni MUBARAK. Agriculture, hydrocarbons, manufacturing, tourism, and other service sectors drove the country's relatively diverse economic activity.

Despite Egypt's mixed record for attracting foreign investment over the past two decades, poor living conditions and limited job opportunities have contributed to public discontent. These socioeconomic pressures were a major factor leading to the January 2011 revolution that ousted MUBARAK. The uncertain political, security, and policy environment since 2011 has restricted economic growth and failed to alleviate persistent unemployment, especially among the young.

In late 2016, persistent dollar shortages and waning aid from its Gulf allies led Cairo to turn to the IMF for a 3-year, $12 billion loan program. To secure the deal, Cairo floated its currency, introduced new taxes, and cut energy subsidies - all of which pushed inflation above 30% for most of 2017, a high that had not been seen in a generation. Since the currency float, foreign investment in Egypt's high interest treasury bills has risen exponentially, boosting both dollar availability and central bank reserves. Cairo will be challenged to obtain foreign and local investment in manufacturing and other sectors without a sustained effort to implement a range of business reforms.

Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.

Since March 2020, economic growth has slowed compared to recent historical averages, but Israel's slump has been less severe than in other Middle Eastern countries because of its swift vaccine roll-out and diversified economic base. Between 2016 and 2019, growth averaged 3.6% per year, led by exports. Israel's new government is hoping to pass the country's first budget in two years, which, combined with prudent fiscal policy and strong global trade ties would probably enable Israel to recover from economic challenges caused by the COVID-19 pandemic.

Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. In 2020, Israel began exporting gas to Egypt and Jordan.

Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high. Private consumption is expected to drive growth through 2021, with consumers benefitting from low inflation and a strong currency.

In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.

Israel has a highly developed economy with focus on technology products; investment in cyber-security industry and hub for start-ups; near universal broadband delivery to households and mobile penetration; LTE coverage, expanded fiber network with plans for 5G; emergency law allows mobile tracking; importer of broadcast equipment, integrated circuits, and computers from China; submarine cable connectivity to Europe (2021)

since 2011, the Egyptian Armed Forces, police, and other security forces have been actively engaged in counterinsurgency and counter-terrorism operations in the North Sinai governorate against several militant groups, particularly the Islamic State of Iraq and ash-Sham - Sinai Province; as of early 2020, Egypt reportedly had over 40,000 troops plus thousands of police and other security personnel deployed to the Sinai for internal security duties

the military has a large stake in the civilian economy, including running banks, businesses, and shipping lines, producing consumer and industrial goods, importing commodities, and building and managing infrastructure projects, such as bridges, roads, hospitals, and housing

Sudan claims but Egypt de facto administers security and economic development of Halaib region north of the 22nd parallel boundary; Egypt no longer shows its administration of the Bir Tawil trapezoid in Sudan on its maps; Gazan breaches in the security wall with Egypt in January 2008 highlight difficulties in monitoring the Sinai border; Saudi Arabia claims Egyptian-administered islands of Tiran and Sanafir

West Bank is Israeli-occupied with current status subject to the Israeli-Palestinian Interim Agreement - permanent status to be determined through further negotiation; in 2002, Israel began construction of a "seam line" separation barrier along parts of the Green Line and within the West Bank; as of mid-2020, plans were to continue barrier construction; Israel withdrew its settlers and military from the Gaza Strip and from four settlements in the West Bank in August 2005; Golan Heights is Israeli-controlled (Lebanon claims the Shab'a Farms area of Golan Heights); in March 2019, the US Government recognized Israel's sovereignty over the Golan Heights; since 1948, about 350 peacekeepers from the UN Truce Supervision Organization headquartered in Jerusalem monitor ceasefires, supervise armistice agreements, prevent isolated incidents from escalating, and assist other UN personnel in the region