Reuters CAIRO (Reuters) — A U.S.-proposed $9 billion aid package could tempt Egypt with long-sought financing to transform its strife-torn Sinai Peninsula, but analysts say political risks are likely to outweigh any potential financial benefit.
Egypt has been struggling to launch infrastructure projects for the development of Sinai, where military and security forces have been battling Islamic State-linked militants.
While authorities say hundreds of militants have been killed or captured since the campaign began last year, the security situation in the governorate remains volatile.
Officials say creating jobs and developing infrastructure is crucial for fighting the militants, who thrive on poverty and lack of jobs.
But securing resources and attracting investments into an area where militants still mount regular attacks and which is still officially closed to outsiders is a major challenge.
Egyptian officials have held discussions with the World Bank on possible financing of development in Sinai.
An aide to President Abdel Fattah al-Sisi said last year that the Sinai development plan was expected to cost some 275 billion Egyptian pounds ($16.52 billion) and should be completed by 2022, saying the plan was a “national security issue.”
Under the $50 billion “Peace to Prosperity” economic plan drafted by U.S. President Donald Trump’s advisor and son-in-law Jared Kushner and which was discussed at a two-day conference in Bahrain this week, the Palestinians would received $25 billion while Egypt, Jordan and Lebanon would receive the other half.
But the $9 billion earmarked for Egypt are linked to a broader political solution for the decades-old Israeli-Palestinian conflict.
While it has yet yet to be revealed, Palestinians briefed on the plan say it falls short of their demands for a state on all lands captured by Israel in the 1967 Middle East war.
Egypt is one of two Arab states along with Jordan to have signed a peace treaty with Israel, and Sisi and Trump have publicly praised each other.
Nathan Brown, a political science professor at George Washington University, said Egypt was unlikely to agree to a proposal that could link it more closely to Gaza’s fate.
“While economic development funds for Sinai are attractive, the purpose of the plan seems to be to tie Gaza and Sinai closer together in a way that Egypt has resisted for political and security reasons,” he said.
The U.S. plan includes a series of infrastructure projects aimed at facilitating trade between Egypt, the Palestinian territories and Israel.
It would expand Gaza, a small area where two million Palestinians are shut into a strip between Israel and Egypt, into North Sinai, creating an area where Palestinians can live and work under Egyptian control, according to Arab sources.