After the Egypt revolution, the looming question was whether or not the land and water requisitioned to create projects like Allegria would be returned to the government and renationalized. Most foreign financial analysts remained certain that this would not happen. According to Dubai analyst Ankur Khetawat, “We don’t think the government will take all the land back. They will prefer to settle because it’s all about money at the end of the day.” The consulting firm Frost & Sullivan, headquartered in California, predicted that private water companies, which made $1.35 billion in Egypt in 2010, would earn double that figure by 2015; as the firm’s report concluded: “The water scarcity in Egypt is one of the most critical in the region.
Egypt water revolution Allegria
This has created a lot of opportunities for development.”31 Meanwhile, the World Bank, along with the International Monetary Fund, maintained a largely business-as-usual attitude toward the interim government and then President Mohamed Morsi, offering $4.5 billion in loans over two years to aid in “recovery.” According to the World Bank, “About two billion dollars in loans would be linked to progress in government reforms,” including privatization. Since one of the driving factors for the revolution was massive corruption in land privatization schemes, President Morsi initially halted and even reversed some land privatization decisions.
Since the military remained in control, he never touched military assets or land, representing 25–30 percent of the national economy. Nevertheless, his renationalization of property proved to be his undoing. One major reversal, postrevolution, was the water privatization deal with Saudi Prince Alwaleed bin Talal, who had invested $500 million to grow grapes, citrus, vegetables, and cotton in Egypt’s desert for export to Saudi Arabia.
The government of Egypt had promised to supply water by diverting about 9 percent of Egypt’s Nile River allotment from Lake Nasser to “Toshka Lakes,” new lakes that would be created in the Sahara. For Saudi Arabia, the Toshka project meant access to the vast Nubian aquifer, which was also being mined by Libya’s Great Man-Made River, a vast network of aqueducts and pipes.33 The Egyptian contract was a near giveaway of land that guaranteed “cost-free and unimpeded” access to groundwater on the property. The government of Egypt justified “the favorable terms and subsidies provided to the agricultural developers in Toshka by the resettlement objectives of the project.
Toshka by the resettlement objectives of the project.” Ultimately, the government wanted to relieve population pressures along the Nile, where 96 percent of Egypt’s population lives, and lower a 9.3 percent unemployment rate by creating a community of agricultural laborers around Toshka Lakes. Since Saudi Arabia was in its own water crisis, Toshka Lakes would allow it to import water through food, a “virtual water”—while Egypt remained thirsty. Initially, the revolution tabled this ambitious plan and the contract was annulled due to allegations of corruption. But the cancellation of projects such as these may have ultimately led to President Morsi’s downfall.
Canceling Toshka and other corrupt privatization deals made foreign investors panicky; they began to pull out of Egypt. The economy spiraled out of control. In the end, Morsi was forced to renegotiate contracts in order to bring back investors, and the Saudi prince ultimately got his deal, though reduced in size.
For Morsi, however, it was too late. In 2013, he was removed from office. After Morsi was ousted, the attorney fighting the Saudi prince, Hamdy El-Fakharany, dropped the case in disgust, claiming, “I have been battling for two eras and nothing has changed. I won’t keep battling alone for the rest of my life.” He particularly decried the “free irrigation water Bin Talal is given, while many Egyptian farmers are denied [this privilege].”
Of course, the problem with Toshka involves much more than the terms of a contract; the diversion of the Nile into the Saharan desert has created a 540-square-foot lake and several smaller ones that are quickly evaporating. The lakes have shown evidence of rapid drying when viewed by satellite.36 As the country goes thirsty, Toshka Lakes are becoming saline because they have no outlet. In 2012, Toshka was called a “megafailure” by Egypt Independent.
Morsi was ousted for a number of reasons, including some of his Islamic-based rulings. More cynically, an e-mail from Stratfor’s senior global analyst, Reva Bhalla, claimed that the Egyptian military had always been in charge of the results of the revolution and would never let the Muslim Brotherhood rule. She claimed the military encouraged the revolution because the Mubarak regime had planned to go after their assets, including an enormous water bottling company. Even so, Bhalla said the military’s goal in supporting the revolution was to “revamp [Murabek’s] regime, but not dismantle it.” Shortly after the revolution, Bhalla wrote:
“This is the negotiation process we are seeing play out right now—whose time is done and needs time to transfer their assets overseas, who is ‘clean’ enough to stay, who can snatch up the assets that are now up for grabs (esp within the military), etc.”
Revolution, unfortunately, can provide new opportunities for corruption as the wealthy flee the country with money from privatization deals and the military “snatches up” what is left. Morsi’s interim government provided such an opportunity: a period of relative chaos with a leader who was not schooled in such “negotiations.”
But when Morsi became a threat to these machinations, he was simply thrown out by the military and declared a “terrorist,” along with the entire Muslim Brotherhood. Changing Egypt’s unequal distribution of water may be nearly impossible in the face of military and international financial forces greater than those of any president. Without internationally enforced laws that allow a nation to abandon contracts found to be corrupt, environmentally disastrous, or otherwise unethical, so-called hot money will instantly leave the country at the first sign of a government wavering on promises of an investment-friendly environment.
Egypt was forced to choose longterm ecological disaster and thirst in order to avoid immediate financial disaster; but disaster was merely postponed.