Egypt, bogged down in debt, began to sell off historical hotels: what does this mean?

“As dusk fell on the verdant grounds of the Marriott Mena House, the reflection of the Great Pyramid of Giza in the pool built to reflect the last of the Seven Wonders of the World grew darker,” The band played a smooth jazz rendition of “The Eagles” “Hotel California.” on the grassy lawns as guests gathered for dinner while the staff tried to project a business-as-usual attitude despite the hotel’s recent acquisition by notorious Egyptian property tycoon Hisham Talaat Mustafa and two powerful Emirati conglomerates.”

The sale of this and six other historic hotels, financed by Emirates, is part of what Timothy Kaldas, an analyst of Egypt’s troubled and often opaque economy, called an “underwhelming sell-off of state assets” as the government demands deeper cash injections, The Observer writes. getting into debt.

Mustafa is Egypt’s largest real estate developer whose business empire has seen a revival since his release from prison in 2017 after President Abdel Fattah el-Sisi pardoned him on murder charges. His portfolio includes properties in Egypt’s new capital, the crown jewel of Sisi’s megaprojects, in addition to his Icon hotel division, which owns several luxury hotels in Cairo.

His Talaat Mustafa Group (TMG) has now acquired seven historic hotels across Egypt, The Observer notes. This includes others that serve as monuments to Egypt’s recent past, including the Sofitel Winter Palace in Luxor, the Old Falls in Aswan and the Steigenberger Cecil on the Alexandria coast. International hotel chains continue to operate the hotels, but Icon bought a majority stake in the Egyptian state-owned company that owned them.

Egyptian Prime Minister Mostafa Madbouly celebrated the $800 million sale to Mustafa, who praised the acquisition for bringing in foreign currency. He added that the sale was financed by a “renowned international strategic investor.”

A few weeks later, it became known that the mystery buyers were a sovereign wealth fund based in the Emirates capital Abu Dhabi, as well as its subsidiary.

No piece of land or modern history is considered off-limits in the Egyptian government’s desperate fundraising efforts, The Observer writes. Emirati investors have snapped up Egyptian properties and companies in recent years, including the $200 million sale of Egypt’s landmark government building in Cairo’s Tahrir Square. An Emirati consortium is reportedly negotiating a $22 billion deal to acquire land on Egypt’s northern coast.

The sale of huge tracts of land and historic hotels is part of Cairo’s efforts to cope with its growing mountain of debt. Egypt is currently the second-largest debtor to the International Monetary Fund after Argentina and is currently in negotiations to increase its lending program.

“It is clear that this is a country that is selling state assets under duress,” said Kaldas, an analyst at the Tahrir Institute for Middle East Policy. “Egypt’s finances are in a completely precarious position.”

Mena House was built as a royal hunting lodge before being converted into a hotel in 1887 with a cocktail bar and dining room with stunning views of the pyramids. Its historic wing is filled with luxurious suites, including the room where Winston Churchill stayed during the 1943 Cairo Conference and a replica of the bedroom of Egyptian diva Uum Kalthoum.

Marble floors, a mirrored lobby and vaulted ceilings greeted guests on visits that showcased the former strength of Egyptian diplomacy as peace talks between Egyptian President Anwar Sadat and Israeli representatives took place in one of the hotel’s banquet rooms.

Wys Monreal, general manager of the Geneva-based Aga Khan Foundation for Culture and a longtime visitor to Mena House, said he hopes the new owners understand that Egypt’s historic hotels have value beyond financial value. “They are part of Egypt’s history, tourism, which has contributed to Egypt’s integration into the wider world,” he said.

As The Observer recalls, Mustafa was convicted in 2009 of paying a former police officer $2 million to kill Lebanese singer Suzanne Tamim by slitting her throat in her Dubai apartment.

That Mustafa, a member of the Egyptian elite traditionally considered above the law, was put on trial at all in Cairo was seen as evidence of Emirati anger that the killing took place on its soil because Egypt does not extradite its citizens.

The trial shocked the Egyptian public. Mustafa maintained his innocence from prison, saying in a widely publicized letter that the charges against him were false.

“These lies will not move the great pyramids I have built in the Egyptian economy,” he wrote.

Although his words were despised at the time, they ultimately proved prophetic. After a retrial in which he was sentenced to 15 years in prison, Mustafa served half of that sentence before being pardoned by President Sisi, and his previous conviction appears to have been no obstacle to his newfound role as an intermediary for Emirati money. injections into the Egyptian economy.

Caldas noted that selling the hotels would ultimately prove counterproductive to the government’s fundraising efforts as the badly needed foreign exchange generated by the hotels would now flow to other countries.

“The Egyptian state received an injection of $800 million, which on the face of it is great news, but it is constantly losing income from these assets. This is a scam, all they do is burn money for an unsustainable economic model that is hampered by maintaining an insatiable network of patronage at the expense of the public interest,” he said.

“This doesn’t stabilize the economy, it just pulls the rug out from under our feet – Egypt owes $30 billion next year,” he said.