On 4 May 2025, the UAE's Abu Dhabi Ports Group (AD Ports Group) signed a controversial deal with Egypt's General Authority of the Suez Canal Economic Zone (SCZONE) to develop and operate the KEZAD industrial and logistics zone near Port Said.
The zone, spanning an area of approximately 20 km2, is located at the entrance to one of the world's most vital waterways, the Suez Canal.
The contract - a 50-year renewable land use agreement - opens the door to planned Emirati investments worth $120 million during phase one, which will be allocated to market and technical research as well as initial development.
Under the agreement, Egypt will receive 15 percent of the revenues, which will not be calculated from net profits.
The deal agreement has sparked a barrage of questions about its strategic significance, economic feasibility for Egypt, and long-term implications, particularly in light of the UAE's history of hefty investments in Egyptian ports and the growing debate over the impact of these partnerships on Egypt's national and economic security.
The UAE's growing sway over Egypt's ports
The UAE's influence in the Egyptian port sector over the past two decades has grown steadily. Dubai Port World (DP World) currently controls a 90 percent stake in Ain Sokhna Port, a 32 percent stake in Alexandria Port, and a 49 percent stake in several Suez Canal Authority (SCA) projects.
Its influence has also grown in Damietta and Safaga ports, as well as dry ports such as the 10th of Ramadan Port.
This control, which has expanded quietly and gradually, is now being questioned by some, particularly in light of what some experts see as the intentional failure to develop these ports, in a way which appears to advantage the UAE's free zones, particularly the one in Jebel Ali, according to observers.
For example, the Ain Sokhna port has seen no significant development in 25 years; while its capacity was originally planned to reach five million containers, it has remained able to hold only 250,000 containers annually.
This raises legitimate questions about the Emirati investor's commitment to its obligations and the Egyptian state's ability to enforce its own terms in such contracts.
KEZAD East Port Said Development
The recent agreement to develop the KEZAD East Port Said Industrial and Logistics Zone takes place against this charged backdrop. The deal grants the AD Ports Group operational control over a vast area at the entrance to the Suez Canal, without any binding guarantees around achieving specific growth targets or development rates within fixed timeframes.
Economist Ahmed Khuzaim expressed his concern about the nature of this contract, stating to Al-Araby Al-Jadeed, The New Arab's Arabic-language sister edition, that granting the right to use this vital area to a foreign partner - especially without an international bidding process - essentially relinquishes the state's sovereignty over one of its most important economic assets.
Khuzaim explained that had the project been put out to international tender, it could have generated over $40 billion for Egypt over its lifespan.
"The most dangerous thing is that the revenues Egypt will receive do not exceed 15 percent," he added. Worse, it is not clear to what this percentage relates, but it is not calculated from net profit, "leaving the door open for companies to establish subsidiaries or manipulate accounts to reduce their declared profits".
He also expressed fears that the project could be used by the UAE to strengthen the position of Jebel Ali Port in Dubai, at the expense of Egyptian ports on the Red Sea and the Mediterranean.
US influence
Questions over the UAE's objectives in terms of its growing investments in Egypt's port sector are inseparable from the context of broader geopolitical competition over the Suez Canal.
According to what several informed sources told Al-Araby Al-Jadeed, China had expressed a strong interest in obtaining concessions in the Ain Sokhna port, but US pressure had prevented any such deal due to Washington's fears that Beijing would establish a foothold at the entrance to the Suez Canal.
Besides this, the plan to establish a Russian industrial zone in the East Port Said industrial zone is also suffering from a complete freeze, despite more than three years having passed since its launch.
Sources working on the project confirm that work has not actually begun, stating that even the steel foundations for the area's construction have not yet been installed, raising suspicions that foreign interference is working to obstruct the presence of any actor unwanted by the US.
Reducing oversight
Egyptian academic and economics professor at Al-Azhar University, Ahmed Zekrallah, expressed his dissatisfaction with the "lack of transparency" regarding the details of the contract with the AD Ports Group. He pointed out that the deal had not been presented to parliament, nor could it be challenged in court due to laws passed recently that shield such economic agreements from any legal review.
"How could Egypt give up such a sensitive strategic area, under a fifty-year contract, without any clear guarantees or clauses allowing for the contract's termination in the event of non-compliance?" Zekrallah asked.
"Egypt could have - had it wanted - imposed harsh fines for non-compliance and set deadlines for implementation and investment, instead of leaving matters to the discretion of the investor."
He also criticised directly awarding the contract for the project to the UAE without a bidding process and questioned the reasons behind excluding potential bids from other countries such as China and France. This, he said, raised the question of whether geopolitical considerations were overriding Egypt's own economic interests.
Significant benefits
On the other hand, economic expert Tarek Metwally believes the project promises significant benefits for Egypt, emphasising that the country is experiencing extremely difficult economic conditions that require attracting foreign investment at all costs.
Metwally pointed out that the cost of creating a single job in Egypt exceeds EGP 300,000 ($6,000), while the Emirati deal will provide thousands of jobs, in addition to the taxes and social security it will pay.
"The entire world - from America to China - is waging a war to attract investment. Egypt's success in signing a contract like this is a positive step, especially since our infrastructure and legislation still lack the elements they need to attract international investors," said Metwally.
However, he acknowledged the need to impose strict controls to ensure that foreign parties adhere to their promises and to ensure the rights of the Egyptian state were maintained, through transparent oversight mechanisms, clearly defined implementation stages, and clarity around predicted yields.
National security
On the national security front, strategic expert Colonel Hatem Saber believes that concerns over growing Emirati investments in Egyptian ports are exaggerated. He asserts that the area where the project is being built will remain entirely Egyptian.
Moreover, it won't affect the state's sovereignty, legally or practically, as the contract is based on usufruct (land use) - not sale, he says, adding that Egypt's sovereignty over the Suez Canal is protected by the constitution and the law and cannot be violated in any way.
He also downplayed the importance of the India-Middle East-Europe Economic Corridor (IMEC), which the UAE has been a key player in pushing, noting that unloading a single ship in this corridor will require approximately 300 trucks, making it impractical in terms of time and effort, rendering it economically unfeasible as an alternative route to the Suez Canal.
This is an edited translation from our Arabic edition. To read the original article, click here.
Translated by Rose Chacko
This article is taken from our Arabic sister publication, Al-Araby Al Jadeed and mirrors the source's original editorial guidelines and reporting policies. Any requests for correction or comment will be forwarded to the original authors and editors.
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