Why are the Gulf states 'buying up' Egypt's coastline?

It has been described as a "turning point" in the worst economic crisis Egypt has dealt with in decades. The country is hugely indebted and suffering from a shortage of foreign currency, which has led to damaging inflation and rising prices that many ordinary Egyptians are finding hard to handle.

But, last week, Egyptian leaders announced that the United Arab Emirates would be investing $35 billion (€32 billion) directly into the Egyptian economy, mostly via a construction project at Ras al-Hikma, a Mediterranean peninsula near the city of Alexandria. It is thought to be the biggest such investment in Egypt's history.

The first tranche of money has already been deposited. Much of this came from cash the UAE already held in Egypt's central bank. The rest is expected to arrive within two months, according to Egyptian officials.

The impact of the deal and the release of the first tranche of funds from the central bank had an impact almost immediately, improving Egypt's financial position in various ways.

The deal will also make it easier for Egypt to fulfill conditions set by the International Monetary Fund, or IMF. Egypt and the IMF are in the final stages of negotiating another multibillion dollar bailout, likely worth over $10 billion (€9.2 billion), to stabilize the Egyptian economy.

The IMF's conditions for a deal involve devaluing the Egyptian pound to bring it into line with the real exchange rate, as opposed to that set by the government, and to further privatize state assets. Basically, this means taking them away from the all-powerful Egyptian military and selling them to private investors.

And there are rumors of another similar deal coming soon. These suggest Saudi Arabia will invest a further $15 billion into a Red Sea tourist destination, Ras Gamila.