Israel-Palestine war: Israel reportedly proposed writing off Egypt's debts for hosting Gaza refugees

Israel is proposing writing off a significant chunk of Egypt’s international debts through the World Bank to entice the cash-strapped Abdel Fattah el-Sisi government to open its doors for displaced Palestinians, according to the Israeli Ynet website.

Egypt is currently mired in a debt crisis, ranking second only to Ukraine among countries most likely to default in debt payments.

The state is haemorrhaging half its revenue in interest payments and is reliant on loans from the IMF and wealthy Gulf states, limiting its ability to contradict US foreign policy.

However, it remains unclear whether Israel wields adequate influence at the World Bank to write off Egypt’s international debts. 

Debt forgiveness has previously been leveraged by the United States to bring Egypt in line with its foreign policy. In 1991, the US and its allies forgave half of Egypt’s debt in exchange for its involvement in the anti-Iraq coalition during the second Gulf War.

Moreover, the Egyptian government has repeatedly rejected the idea that Palestinians could be displaced to Egypt temporarily as Israel carries out its military operation against Hamas in neighbouring Gaza.

The Ynet report follows a story by the Financial Times claiming that Israeli Prime Minister Benjamin Netanyahu lobbied EU leaders to pressure Egypt into accepting refugees from Gaza.

The British paper said EU members, including the Czech Republic and Austria, had floated the idea at a meeting of member states last week, although a number of European countries including the UK, Germany and France have said separately that the idea is a non-starter as Egypt has categorically refused to accept Palestinian refugees.

An unnamed diplomat from an unnamed country, however, told the FT that the pressure of Israel's continued assault on Gaza could shift Cairo's stance.

"Now is the time to put increased pressure on the Egyptians to agree," the official said.

Despite Netanyahu’s calls, the leaders ultimately agreed that Egypt’s role should be the delivery of humanitarian aid, as the Rafah crossing into the Sinai region is currently the only route for aid to enter the besieged Gaza Strip, but that Egypt is not obligated to accept an influx of refugees.

This comes shortly after an Israeli intelligence ministry document was leaked to the Israeli news site Calcalist; it detailed purported plans for the forced transfer of Palestinians in Gaza to the Sinai peninsula.

Live: Over 30,000 in Gaza killed, wounded or missing

Despite the mounting pressure, President Sisi said this month that his country rejected “any attempt to liquidate the Palestinian issue by military means or through the forced displacement of Palestinians from their land, which would come at the expense of the countries of the region”.

The memory of the Nakba in 1948, in which Zionist militias forcibly expelled more than 700,000 Palestinians from historic Palestine and prohibited them and their descendants from ever returning, means many Arab states fear that any transfer of people from Gaza would be permanent.

Since the Israeli onslaught on Gaza started on 7 October, one million Palestinians have been displaced inside the territory, with more than 30,000 Palestinians killed, missing or wounded.

The chief of the United Nations Relief and Works Agency (Unrwa) has said that Palestinians in the besieged Gaza Strip are facing forced displacement and collective punishment.