Why is El-Sisi’s regime considering the sale of the Suez Canal?!

A proposal to sell the Suez Canal, in north-eastern Egypt, has sparked widespread concern among Egyptians, who are already deeply suspicious of the government’s accelerated sale of state assets, vital infrastructure and strategic ports to Gulf allies.

The idea was put forward days ago by Hassan Heikal, an adviser to the Egyptian Prime Minister, as part of what has been described in the media as the “grand swap”, involving the exchange of state assets and the transfer of debt between state institutions.

Under the proposal, domestic debt would effectively be wiped out by transferring part of the state’s assets – such as its stakes in public companies or the Suez Canal – to the Central Bank of Egypt, provided that the bank receives assets equivalent to the value of the debt.

Huge debts

President Abdel Fattah El-Sisi’s regime is currently weighed down by domestic debt of 11.057 trillion Egyptian pounds (approximately $219 billion) as of the end of June 2025, and external debt of around $164.8 billion at the end of the first quarter of 2026, according to official data.

Debt is consuming more than half of Egypt’s treasury revenues, while annual debt-servicing costs reached around 5.2 trillion pounds in the latest budget, including 2.8 trillion pounds in principal repayments and 2.4 trillion pounds in interest payments.

Egypt is due to pay off $62.8 billion in external loans over the 12 months from April 2026 to March 2027, including $7 billion in interest and $55.8 billion in loan principal, according to World Bank data.

Amid the deterioration of Egypt’s finances since the military coup of 3 July 2013, the government has accelerated the sale of state assets. The process has involved major companies operating in vital and sensitive sectors, including oil, electricity, energy, transport, telecommunications, tourism, banking and finance. It has also extended to the sale of strategic plots of land on the Mediterranean coast, most notably the Ras El-Hekma deal with the UAE, Alam Al-Roum with Qatar, and Ras Gamila on the Red Sea, which may be sold to Saudi Arabia.

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Testing the waters

Growing public concern over the proposal to sell the Suez Canal is fuelled by four main factors. The first is a statement by the Egyptian Cabinet, which said that the proposal “reflects a purely personal view of its author and does not represent a policy or proposal adopted by the government”. However, it also acknowledged that the idea had previously been studied.

The second is the Egyptian government’s settlement of 88.3 billion pounds in debts owed by the National Media Authority, known as Maspero, to the state-owned National Investment Bank. The settlement involved transferring ownership of real estate assets to the bank. Heikal described the arrangement as a “small swap” and considered it a model for what could potentially be done with the Suez Canal.

The third is the reported valuation of the strategic waterway at as much as $1 trillion.

The canal handles up to 15 per cent of global trade and around 30 per cent of global container traffic, while the value of goods transported through it exceeds $1 trillion annually.

The fourth factor fuelling Egyptians’ concerns is the amendments approved by the Egyptian Parliament in 2022 to Law No. 30 of 1975 governing the Suez Canal Authority. The amendments provide for the establishment of a fund owned by the authority, with the right to buy, sell, lease, rent out, exploit and make use of fixed and movable assets.

An Egyptian economist, speaking to Middle East Monitor on condition of anonymity, said the proposal was essentially a trial balloon designed to gauge public reaction. It could be intended either to privatise the canal outright, offer a stake in it for sale on the Egyptian Stock Exchange, or possibly conclude a major deal through which Egypt would receive a substantial amount of foreign currency from a Gulf state, such as the UAE, in return for granting it the right to use the canal for a fixed period – 10 years, for example.

Another group of economists believes that Heikal’s proposal may have other objectives, including completing the sale of government stakes in strategic companies such as Alexandria Container and Cargo Handling, Abu Qir Fertilizers, Sidi Kerir Petrochemicals, Alexandria Mineral Oils and Telecom Egypt. This could take place without disclosing the identities of the buyers or the true value of the stakes being sold, and without prior disclosure as required by capital-market regulations. The government may also accelerate the sale of other companies before the end of the year in an attempt to generate enough cash to pay off the country’s scheduled debts.

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A dangerous swap

Egyptian economist Mustafa Abdel Salam warned on the London-based Al-Araby Al-Jadeed platform that transferring ownership of assets, including the Suez Canal, to the Central Bank in return for settling part of the domestic debt could simply mean that the bank uses depositors’ money to service public debt and reduce its cost. Alternatively, the state bank could print money without sufficient gold and foreign-currency reserves to back it, triggering an unprecedented wave of inflation and a sharp rise in prices.

Meanwhile, Egyptian opposition writer living abroad Salim Azzouz questioned the proposal in an article published by the independent website Arabi21 under the headline “Is Heikal Thinking Off the Top of His Head?!” He wrote: “What alarmed me about the government’s response was its admission that the idea had previously been studied and discussed before being ruled out on grounds of Egyptian sovereignty and national security, among other considerations cited in the statement. What is striking that a matter this serious was discussed and studied behind the people’s backs, while they do not know when this happened, what prompted it, or whether the idea originated with the government or came from outside it.”

Alaa Mubarak, son of the late President Hosni Mubarak, also weighed in on the controversy in a post on his personal account on X. He wrote: “It is clear that the so-called expert Heikal is ignorant of the importance of the Suez Canal as a global waterway, a vital artery and a symbol of national sovereignty. Any proposal to mortgage or swap it to settle domestic debt represents a major risk to national sovereignty and Egyptian national security.”

He added: “It is also clear that he (Heikal) does not understand that the Suez Canal is not merely an ordinary asset that can be treated like a piece of land or a company in order to wipe out domestic debt. The value of this vital waterway exceeds any existing debt, and the Suez Canal must not be included in any swap or mortgage, nor should its ownership be compromised or tied to the debt issue, even if the other party were a domestic entity.”

On the brink of bankruptcy

The proposal to sell the Suez Canal is not new. Years ago, a similar proposal was raised to sell a 51 per cent stake in the canal to China or the UAE to pay off Egypt’s debts, and the Egyptian government swiftly issued an official denial.

In February 2023, El-Sisi denied reports that the Suez Canal was being sold for $1 trillion, describing them as “rumours and lies”.

Opponents now say that what were once dismissed as lies have become a proposal put forward by a senior government adviser. They warn that history could repeat itself, recalling how foreigners took control of Egyptian assets during the rule of Khedive Ismail Pasha, who plunged the country into a spiral of debt. In 1876, he was forced to establish the “Debt Fund” commission, which included representatives of European countries and was tasked with managing Egypt’s debt and arranging its repayment.

Egyptian academic Aliaa El-Mahdi, former dean of the Faculty of Economics and Political Science at Cairo University, questioned the government in a post on her personal Facebook page, asking: “We sold Ras El-Hekma (valued at $35 billion), but did the debt fall by even the amount of the sale?”

She added: “No. We need rapid structural reform that does not rely on selling assets, but instead mobilises all state institutions – the private and public sectors, civil society and foreign investment – to build up and invest in productive sectors such as industry and agriculture, among others.”

Fears among Egyptians over the proposal therefore remain understandable and legitimate, particularly under a military-backed regime that has saddled the country with massive debts and could, if Egypt approaches the brink of bankruptcy, cost the Egyptian people many of their vital and sensitive assets and facilities.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.