Our View:

At the end of 2014, security issues for Egypt both at the domestic and regional level continue to be of major concern. The reports view is that Egypt’s violent crack on all forms of political opposition risks pushing more and more young people - a key segment of the population - towards adopting extremist views in the long term. As the military seeks to continue strengthening its grip on power, we are expecting defence spending to increase both in absolute and relative terms in 2015.

Demonstrations amongst Egyptian youths continue in the Nile Delta, which we suspect has the potential to be the Achilles heel of the al-Sisi’s regime. The collective punishment of entire communities in the Sinai also places the army at risk of losing the battle of hearts and minds against extremism. Furthermore, the cancellation of the talks with Hamas for a long term ceasefire with Israel does not bode well for lasting stability on Egypt’s eastern frontier.