The War on Egypt's Middle Class: How International and Regional Banks Hijacked the Economy Talaat Harb Built

The Visionary Who Saw the Trap

In 1907, before the Great War, before the revolution, before the world had heard of Zionism, an Egyptian economist published a book. His name was Mohammed Talaat Harb. His book was called “The Economic Remedy of Egypt and Creating a National Bank.” It was a warning, a blueprint, and a prophecy.

Harb had watched as foreign banks - British, French, and Italian - siphoned Egypt’s wealth through their ledgers. The loans were signed in Cairo. The interest flowed to London. The land was worked by Egyptian farmers, but the profits belonged to absentee shareholders. Harb saw the trap being laid, and he raced to build a door.

In 1911, he convened the first national conference to discuss the establishment of an Egyptian bank entirely owned by Egyptians. His vision was rejected. Not because it was unworkable, but because it threatened the colonial order. Foreign bankers whispered to the Khedive. The project was shelved.

Then came the 1919 Revolution. The British had tried to banish Egypt’s nationalist leader, Saad Zaghloul, and the country erupted. When the dust settled, the colonial authorities understood that they could no longer rule without concession. One of those concessions was the creation of a national bank.

In May 1920, Banque Misr -the Bank of Egypt - opened its doors. It had been funded by 126 Egyptian shareholders who had pooled 80,000 Egyptian pounds, the equivalent of 20,000 shares at four pounds each. The bank’s purpose was not merely to store money. It was to invest in Egypt. To build factories. To create jobs. To break the foreign stranglehold on the Egyptian economy.

Harb was not a politician. He was a patriot. He understood that political independence without economic independence was a sham. As he wrote decades before the Nasser era, “A people who do not control their own banks do not control their own destiny.”

He was right. And his warning is more urgent today than it has ever been. I know this because I sat across the desk from those who inherited the system he warned against.

The Rise of the National Banks and the Golden Era

For the first half of the 20th century, Banque Misr, Banque du Caire, and the National Bank of Egypt served as the backbone of Egypt’s development. They financed the textile industry, the transport sector, and the first generation of Egyptian entrepreneurs. The middle class grew. The professions expanded. Cairo became a city of clerks, teachers, lawyers, and shopkeepers - people who owned their homes, educated their children, and believed that their future was tied to their nation’s future.

In the 1950s and 1960s, under Nasser, the banking sector was nationalized. This brought stability and directed credit toward industrialization. The state was the largest employer, and the public sector provided a secure ladder into the middle class. A university graduate could expect a job with a pension, affordable housing, and access to healthcare. It was not perfect. It was not free. But it was a system that protected millions from the abyss of poverty.

Then came the economic liberalization of the 1970s. The Infitah (open door) policy invited foreign capital back into Egypt. International banks returned. Regional Gulf banks, flush with petrodollars, opened branches in Cairo and Alexandria. At first, this brought competition and new services. But over time, the balance of power shifted.

The national banks - Banque Misr, Banque du Caire, the National Bank of Egypt - were gradually privatized or reduced to junior partners in their own market. The lending decisions that once favored local industry now favored short-term profit. Foreign and regional banks prioritized trade finance, corporate lending to multinationals, and real estate development - not small businesses or manufacturing. Local banks, stripped of their state protection and unable to compete with the capital of Gulf giants, retreated from their traditional role of patient lending. Interest rates became tied to global markets, not local needs.

A Banker’s Observation - The Last Decade of Brutality

I spent years working inside a private regional bank in Egypt. I saw the loan files. I watched the credit committees. I listened to the treasury calls. And I watched the middle class disappear not by accident, but by design.

The past ten years have been an unrelenting assault on the Egyptian middle class. It did not happen by chance. It happened by policy - the policies of international financial institutions that treat countries as balance sheets, not as homes.

In 2016, Egypt signed a $12 billion loan agreement with the International Monetary Fund (IMF). The conditions were familiar to anyone who had lived through the structural adjustment programs of the 1990s: float the currency, cut subsidies, raise interest rates, shrink the state. The government complied.

The currency was floated. The pound lost half its value overnight. Inflation soared above 30%. The poor suffered. But the middle class was destroyed.

Consider the numbers. In 2000, Egypt’s middle class numbered approximately 5.7 million adults, according to Credit Suisse. By 2017, that number had collapsed to just 2.9 million - a 48% contraction. The middle class was not simply “shrinking.” It was being pushed below the poverty line.

In 2024, the government floated the currency again. The pound fell another 38% against the dollar. Inflation, which had briefly cooled, reignited. By early 2026, the Central Bank had raised interest rates to nearly 30% in an effort to curb inflation and attract foreign capital. For the borrower - the entrepreneur who needed a loan to expand, the family who needed a mortgage, the worker who needed a credit card to survive until the end of the month - those rates were a death sentence.

Today, per capita income in Egypt stands at a meager $469 per year. Millions of families who once considered themselves middle class now qualify for state food subsidies. The dream of home ownership has receded beyond reach. According to independent studies, more than a third of the population suffers from “urban deprivation” - a polite term for slum conditions.

The middle class is not merely “struggling.” It is being eliminated. And the banks - both international and regional - have not come to build. They have come to extract.

The Silence of the Ledger - A Banker’s Reckoning

Why does this matter? Because a country without a middle class is a country without a future.

The middle class is the engine of democracy. It is the source of tax revenue, the driver of demand, the foundation of political stability. When the middle class disappears, the society polarizes into a small, wealthy elite and a vast, impoverished mass. The elite control the banks. The banks control the economy. The economy serves the elite.

This is the trap that Talaat Harb saw a century ago. He understood that foreign and regional banks do not exist to develop Egypt. They exist to profit from it. Their lending decisions are not designed to build factories in Upper Egypt or to finance small farmers in the Delta. They are designed to maximize shareholder returns in London, Zurich, and Riyadh. As a banker, I have seen the credit memos. I have seen the rejections of perfectly viable Egyptian SMEs in favor of financing a luxury real estate project for a Gulf investor. I have seen the treasury department prioritize hot money inflows over lending to the local economy.

The solution is not to expel foreign banks - that would be impossible, and perhaps even undesirable. The solution is to restore the balance of power. To strengthen local banks. To redirect credit toward productive investment rather than consumption. To build an economy that serves the Egyptian people, not the international bond market.

Talaat Harb raised 80,000 pounds from 126 patriots to build Banque Misr. Today, those 126 shareholders are gone. The bank they built is still standing, but it has been joined by dozens of foreign and regional competitors who did not come to build. They came to extract.

The ledger is open. The century is closing. And the question is whether a new generation of Egyptian bankers - those who still remember the value of a national economy - will emerge to finish the work that Harb began.

This essay is dedicated to every Egyptian who has watched their savings evaporate, their dreams deferred, and their dignity denied. The war on the middle class is not over. But neither is the memory of those who built this nation with their own hands.