Egypt aims to strengthen regional and global partnerships

 

While Egypt has long looked internationally to build alliances and win favour, the country’s immediate neighbourhood is becoming an increasingly important source of support. As the oil-rich states of the Gulf become more politically assertive, Egypt is navigating this new regional reality. At the same time, however, the MENA region is still feeling the repercussions of the Arab Spring, and the country is therefore treading carefully.

External relations have been shifting over the last few years, not only with regional countries, but also with partners further afield. While the country has relied heavily on the US for aid and support in the past, it is now building a broader network of international partnerships, including with Russia and China. Indeed, as US commitment to Egypt wavers – at least in Congress, if not from the executive branch – the government has been pushed to forge new relationships in the region and beyond.

Gulf Relations

Perhaps the most important strategic relationships for Egypt are with the nations of the Gulf. While there have long been valuable relations between Egypt and Gulf countries, particularly in terms of expatriate remittances and tourism revenue, cooperation in the region has become even more critical since 2013, when President Mohamed Morsi was deposed. After this, various countries in the Gulf became an essential source of aid and investment for Egypt. In the first year and a half following the departure of President Morsi, the country received a combined $23bn in aid from Saudi Arabia, the UAE and Kuwait.

Although there have been some fluctuations, aid has continued to flow into Egypt. Between 2014 and mid-2017 Saudi Arabia granted the country at least $25bn in aid. In addition, there has been more than just basic foreign aid on offer from the region: oil, foreign investment and loans have all been on the table. Of the $8bn worth of Egyptian external debt set to mature in the second half of 2018, more than $6bn is owed to countries in the Gulf.

It is perhaps unsurprising, then, that recent Egyptian foreign policy has been particularly sensitive to its Gulf benefactors. In June 2017 the country was quick to support the economic blockade on Qatar, which was led by Saudi Arabia, the UAE and Bahrain.

The move appears to have been in response to alleged Qatari financing of terrorism and was, at least in part, aimed at its support of the Muslim Brotherhood throughout the region. The decision was generally in line with the Egyptian administration’s anti-Muslim Brotherhood stance, but it also brought some risks for the country, as Qatar is a leading source of natural gas imports for Egypt.

Regional Tension

Despite the increasing importance of regional ties, Egypt’s relationship with the region has not been without challenges. Egyptian courts struck down President Abdel Fattah El Sisi’s decision to grant two disputed islands in the Red Sea – Tiran and Sanafir – to Saudi Arabia in 2017. The ruling dealt a blow to the Saudi-Egyptian relationship and damaged plans for large-scale development in north-western Saudi Arabia and the Sinai centred on a new bridge across the Red Sea. The two countries also have different approaches to the ongoing conflict in Syria, with Egypt asserting that a resolution to the conflict will necessarily include the president, Bashar Al Assad.

These differences have led to periods of tension between the two regional powers. Indeed, in late 2016 Saudi Arabia cut off oil deliveries to Egypt from Saudi Aramco, the national oil company. However, the Egyptian relationship with the Gulf’s main players has largely been positive, and Saudi oil began to flow back to Egypt in April 2017. Cairo has also maintained close cooperation with officials of the UAE, with President El Sisi visiting the country in September 2017 for the second time in one year.

President El Sisi’s administration has been dealt a difficult hand. The MENA region is in a period of flux and instability, making it difficult to ensure stability and development. Nevertheless, the Egyptian government has pursued a consistent diplomatic programme to strengthen ties with major players in the Gulf and improve border security. While these policies have experienced some success, the challenges that still face Egypt and the region are unlikely to disappear in the short to medium term.

Russia Reliance

While Egypt and Russia developed close ties in the 1960s and 1970s, the relationship had been eclipsed in recent decades by partnerships with the US. However, Russian President Vladimir Putin’s visit to the country in December 2017 represented a renewed sense of commitment between the two nations.

This relationship is more than a symbolic one. President Putin and President El Sisi discussed developing a new Egyptian industrial zone with incentives to attract Russian businesses, as well as a nuclear deal that would see Russian firm Rosatom construct a $30bn nuclear plant in Egypt, supported by a $25bn Russian loan. The plant is anticipated to be supplied with Russian nuclear fuel. This was arguably not the most momentous agreement between the two countries in 2017: on the eve of Putin’s visit, Prime Minister Dmitry Medvedev signed off on a bilateral agreement over the use of airspace and airports that could result in new Russian military bases in Egypt.

China

In many ways, these moves are in line with the wider trend of global players seeking to exploit the new ambivalence of the US towards involvement in the region. This is also evident in the increasing warmth of Sino-Egyptian relations. China has become a major source of capital and expertise in Egypt’s government-led construction drive. While China ranks 21st as a source of foreign financing for Egypt, the General Authority for Investment hopes it can break into the top 10 in the coming years. China is already Egypt’s largest trade partner by value, with trade volumes reaching $11bn in 2016 and $5.2bn in the first half of 2017.

The intensification of the relationship between the two countries is illustrated by the number of Sino-Egyptian diplomatic summits that have occurred since 2014. The five summits have occurred over four years, representing one-third of all the summits ever held between the two countries.

China has also become essential to President El Sisi’s ambitious agenda. Without Chinese financing, expertise showpiece projects – such as the New Administrative Capital and a new Suez Canal industrial zone – are unlikely to get off the ground. In turn, Egypt has been a vocal supporter of China’s $1.4trn Belt and Road initiative, which seeks to build a new Silk Road trading network through investment in roads, rail, energy production, transit and other transport infrastructure across 60 countries.

Shifting Influence

The initiative could shift the global economic centre towards China, a move that may already be under way, given the country’s new influence in countries such as Egypt. Nevertheless, the diminishing influence of the US should not be overstated. In the case of Egypt, the US still remains a major source of aid. Furthermore, US President Donald J Trump’s administration’s stance on Cairo has been equivocal, from a ringing endorsement of President El Sisi in April 2017 to a decision to withhold $290m in aid in August 2017. The latter was officially attributed to Egypt’s suboptimal human rights performance, but has also been linked by the US press to Egypt’s relationship with North Korea. While such fluctuations in US-Egyptian relations are important to note, the general trend has been towards greater US disengagement, with a number of legislators and career diplomats questioning the current nature of the relationship.

Although the US is likely to remain a critical source of aid and support for the foreseeable future, Egypt is hedging its bets by developing deep and lasting ties with historic and emerging global powers.

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Cover of The Report: Egypt 2018

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This article is from the Country Profile chapter of The Report: Egypt 2018. Explore other chapters from this report.