Egypt and the Gulf: allies and rivals

This latest report from UK think tank Chatham House primarily looks at the Egypt–Gulf relationship during the Sisi era.

Egypt and the Gulf Arab region have long been important poles of political, military economic and cultural power and influence in the Middle East. Under the presidency of Gamal Abdel-Nasser, Egypt was the dominant force in the region, but the balance of power shifted towards the Gulf in the 1970s, as Egypt’s economy faltered and the Gulf Arab states reaped the benefits of resurgent oil prices in the wake of the 1973 OPEC embargo. The popular uprising against President Hosni Mubarak’s regime in 2011 elicited divergent reactions in the Gulf. The leaders of Saudi Arabia and the United Arab Emirates (UAE) were concerned about the risks of a movement for revolutionary change spreading to their own region, while Qatar saw an opportunity to strengthen its regional role through supporting the Muslim Brotherhood. The forcible removal of Egypt’s elected president, Mohammed Morsi of the Muslim Brotherhood, in July 2013 by the army commander, Abdel-Fattah el-Sisi, ushered in a new era in Egypt–Gulf relations. The UAE, Saudi Arabia and Kuwait quickly mobilized financial support for the new administration. Abu Dhabi’s crown prince, Mohammed bin Zayed, known for his intense opposition to the Muslim Brotherhood, signalled his strong support for the new regime by visiting Cairo only weeks after hundreds of Morsi’s supporters were killed. Between July 2013 and August 2016, the UAE, Saudi Arabia and Kuwait provided about $30 billion in aid to the Sisi regime through placing deposits with the Central Bank of Egypt and supplying petroleum products as grants. The UAE sought to link its aid to a programme of economic reforms, but the Egyptian government finally decided in mid-2016 to negotiate a loan agreement with the International Monetary Fund (IMF). Since the signing of the $12 billion loan with the IMF in November 2016, Egypt has no longer been reliant on Gulf Arab financial support, although some of the deposits placed previously have been rolled over on reaching maturity. During the Sisi era, Egypt has benefited from its economic links to the Gulf over a wide spectrum of activities. The UAE and Saudi Arabia in particular are increasingly important export markets for Egyptian companies, as well as major sources of foreign direct investment. The financial aid provided by Sisi’s Gulf allies in 2013–16 has also helped to underpin the surge in Egypt’s arms procurement. Another critical element in the economic relationship is the presence of millions of expatriate Egyptian workers in the Gulf, who are responsible for a large share of the annual inflow of about $25 billion in remittances. Egypt’s most important political relationships in the Gulf have been with Saudi Arabia and the UAE. Ties with Saudi Arabia were affected by the death of King Abdullah at the start of 2015 and by the subsequent emergence of Mohammed bin Salman as the most influential figure in the kingdom. During a visit by King Abdullah’s successor, King Salman, to Cairo in April 2016, Egypt announced a decision to cede sovereignty over two Red Sea islands, Tiran and Sanafir, to Saudi Arabia. Relations soured after this decision was challenged in the Egyptian courts, but the issue was resolved in favour of the deal. Egypt played no active role in the Saudi- and UAE-led intervention in Yemen, but joined its two principal Gulf allies and Bahrain in imposing sanctions on Qatar in mid-2017. Relations between Sisi and Crown Prince Mohammed bin Zayed have remained close throughout the past seven years. The UAE and Egypt have been among the most important external supporters of the Libyan National Army, commanded by Field Marshal Khalifa Haftar, although they have not created an overt alliance in this arena. Egypt has adopted a more prominent diplomatic profile in relation to Libya, while the UAE has been more deeply engaged militarily, to judge from assessments by the panel of experts tasked to monitor adherence to the UN embargo on the supply of weapons to Libya. The relationship between the Egyptian and Emirati leaders is underpinned by a strong shared ideological antipathy to the Muslim Brotherhood. Following the completion of the IMF programme in 2019, the Egyptian economy is in a much stronger position than it was in the early period of Sisi’s rule, even though this has exacted a harsh toll on the 60 per cent of the population classified by the World Bank as poor or vulnerable. There is no pressing need for direct financial support from the Gulf, but Egypt still depends on economic linkages through trade, investment, tourism and remittances. In this respect, the balance of power has tilted marginally back towards Egypt. However, Egypt is still beset by deep internal political contradictions, as reflected in the regime’s heavy reliance on coercion and repression, and the economy remains vulnerable to external shocks – of which the coronavirus pandemic is a prime example.

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