The Caravan

Saudi Arabia And Egypt: An Uneasy Relationship

Tuesday, March 14, 2017
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istock

Any observer of the relationship between Egypt and Saudi Arabia over the last few months will have noticed considerable tensions.  This is unexpected since Riyadh had strongly backed President Sisi’s government after the 2013 military coup, offering tens of billions of dollars in aid and fuel supplies, and Cairo in return had pledged its full diplomatic, political and military support for the kingdom. Egypt even agreed to return control of two Red Sea islands (Tiran and Sanafir) to Saudi Arabia.  This deal was to be the first step in a much larger plan that would link the two countries by a bridge spanning the Straits of Tiran, and lead to the economic development on both shores. An entrepôt city, similar to Dubai in scale, is planned to be built on the Saudi side and this would transform northwestern Saudi Arabia and the Sinai. It was expected that the fate of both nations would become intimately entwined, along with their electric grids and ever increasing flows of investments and people.  It was also assumed that they would coordinate their regional policies, especially taking into account Saudi Arabia’s geopolitical rivalry with Iran.

The relationship, however, has soured, and quite rapidly since June 2016.  Egypt’s courts have repeatedly, and on appeal, refused to approve the Red Sea islands hand-over, despite President Sisi’s promise that this agreement would be implemented. The hyper-nationalist mood that has gripped Egypt since the coming to power of President Sisi appears to have made it impossible to relinquish control over any land, even though the islands in question are uninhabited and are, in fact, sovereign Saudi territory.  In response to the legal decision on the islands, the Saudis have either cancelled or put on hold financial aid agreements and preferential oil shipments.  The rift can also be seen in other areas.  Riyadh and Cairo have very different assessments of the Syrian war and, more generally, of Iran’s influence in the region. Saudi Arabia is adamant that President Assad must go whereas Cairo seems to prefer that he stays in power, favoring a military authoritarian regime in Syria over the rule of Islamists who would undoubtedly take over if Assad is toppled. Last October, Egypt even voted in favor of a Russian-backed UN Security Council resolution on Syria, which the Saudis had opposed. Indications that Egypt was not fully supportive of Saudi Arabia could be already seen in spring 2015 when, for example, Cairo offered tepid support for Riyadh’s war in Yemen against the Iranian-backed Houthi militia and refused to mobilize its army for this effort. Saudi Arabia sees the war in Yemen as part of its larger struggle against Iran’s spreading influence in the Arab world, whereas Egypt appears genuinely ambivalent about Iran’s expansionist policies. A token of this view was on display in November 2016 when Egypt’s oil minister visited Tehran to obtain an oil deal that would make up for the losses in Saudi fuel aid.  What explains this deteriorating state of affairs?

An important explanation for the tensions in relations between Riyadh and Cairo is structural: Egypt has been in steep political and economic decline for decades whereas Saudi Arabia is an ascending regional power led by a dynamic young leadership and forward leaning policies. Such divergent trajectories are bound to generate friction, as Egypt makes an uncomfortable accommodation to its reduced size while Saudi Arabia discovers the limits of its newfound power and regional role after decades of being relatively passive.

Since 1967 Egypt’s power and influence in Arab politics has been waning.  Whereas Cairo was once the undisputed leader of the Arab world it is today facing dire economic straits, is politically sclerotic and has been reduced to a condition of dependence on foreign aid and support.  The peace agreement with Israel created a habit, especially among Egypt’s military establishment, of expecting foreign aid for the country’s compliant behavior.  This culture of dependency has been extended to include aid from the Gulf states, and particularly from Saudi Arabia.  A leaked recording of President Sisi from February 2015, in which he discusses obtaining tens of billions of dollars from the Gulf states, is revealing of this attitude and expectation in Cairo.

In the last few years, Saudi Arabia has become a more important player in the region and is perhaps today the most significant Arab country and the major Sunni Muslim power.  The kingdom has realized from President Obama’s policies—the indifference about President Mubarak’s ouster, the keenness on the Iran nuclear deal and Obama’s refusal to intervene against Assad in Syria--that a blanket US protection for the regime can no longer be assumed.  And given the increasing power and influence that Iran deploys in the region, Riyadh has decided to build-up its armed forces in such a way as to be able to defend the country.  This represents a break with past policy: the Saudi armed forces were deliberately not up to par because from the 1950s the leadership in Riyadh had worried about a military coup, but this view has now changed.

There are a number of ways to capture the reversal of roles between Egypt and Saudi Arabia: the kingdom’s GDP is at least twice that of Egypt’s with less than a third of the population, and the Saudi per capita GDP is nearly eight times larger. Egypt is highly dependent on outside aid whereas Riyadh is a major donor to Egypt, and to other countries. Saudi Arabia’s air force is far superior in terms of equipment, materiel and training than that of any other Arab country, and its armed forces are rapidly being built up into a serious force. The kingdom today is the second largest weapons importer in the world after India with a military budget that dwarfs any of its neighbors.  But there are less obvious ways of measuring the difference. For example, Riyadh’s annual book fair is by a significant margin the largest and most important in the Arab world and many Arab publishers would fold were it not for purchases of the Saudi market.  Another way is to notice the difference in the frequency and duration of US presidents’ visits to each country. Both presidents George W. Bush and Barrack Obama have traveled more often to, and spent significantly more time in, Riyadh than Cairo.

Egypt has simply become a less important player. The reasons for its decline are complex, but certainly one can argue this is in good part self-inflicted because of decades of bad economic policies and poor governance.  And while Egyptian leaders still tout past glories, the country’s importance today has more to do with the terrible consequences of its economic and possible political failure, given its enormous population size and its strategic geographical location.  It is keeping Egypt from failing that occupies the attention of policy makers in Riyadh, but also in Washington DC, Europe and Jerusalem. Maintaining stability in Egypt is paramount and the US, the Gulf countries and the IMF have contributed financially to keep the country afloat.  But no country has done more of late to prop up Egypt financially, and especially after the 2013 coup, than Saudi Arabia and its Gulf allies, the UAE and Kuwait.

The quid pro quo for this support was assumed to be Egypt’s backing of Riyadh’s regional political agenda, which includes coordinating policy on Syria, Iran and Yemen.  The Saudis even expected Egypt to lend military support for their engagements against Iran’s proxies, such as the Houthis in Yemen.  But this was not forthcoming, especially since Egyptian forces were tackling an Islamist insurgency in the Sinai and had already learned a hard lesson from a debilitating war waged in Yemen in the 1960s.  There is a unifying element between Cairo and Riyadh, namely fierce opposition to the Muslim Brotherhood, but this does not constitute sufficient ground for a strong alliance.  Saudi Arabia wants Egypt to follow its lead in return for financial compensation.  The Saudi leadership even included Egypt in the domestic economic reform agenda by agreeing to the Straits of Tiran bridge and the islands’ and coastal development project, but clearly all this has not delivered a strong alliance.  As a result, there are increasingly louder voices in Riyadh arguing for discontinuing financial support for Egypt, seeing the country as a black hole that will drain Saudi coffers and never become economically viable. These critics favor having Egypt’s difficulties and fate shouldered by the US, the EU and Israel, as these are the countries that would be most directly affected by a collapse of the Egyptian economy. Should such views prevail, then the US will be confronted with a crisis and financial burdens. It is therefore important for Washington to try to involve itself more actively in the region, to help coordinate between Cairo and Riyadh and to foster a stronger and more durable alliance between them.  The time has come for America’s regional allies to play a greater role in maintaining regional security and in supporting the economic development of the Middle East. The Saudis appear to be willing to do just that, while the Egyptians must find a way to participate in this effort and stop their habit of expecting endless aid so as not to become spoilers and a burden on the world.