February 24, 2016
Saudi Arabia is expected to reaffirm its policy of supplying Egypt with petroleum products as a contribution to help alleviate the country’s energy shortages. This subject will feature high on the agenda in the upcoming meeting between Egyptian President AbdelFattah al-Sissi King Salman of Saudi Arabia.
The past few months have seen noticeable foreign policy disparities between Egypt and its Gulf allies, Saudi Arabia in particular. Are these of a nature that could affect the Egyptian energy sector, or even stability in Cairo?
Following the overthrow of former President Mohammad Morsi and the accession to power of AbdelFattah al-Sissi, Gulf monarchies (KSA, UAE & Kuwait) poured tens of billions of dollars in grants, soft loans and supplies of petroleum products, in a bid to help stabilize the regime. But, there is an increasing sense of exasperation from the part of Gulf partners: On one hand, Egypt’s economic and financial situation is not progressing at a satisfactory pace. On the other, Gulf partners, Saudis in particular, no longer hide their frustration over increasingly perceptible divergence on various foreign policy issues:
Muslim Brotherhood: Until recently, both Cairo and Riyadh viewed revolutionary Islamic groups like the Muslim Brotherhood as an existential threat. But, since the accession to power of King Salman in Saudi Arabia, and the rise of Iran as the major source of threat for the Kingdom, priorities are changing. While the MB are still perceived as the biggest threat in Cairo, Iran’s growing influence, in the region and beyond, has become the focus of all attention in Riyadh, which has learned to develop a necessary pragmatism towards the MB. On this point in particular, Egypt and the UAE still see eye to eye.
Turkey: A direct result of the above is Saudi desire to develop a unified Sunni front in the face of what Riyadh perceives as Shiite expansionism in the region. The Saudis have attempted to reconcile Egypt and Turkey and are growing increasingly impatient with what they see as Egyptian stubbornness.
Yemen: An absolute priority for Saudi leaders, that has overtaken Syria in importance. On January 14, Egypt extended its foreign military operations for a year (without mentioning Yemen in specific). But, the Saudis do not hide their disappointment with the extent of Egyptian participation, focusing mainly on the navy (Egypt has strategic interests in the Red Sea that go beyond Yemen), with a limited involvement from ground forces. In addition, the Egyptians perceive with a certain apprehension Saudi readiness to deal again with al-Islah (the Yemeni chapter of the Muslim Brotherhood).
Syria: Egypt welcomed Russian intervention in Syria, which it perceives as a battle against radical Islamists, while Saudi views it as assisting the Iran-backed Assad regime. Also, unlike Riyadh, Cairo does not rule out a future role for Assad in Syria (as a matter of fact, Syrians and Egyptians are believed to have resumed intelligence cooperation).
Libya: An absolute priority for Egypt given geographical proximity and a shared border that threatens to become porous. Relatively distant Saudi Arabia does not share the same sense of urgency.
Saudi-Egyptian partnership was a necessity for the regimes in both countries, in a certain context, at a certain point in time. While Riyadh and Cairo still enjoy special relations, they no longer see eye to eye on a number of subjects. Mired in its own difficulties, this could lead Riyadh to reassess its enthusiastic support for Cairo. This could affect Egypt’s energy sector, and the economy as a whole. For instance, Cairo has relied on Gulf largesse to repay its debt to foreign companies, a “pre-condition” that allowed Egypt’s latest energy recovery. Although Egypt has regained a certain political stability, the security situation remains tense, and economic growth is struggling to keep up with expectations. Economic performance, in large part reflecting the performance of the energy sector, will contribute to either weakening or strengthening the regime’s legitimacy among Egyptians.
For various reasons, Egypt fears Gulf partners – Saudis in particular – may reduce financial support, with possible (unintended) repercussions that could affect the country’s stability. Should this happen, other partners, who have a direct interest in maintaining stability in Egypt and containing the propagation of the Libyan conflict, may find the timing is right to step in and offer support.
This is a sample of the analysis delivered by MESP’s monthly East Med Oil & Gas Report.
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