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Nov 17, 2016 | 09:00 GMT

4 mins read

Egypt Looks for Help Where It Can Get It

During the past several months, Saudi Arabia's relationship with Egypt has become more strained, but neither country can afford to turn its back on the other.
(FAYEZ NURELDINE/AFP/Getty Images)

Egypt is on a quest for economic allies. In the tumultuous years since former President Hosni Mubarak's ouster, Saudi Arabia has been one of Egypt's primary backers. But the past several months have brought the countries' differences to light, straining their relationship. In October, the Saudi Arabian Oil Co. (better known as Saudi Aramco) announced that it would suspend delivery on its petroleum deal with Egypt, likely in an attempt to bring the country back in line. Though the governments in Egypt and Saudi Arabia are trying to downplay their apparent falling out, Cairo is scrambling to secure its access to fiscal aid and oil from other allies.

The emerging rift between Cairo and Riyadh is not surprising. Egypt has demonstrated a desire for greater independence in its foreign policy, resisting Saudi Arabia's attempts to bring the country further under its influence. In October, Egypt was one of four countries to veto a U.N. Security Council resolution demanding an end to airstrikes in Syria. Egypt's vote came much to Saudi Arabia's dismay, but Cairo was acting in line with its long-standing policy, which has never aligned with those of Riyadh and the Gulf Cooperation Council (GCC). Egypt has also cultivated friendlier ties with Iran — a signal not of a dramatic swing to back the Saudis' rival but of Cairo's desire for a more independent foreign policy strategy. Depending on the policies of the next U.S. president, Cairo may feel even more comfortable pursuing this goal. The United States has been an important source of financial and political support for Cairo for decades, though the relationship has undergone intermittent strain since the Arab Spring. If the next administration in Washington demonstrates continued commitment to Cairo, Egypt will feel freer to deviate from the GCC's stance on matters such as the Syrian and Yemeni civil wars.

Preserving the Ties That Bind

In the meantime, until it can stanch the flow of money from its economy, Cairo's first priority is finding the financial support and fuel supplies it needs. Despite Saudi Arabia's differences with Egypt, two other GCC members, Kuwait and the United Arab Emirates, are continuing business as usual with Cairo, preserving the ties that bind it to the bloc. On Nov. 16, Kuwait agreed to deliver 2 million barrels of crude oil to Egypt each month starting Jan. 1, and another deal to extend its refined oil to Cairo may be forthcoming.

Keeping Egypt stable is a cornerstone of the GCC's security strategy. To that end, the bloc's members have provided a combined $30 billion in loans and aid to Cairo over the past five years. The United Arab Emirates provided much of that funding, content to help Cairo so long as its policies align with Abu Dhabi's. Since 2013, when a coup forced Mohammed Morsi and his Muslim Brotherhood-led government from power, the United Arab Emirates has redoubled its support for Cairo and its efforts to rid the Egyptian government of Islamist influences. As Saudi Arabia's relations with Cairo have faltered, Abu Dhabi's have been as strong as ever. In fact, Stratfor contacts indicate that Abu Dhabi and Cairo may be hashing out a deal for petroleum products to tide Egypt over through the spring, though no such agreement has been announced yet.

A Friend in Need

But Egypt's straits have forced it to look beyond its traditional allies as well. The country has signed memorandums of understanding for crude oil with producers such as Azerbaijan and Iraq. These deals, however, will not make up for the 700,000 metric tons per month of refined petroleum products that Saudi Aramco had promised, nor will they provide the strategic benefits that GCC countries can offer. Consequently, Egypt will continue its quest for cash so that it can purchase the fuel it needs on the spot market. Cairo signed a deal with the International Monetary Fund on Nov. 11 for a new loan and received the first $2.75 billion tranche of funds the same day. As part of the agreement, Egypt is required to reach out to other lenders, too, and in January, the World Bank will pay out its second of three $1 billion loan installments to Cairo.

The promise of financial relief could embolden Cairo in its pursuit of greater foreign policy independence. But Egypt's economy is not out of the woods yet. As it looks to new partners for economic help, Cairo cannot afford to jeopardize the valuable relationships it already has with Saudi Arabia and the GCC. Similarly, the GCC cannot turn its back on Egypt, in whose stability the bloc's members are all invested. 

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