During President Abdel-Fattah el-Sisi’s first term in office (2014-18), Egypt had strained relations with Turkey, Qatar, and Iran. However, this began to change during his second term, as Cairo made an incremental shift toward Ankara, Doha, and later Tehran. This shift coincided with changes in global and regional dynamics, stalemates in many of the Middle East’s conflict zones, and a detente between regional powers. While some analysts attribute Egypt’s realignment to a change in the foreign policies of its influential allies, the United Arab Emirates and Saudi Arabia, toward engaging with the three countries, it can be argued that Egypt’s shift is primarily motivated by its domestic dynamics and its unfulfilled foreign policy objectives between 2014 and 2018. Egypt’s realignment, in that sense, seeks to achieve multiple unmet domestic and regional aims.
Mitigating the financial crisis
The most pressing of these goals is mitigating Egypt’s financial crisis. For years, the country has faced a financial crisis aggravated by inflation, substantial foreign debt, and a foreign currency shortage. Domestically, this has led to soaring prices for goods and services, putting the Egyptian government under pressure from social discontent. The International Monetary Fund and Egypt’s traditional allies, such as Saudi Arabia and the UAE, which previously provided tens of billions of dollars in assistance, appear unwilling to provide additional funding this time around unless Egypt adopts structural reforms. But further accelerating fiscal reforms could spark a backlash and fuel unrest, a concern that Egypt perceives as a matter of national security. This dilemma has prompted Cairo to seek other sources of foreign currency by approaching other donors, attracting foreign investors, trying to get involved in post-conflict reconstruction in the region, supporting the tourism sector, and, more importantly, turning the country into a liquefied natural gas (LNG) hub for Europe.
Following the restoration of diplomatic ties with Cairo, Doha deposited $3 billion into Egypt’s central bank last year. In addition, Turkey and Qatar pledged $5.5 billion in investments. With their leverage in Libya, both countries could potentially enable Egypt to access postwar reconstruction opportunities there. Similarly, Iran’s influence could grant Egypt access to the reconstruction market in Syria. The combined cost of rebuilding Libya and Syria is expected to exceed $350 billion, which could create profitable opportunities for Egyptian companies once funding for such efforts is available. In parallel, restoring ties with Iran could provide a lifeline for Egyptian tourism, a vital source of income for the country, accounting for around 10-15% of the economy, and one that has fluctuated since 2011. Egypt hopes to double tourist numbers to 30 million annually by 2028, in part by drawing a growing share of Iran’s outbound tourists, estimated at 6 million in 2018. For Iranian tourists, Middle Eastern countries are among the most popular destinations. In a change announced earlier this year, Egypt will allow Iranians to obtain visas on arrival in the south of the Sinai Peninsula to extend access to other parts of the country.
Source : mei.edu