- Diplomatic and economic relations with Saudi Arabia will decline further in 2017 as Egypt reassesses its domestic security requirements under its weak financial position.
- Cairo’s regional policy is likely to be motivated by a Russian-Iranian confrontation with Salafist-jihadist groups across the Middle East and is in line with Egypt’s domestic priorities of containing unrest and terrorism. An alliance with Saudi Arabia over regional issues is seen as increasingly incompatible with that view.
- Russian investment in Egypt is likely to increase, with Saudi investments and contracts at greater risk.
The decision by President Abdel Fattah el-Sisi and his cabinet on 30 December to unilaterally approve the transfer of two Red Sea islands to Saudi Arabian sovereignty despite judicial, media, and public opposition, masks the reorientation of Sisi’s foreign policy.
Cairo is realigning its regional policy interaction based on the immediate domestic concerns of the Sisi administration: to confront Islamist Salafist and Muslim Brotherhood terrorism and respect the sovereignty of national governments. This requires divergence from the Saudi regional agenda of prioritising confrontation with Iran.
The agreement transferred sovereignty of the Red Sea islands of Tiran and Sanafir to Riyadh, and was accompanied by investment and aid pledges from Saudi Arabia worth USD22 billion. When announced in April 2016 it provoked the largest protests of Sisi’s presidency, and more than 90 people were arrested by security forces across eight governorates.
Cairo’s relationship with the Gulf Cooperation Council since 2011 has been based on a mutual recognition of economic dependence and regional security concerns. The Egyptian military diverged considerably from the Muslim Brotherhood and Islamists in government from 2012-13 in translating that into regional co-operation. Although this initially prompted Saudi Arabia to establish itself as the pre-eminent financial backer of the Sisi administration from 2013, a clear divergence of domestic priorities between Cairo and Riyadh in 2016 has undermined this relationship.