Journal 6

Money matters, and in this realm, size really matters when it comes to the influence and importance of foreign countries to Egypt. Home to the worlds’ largest Arab population, which has been relentlessly expanding for decades, Egypt has few sources of revenues to grow its economy. Running a 35% budget deficit for 2015, with an unemployment rate of 13%, and struggling to revive tourism, one of its major sources of income which has been devastated by terrorist attacks, Egypt has had to increasingly rely on outside sources of aid and loans. Traditionally, the United States has been the country’s major source of external aid, dating back to the 1979 Egypt-Israeli Peace Treaty that the U.S. brokered. As part of the negotiations, the U.S. pledged $1.3 billion in military aid yearly plus a variable amount of economic aid.  That sum has remained remarkably unchanged across multiple U.S. administrations. Even through the populous Arab Spring overthrow of Hosni Mubarak in early 2011, the election of Muslim Brotherhood leader Morsi and the subsequent the military coup that deposed him, and the eventual rise of military leader Abdel Fattah Al Sisi, U.S. aid has continued to flow, interrupted only temporarily as the Obama administration raised transient and symbolic gestures of opposition over the fall of democratic rule.

The often waffling political support offered by the Obama administration angered and frustrated the Sissi government who perceived their own actions as saving the country from a leader, while elected democratically, began to transform his government into an increasingly autocratic government that progressively began to oppress all opposition in a many similar to prior autocrats, curbing fundamental rights. These conditions set the stage for a change in the monetary power dynamics to occur. In March 2015, the Gulf monarchies of Saudi Arabia, Kuwait and the United Arab Emirates pledged $12 billion to help stabilize Egypt’s economy, which was on top of over $20 billion already committed by the Gulf States since the coup that empowered Sisi.  This move was objected to by Washington.  Many see the Gulf states actions as nothing less than part of a Saudi led counter-revolution, designed to halt the spread of the Arab Spring / Awakening to the Gulf monarchies and a way to stabilize the Sunni heartland against further destabilization by either Islamic radicalism or Shia intrusion (both of which have plagued Iraq and Syria).

The new player in the foreign aid power dynamic is China. In March 2016, China announced it would design and construct a new capital for Egypt and has pledged an astonishing $45 billion in financing to date. It will be a completely new city, built east of Cairo. China’s entry brings a new economic superpower into the equation, turning Egypt’s vision eastward and eclipsing the historical support provided by Washington. It also gives Egypt its own “China card” to play if it feels too beholden to its Gulf neighbors.

Egypt is evolving, if not democratically, perhaps economically. The current major foreign influences can be roughly divided into three major powers; the United States representing Egypt’s traditional supporter over the past four decades, the Gulf monarchies (led by Saudi Arabia) representing a core Arab Sunni power block hoping to preserve some vestige of regional status quo in the aftermath of the Arab Spring, and China who has regional economic interests driving it foray into this shifting paradigm. In the balance is Egypt’s tenuous economic base desperately trying to support an expanding and restless population.

 

References:

Central Intelligence Agency. “Egypt.” The World Factbook. November 22, 2016. https://www.cia.gov/library/publications/the-world-factbook/geos/eg.html (accessed November 30, 2016).

Kamrava, Mehran. “The Arab Spring and the Saudi-led Counterrevolution.” Orbis (Foreign Policy research Institute), 2012: 96-104.

Monks, Kieron. “Egypt is getting a new capital – coutesy of China.” CNN. October 10, 2016. http://www.cnn.com/2016/10/09/africa/egypt-new-capital/ (accessed November 4, 2016).

Parasie, Nicolas, and Jay Solomon. “Gulf States Pledge Aid to Egypt, U.S. Balks.” The Wall Street Journal. March 13, 2015. http://www.wsj.com/articles/gulf-states-pledge-additional-12-billion-in-aid-to-egypt-1426262660.

 

 

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