The Egyptian revolution has revealed a lot in its fiscally blustery path, a path riddled with billion-dollar sums written about in the intense news coverage of the events.
Within the economic sphere, the revolution’s coverage revealed that Egypt was home to some of the largest-ever recorded figures of capital flight. It also reported one of the fastest-growing public debts in the Middle East. And it announced a multi-billion dollar spending gap that the Egyptian government desperately needed to bridge for the fiscal year beginning July 1.
It also revealed something else: Egypt’s bunch of friends.
One after the other, Gulf leaders pledged financial aid to Egypt, making an almost heroic entrance into Egypt’s distressed economic landscape by lending their helping hands. First it was Kuwait, with a $168 million state-run business set up to invest in Egypt’s economy. Then Saudi Arabia stepped in with $4 billion in financial aid, followed by Qatar’s pledge to plan projects in Egypt worth at least $10 billion, (although Qatar is yet to disclose what these projects will be). And most recently, the United Arab Emirates announced a $3 billion aid package for Egypt. Most of these offers are part-grant, part-loan bundles.
But the fact that Gulf States may be lending a hand to a good old chum has caught the attention of geopolitical analysts.
For starters, were they ever really “chummy” with Egypt? And if so, which Egypt are they now chummy with – the old or the new, 2.0 post-revolution version?
Reda Issa, an independent economic researcher, said that just months ago, Gulf states did not express support for the revolution because their interests did not align with the forces that overthrew Hosni Mubarak. He added that Egypt should be wary of the Gulf’s financial aid.
“There has to be a political reason,” he told an Egyptian newspaper. “We are not foolish enough to believe that money is given for nothing.”
The UAE announcement of its pledge to Egypt on July 5 came immediately after Egyptian Foreign Minister Mohamed Al Arabi told Gulf leaders that Egypt will not pursue relations with Iran if it means risking stability in the region. So was the financial aid more of a gift for saying the right thing, then?
Recently, Gulf Arab sociopolitical consensus, in a series of political tangles focusing on Iran in the wake of the Arab Spring, has blamed Iran for pursuing a region-wide sectarian agenda. In turn, Saudi Arabia, the UAE and Qatar consider neighboring Iran a threat to their security.
So in a nutshell, being less friendly with Iran at the moment could make you more popular among Gulf countries that have recently clashed with Tehran.
Still, Mr. Issa said that there could be conditions attached to “Gulf gifts,” although there is no way of knowing if they exist because the Egyptian government has not been conducting open talks. This perhaps reminds Gulf States of the former Egyptian regime, which handled much of the country’s business in private.
Meanwhile, Alanoud Al Sharekh, a senior fellow for regional politics at the UK-based International Institute for Strategic Studies, takes a more laissez-faire view of the Gulf’s aid.
She told the Egyptian newspaper Al Masry Al Youm that Gulf countries see their grants simply as an investment in the region’s stability, helping to restore the interests of Gulf investors in Egypt.
“This is not a new phenomenon,” she said. “The GCC countries have all been crucial in supporting Arab states financially, they have a history of giving money to Egypt.”
Could it really be a matter of old chums after all? As everyone knows, politics always matter. But this is much like breaking a code that cannot be decrypted without knowing the full picture. And a good analyst never assumes they are in possession of all the facts.
(Eman El-Shenawi of Al Arabiya English can be reached at: firstname.lastname@example.org)