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Egypt's foreign solutions to domestic problems

Saudi Arabia, the UAE and Kuwait have kept Egypt's economy afloat.

Egyptian President Abdelfattah Al Sisi completed his first year in office a few days ago. His election in June 2014 was seen as a first step towards achieving a modicum of stability for a country that has endured turmoil since January 2011. The Arab uprising led to protests at Tahrir Square and the ouster of President Hosni Mubarak.The country then flirted with democracy with the empowerment of the Muslim Brotherhood, but President Mohamed Morsi’s exit saw the return of military rule and an upsurge in militancy, before Sisi’s transformation from a military to a civilian leader.

To address the cumulative political, economic, social and foreign policy disarray, Sisi employed an array of measures that originated overseas. Though it is early days to pass a judgment on the efficacy of all these policies, even if things go half as well as desired or expected, Egypt could return to the mainstream of Middle East politics, after a lull over the last decade.

First, the economy – unemployment is at a record high, loans from international institutions and foreign investments have been few and budget deficit has doubled during the crises period. The ground realities would have been worse if not for the relief provided by the GCC countries, which backed Brotherhood-Morsi’s ouster and Sisi’s political elevation.

Saudi Arabia, the UAE and Kuwait have kept Egypt’s economy afloat with about $23 billion in fuel shipments, financial aid, free loans, bank deposits, and critical food, healthcare, housing, education and transport project support.

The GCC economic assistance is important because it also underlines Egypt’s return to the Mubarak era proximity with the six-member bloc.

Sisi hopes to use this assistance to revive the economy through, for example, announcement of infrastructure projects, including a massive expansion of the Suez Canal, and ending crony capitalism. An example of reforms paying off is evident in British oil company BP announcing a $12 billion investment plan in May.

Second, foreign aid driven economic solutions are bound to impact domestic politics. The country’s economic revival is important not only to Egyptians and Sisi, but to the GCC countries as well, since it would undermine the Brotherhood-Mursi combine even more than it has already been at home and abroad. Egypt’s crackdown on political Islam has been replicated in the GCC countries as well.

Egypt has been without a parliament since July 2013, after its election laws were deemed unconstitutional, giving the president full legislative powers. Gaining in confidence and showing signs of political astuteness, Sisi has now announced that parliamentary elections would be held before the end of the year.

Third, in the foreign policy domain, Egypt has chosen to keep all doors and options open to maximize benefits both at home and abroad. In a throwback to the non-aligned movement era, which it helped develop, Egypt has sought to collaborate with partners from opposite spectrums – the GCC countries, which are closer to the United States; and Russia, which opposes the United States on most global issues.

Aiming to return to the Arab political mainstream and regain some of its past glory as a regional power broker, Egypt has joined the Saudi-led coalition against the Al Houthis in Yemen. It has also been part of air raids against Daesh and Al Qaeda militants in Libya.

Further, to ward off US and EU pressure over its domestic politics, Sisi warmed up to Russia. Apart from reciprocal visits, President Vladimir Putin and Sisi have agreed to a $2 billion arms deal. Engagement with Moscow became necessary after Washington suspended $1.3 billion annual military funding to Cairo after democratically elected Mursi was overthrown by the Egyptian military.

But, in a case of its strategic Russian gamble paying off, Washington restored US military aid to Egypt because of the need to counter the Daeshmenace. This makes Egypt the second-largest recipient of US military aid, after Israel.

Thus, Egypt is attempting a reversal of fortune. It shaped the developments in the Middle East rather substantively during the last two decades of the 20th century and partially until 2011, before becoming a bundle of confusion and contradiction. The possibility of it re-emerging as a pragmatic, balanced, and influential power now rests on how well some of its ‘foreign’ solutions impact its domestic problems.

N. Janardhan is a Gulf-based political analyst.