Gulf states have played large roles in Egypt’s economy as employers, investors, and donors for many years, but after 2011, they took center stage in its politics as well. The tense intra-Sunni rivalry between Saudi Arabia and the UAE on one side (supporting national militaries) versus Qatar and Turkey on the other (supporting the Muslim Brotherhood) played out roughly in Egypt as well as other MENA countries, particularly around the time of the 2013 military coup.
In 2019, a Gulf newspaper quoted an unnamed official at the Central Bank of Egypt on the astronomical sum of assistance Gulf states had given since 2011: $92 billion. While difficult to verify, the article included some credible details, such as $8 billion in deposits from Saudi Arabia, $6 billion from the UAE, and $4 billion from Kuwait, as well as more than $30 billion in loans to finance petroleum purchases. Assistance from Qatar was apparently included in the gross sum too.
What the newspaper did not mention is that Gulf aid to Egypt since 2011 has ebbed and flowed in several waves. In the first year after the January 2011 revolution, while the Supreme Council of the Armed Forces oversaw the initial transition, all the Gulf donors made contributions to stabilizing the Egyptian economy. After Mohamed Morsi of the Muslim Brotherhood’s Freedom and Justice Party won the presidency in June 2012, however, Qatar emerged as his most enthusiastic political and financial backer in the Gulf (along with Turkey). Qatar deposited $7 billion in Egypt’s Central Bank, while Saudi Arabia gave $1 billion.
The July 2013 military coup by then defense minister (later president) Abdel Fattah el-Sisi unleashed an even larger avalanche of assistance from Kuwait, Saudi Arabia, and the UAE, estimated at $30 billion. The UAE was particularly active in urging and championing the coup and reportedly funded opposition to Morsi as part of its ideological struggle with the Brotherhood and bitter rivalry with Qatar. The UAE also has been a major investor in Egypt and tried for a while—without much success—to persuade Sisi to implement a consultant-written economic reform vision similar to those popular in the Gulf.
While Gulf assistance was enormous, it fell off sharply after oil prices plummeted in the second half of 2014. By 2016, Egypt was obliged to seek $12 billion in relief from the IMF, with the Central Bank director announcing unceremoniously that “it has been a year since we received any money” from the Gulf. The UAE and Saudi Arabia did eventually contribute half of the $6 billion Egypt needed to raise in external funds to qualify for the IMF loan in 2016–2017, but Saudi Arabia was noticeably slow and reluctant. Relations with Sisi had soured due to differences over several regional issues. For example, he refused to send ground troops to support the Saudi air war against Yemen, and he provided support to Syria’s Bashar al-Assad. Sisi had to cede sovereignty over two Red Sea islands to the kingdom to patch the rift, provoking protests and lawsuits in Egypt.
Apart from waning government-to-government assistance, declining employment opportunities in the Gulf and diminishing investments and trade from the Gulf will be major losses to the Egyptian economy. About one-half of the nearly 10 million Egyptians abroad work in the Gulf—most in Saudi Arabia, by far—sending home remittances of more than $20 billion annually. With an exodus of expatriates expected from the Gulf as a result of the pandemic and oil crash, Egypt will feel keenly both the drop in remittances and the additional pressure on the local labor market. In addition, Gulf funds have made up some 10–20 percent of all foreign direct investment in Egypt in recent years; now it is unclear to what extent Gulf investors will continue to have the capital to invest there.
Egypt will continue to have large external financing needs (reportedly $10 billion in 2020 alone) and increasingly is having to look to non-Gulf sources, whose support comes with different conditions. Egypt received a $12 billion IMF loan in 2016, for which it had to raise an addition $6 billion in external financing—nearly half of that came from China, with the rest from the Gulf and the United States. Egypt is now requesting more money from the IMF earlier than expected due to the pandemic-induced recession. It recently obtained $2.8 billion in emergency IMF funding and is trying to raise another $9 billion. The IMF has now agreed to another standby loan—this time for $5.2 billion over one year, tied to unspecified economic reforms—while Egypt continues to seek $4 billion from other sources. Will Gulf states be among them? Maybe, but they will not be offering anywhere near the amounts they provided in 2013.