Are We Seeing the Beginnings of an Egyptian-Saudi Split?

Cairo would like to break from its Saudi financiers on Syria, but can it afford to?

Something is cooking between Egypt and Saudi Arabia. Last month Riyadh sprang the news on Cairo it is suspending deliveries of 700,000 tonnes of refined oil. To the present Egypt has not been informed if and when the shipments will resume.

The two Arab states have a deal under which Riyadh delivers Cairo oil under very favorable terms, effectively subsidizing Egypt. This arrangement is now clearly under strain.

The Saudis announced they were cutting oil supplies two days after a UN Security Council vote in which Egypt backed a Russian-proposed resolution on Syria’s Aleppo (albeit it also voted in favor of a competing French-proposed resolution).

In response the Saudis angrily (and absurdly) complained the Egyptian vote “represented the Egyptian position” rather than the “agreed-upon Arab decision”.

Indeed, Egypt under the military government of Abdel Fateh el-Sisi has always sympathized with the secular Syrian government of Bashar al-Assad. The Islamist rebels the Saudis are backing in Syria after all aren’t unlike the Muslim Brotherhood which Egypt’s generals overthrew and oppose at home.

However the Saudi oil wealth allows its royal family to exert an outsized influence in the Arab world. It has meant that since helping install Sisi in a 2013 coup Riyadh has been able to effectively buy off Egypt.

In exchange for billions in loans and oil supplies Cairo has symbolically joined the Saudi war effort in Yemen (without sending the ground troops Saudis expected) and has kept its distance from secularists in Damascus.

There are signs indicating this may change, as well as reasons to believe that it won’t.

On the one hand we have since seen something previously unthinkable. A week into the Saudi oil suspension Egyptian officials received Assad’s special security advisor and “trusted man” Ali Mamlouk and spoke to him about the possibility of Egypt declaring openly for Bashar al-Assad:

An Egyptian political source told a The New Arab correspondent that the officials discussed Egyptian President Abdel Fattah al-Sisi taking a stronger public stance in support of Syrian President Bashar al-Assad.

“Both sides discussed the possibility of Egypt hosting talks between Syrian parties that accept Bashar al-Assad remaining in power as part of the Russian-backed political roadmap for the country,” the source, who spoke on the condition of anonymity, said.

Additionally Egypt has declared it will easily replace Saudi shipments with deliveries from elsewhere — particularly Iraq which likewise have no love for Riyadh. This could be bravado, however — Iraq can ship the same quantities of oil but it is unlikely the war-torn country can afford to duplicate generous Saudi terms.

Another factor that will give Sisi pause is the poor state of Egyptian state finances:

The spat comes at a sensitive time for Egypt as it hopes to conclude a $12bn bailout with the International Monetary Fund.

Cairo’s agreement with the fund includes the preconditions that Egypt devalue its currency and cut fuel subsidies.

Egypt has also to secure a war chest of some $5bn-$6bn in loans to enable it to fund reforms, with the funding expected to come from oil-rich Gulf allies.

An Egyptian finance ministry official was quoted on Thursday as saying that Saudi Arabia had provided Egypt with a $2bn loan, which eased fears that any dispute over Syria would have an impact on the country’s ability to secure the IMF package.

The problem then is that Egypt’s dependence on Saudi largess goes far beyond shipments of refined oil. So really there is no doubt that Cairo wishes to set its own policy on Syria. Question is, can it afford to?