Analysis: The Egypt-Gulf Bargain: Between Lifeline and Leverage

From Ally to Asset: The Egypt-Gulf Shift

By Ahmed Fathi

New York: —In the shifting tectonics of the Middle East and North Africa, few relationships reveal more about the region’s future than the one between Egypt and the Gulf. The Egypt-Gulf relationship used to be based on shared enemies and ideology, but now it is based on transactions, tension, and changing tactics. Egypt has become more dependent on Gulf money since 2013, when it started getting cash infusions. In 2025, it will hold privatization auctions. But so have the differences, doubts, and strategic disagreements. Nowhere is this clearer than in Sudan’s civil war, where Egypt and the UAE find themselves backing opposite sides, exposing the quiet unraveling of what was once a solid axis of Arab counterrevolution. This is no longer a donor-recipient dynamic. It is a bargain under strain, where power, not loyalty, sets the terms.

I. From Bailouts to Buyouts:

A Shift in Gulf Strategy After the 2013 ouster of Mohamed Morsi, Gulf states—particularly Saudi Arabia, the UAE, and Kuwait—poured more than $20 billion into Egypt to stabilize the country and ensure a secular, military-led government held power. At the time, this was ideological investment: a firewall against Islamism and instability. But since 2020, this has shifted decisively.

Today’s Gulf policy is profit-driven and increasingly conditioned on asset acquisition, not blank-check solidarity. Sovereign wealth funds like the Abu Dhabi Developmental Holding Company (ADQ) and Saudi PIF are purchasing major stakes in:

• Egyptian ports (e.g., Ain Sokhna)

• Banking, telecoms, and fintech companies• Strategic commodities and infrastructure assets

This economic model has provoked a domestic backlash in Egypt, where citizens and opposition voices express growing anxiety over selling national assets to foreign governments. While the privatization program is being marketed as reform, for many Egyptians it feels like a controlled fire-sale under IMF supervision.

Yet despite these tensions, Cairo has few alternatives. Inflation is soaring, foreign reserves are strained, and global investors are hesitant without Gulf cover.

II. Strategic Drift: The Sudan Proxy Conflict

Where economic leverage is contentious, strategic misalignment is becoming irreconcilable. Nowhere is this more apparent than in Sudan’s civil war.

Egypt supports the Sudanese Armed Forces (SAF)

Egypt thinks that the SAF is the right and stabilizing force in Sudan. This comes from:

• Nile security concerns: Sudan is important to Egypt's water needs because of the GERD dispute with Ethiopia.

• Military ties: The SAF and the Egyptian Army have the same training, doctrine, and history.

• Stability along the border: A hostile or broken-up Sudan is a real threat to Egypt's southern border.

Cairo has reportedly provided arms, surveillance assets, and diplomatic backing to SAF, and hosted senior Sudanese generals for coordination.

The UAE supports the Rapid Support Forces (RSF).

The UAE's position is less clear, but it is becoming clearer:

• Several governments and groups in Sudan have accused it of giving weapons to the RSF, including through supply routes through Libya and Chad.

• The RSF controls huge networks for smuggling gold, and there is strong evidence that gold ends up in UAE markets.

• Abu Dhabi wants commercial and military access along the Red Sea and has spent a lot of money on port infrastructure and influence in eastern Sudan.

In May 2025, drone strikes from the RSF hit Port Sudan, which was the last straw for the SAF-led government, which cut off diplomatic ties with the UAE and accused it of direct aggression. Egypt quickly condemned the attacks, making it clear that it was against what Abu Dhabi was said to be doing. This break isn't just about Sudan. It shows two very different ways of looking at the world:

• Cairo looks at Sudan through the lens of territorial integrity and state hierarchy.

• Abu Dhabi sees Sudan as a battlefield of economic opportunity and strategic positioning, even if it means giving power to non-state actors.

III. Between Vision 2030 and Nationalism in the Economy

The bigger difference also reflects the development path of each state:

• The Gulf (especially the UAE and Saudi Arabia): Putting money into AI, tech cities, entertainment, and economies that don't rely on oil. With bold, Western-facing rebranding plans like NEOM and Expo 2020, they are changing the region's identity from the top down.

• Egypt: stuck between the IMF's demands for liberalization and Nasserist-era state capitalism, where the military controls construction, manufacturing, and food production. The flashy New Administrative Capital is still a symbol of a top-down development strategy that hasn't yet led to real economic growth for most Egyptians.

This divergence has fueled growing Gulf doubts about Egypt’s governance model and return on investment—especially as youth unemployment, inflation, and informal debt rise in Egyptian cities and towns.

IV. What the Gulf Wants vs. What Egypt Needs

Gulf Priorities Egyptian Needs

Gulf Priorities	Egyptian Needs
Asset-backed investments	Debt relief and hard currency
Strategic access to ports & gold	Employment and FX stabilization
Fiscal discipline and quick ROI	Policy flexibility and political cover
Quiet foreign policy partnerships	Regional mediation & prestige roles

.V. The Future:

Strategic Decoupling or Realignment?

Egypt will continue to seek Gulf investment, but the era of automatic alignment is over. The region is witnessing the fragmentation of the old Arab order—where Cairo, Riyadh, and Abu Dhabi once acted as a unified bloc on major issues from Libya to the Muslim Brotherhood. What emerges now is a network of overlapping interests, not a clear alliance.

Egypt may look increasingly to:

• China and the BRICS bloc for alternative funding sources

• Qatar and Turkey for cautious diplomatic normalization

• Africa and AfCFTA (African Continental Free Trade Area) for economic breathing room

The Gulf, meanwhile, may reduce exposure to Egypt and turn to African partners offering easier returns and fewer political headaches—such as Ethiopia, Kenya, or Tanzania.

Conclusion: Between Leverage and Legacy

In 2025, Egypt is no longer the unquestioned center of the Arab world. The Gulf is no longer its unquestioning benefactor. Cairo seeks space to breathe, sovereignty to protect, and dignity in the midst of dependence. The Gulf demands speed, access, and outcomes.

Whether these clashing priorities lead to a strategic recalibration or an irreversible drift will shape not only their future—but the fate of regional order across the MENA landscape.

The bargain remains. But it's no longer written in the language of loyalty—it’s drafted in the ledger of leverage.