Sunday,22 July, 2018
Current issue | Issue 1291, (14 - 20 April 2016)
Sunday,22 July, 2018
Issue 1291, (14 - 20 April 2016)

Ahram Weekly

The new Egyptian-Saudi strategic partnership

The five-day visit of King Salman to Egypt proved to be historic, foreshadowing outcomes that will reshape the future of the region, writes Ibrahim Nawar

Al-Ahram Weekly

Those who think that Saudi Arabia can be pressured militarily and strategically will have to think again, and those who think that they can exert economic and political pressures on Egypt will also have to think again.

The two countries have finally come to terms on a real strategic partnership promoting their mutual interests in peace and development, and in building capacity for stability and welfare in the region. This new partnership responds to mutual interests but is not directed against any third party as most Arab integration projects were in the past.

The move will strengthen the new drive for regional integration built upon a “positive” rather than a “negative” approach. The five-day visit of King Salman to Egypt proved to be a historic event.

My interest here is not to recall how many memoranda of understanding (MOUs) were signed or how many projects were agreed upon, facts on which were provided in news reports. My aim is to illuminate some aspects of the internal and regional contexts in which these agreements, MOU’s and projects have come about. It is very important to read the new Egyptian-Saudi partnership in a regional context and also to relate it to changes and challenges that the two countries are facing now.

But I must emphasise here the huge importance of the demarcation of maritime borders, the agreement on building a giant highway linking the two countries through the islands of Tiran and Sanafir at the mouth of the Gulf of Aqaba, and the two agreements of cooperation in water desalination and nuclear energy. These are of huge importance in shaping the future of the partnership.

Democracy test: Both Egypt and Saudi Arabia are poised to face unavoidable structural changes, politically and economically. Egypt will have to succeed in the democracy test and the building of a new efficient and transparent political system. Likewise, Saudi Arabia is now standing at a very sensitive political junction and will have to move forward to becoming a constitutional monarchy.

The old system of horizontal succession of power amongst the sons of the late King Abdulaziz has expired and a new system will have to be put in place. The rising Prince Mohamed bin Salman provides an alternative and may have the courage to change the system of succession once and for all and open the way to establishing a constitutional monarchy in Saudi Arabia.

On the economic front, Egypt is in a big financial mess and Saudi Arabia can easily offer a helping hand. But in Egypt’s current economic troubles, the administration should be aware of the fact that quick fixes won’t work and the efficient use of new resources requires a lot of efforts to introduce successful structural changes in managing the affairs of the country.

Since 2011, Egypt has received more than $55 billion in assistance, mainly from Arab countries. Such an amount of funds should have been enough to fill Egypt’s financial gap for more than five years. Yet the economy is in a shambles because of inefficient administration and the use of a “business as usual” approach, rather than changing the way things are done.

Resisting the urgent need for real change is the main problem Egypt is facing. The needed changes are the responsibility of the Egyptian leadership and the people of Egypt, not any other party. Remember that money that comes easy goes easy!

Post-oil society: Because of the collapse of oil prices, Saudi Arabia is losing about $1 billion a day. The fact now is that even if oil prices recovered it would be a short-lived recovery, meaning that oil exporters will have to live in line with new facts of life.

In responding to the current oil crisis, Prince Mohamed bin Salman suggested that Saudi Arabia embark on a gradual privatisation programme to include ARAMCO, SABIC and many downstream companies.

In two very important interviews, with The Economist (January 2016) and Bloomberg (April 2016), the rising Saudi prince talked boldly about a new future for Saudi Arabia and illustrated some features of his vision of a post-oil policy. In his view, Saudi Arabia will be able to launch the biggest sovereign wealth fund in the world, totalling about $2 trillion. This is more than China, Norway and Russia have together.

Saudi Arabia will be able to acquire huge assets in the US, China and Europe, such as oil refineries, IT companies, railways, ports and airlines.

But in order to become much more than a sovereign wealth fund, Saudi Arabia will have to strengthen its economic base at home and increase its economic absorption capacity.

In order to do so, Saudi Arabia will be seeking regional partnership with neighbouring countries. To that end, Egypt provides the best option with its diversified economy, physical and human capital, and its political weight in the region. In fact, for Saudi Arabia Egypt provides much more than an economic ally — it stands as a trustworthy strategic ally.

Arab Gulf states will also hurry their way to relatively stable Arab countries such as Egypt, Morocco and Jordan. Oil industry privatisation in countries such as Kuwait and the UAE will generate huge resources that should be reinvested locally, regionally and worldwide.

The privatisation drive will have its impact on foreign policy in the region and soften up some hard-line policies in favour of a moderate approach. I may indicate here that thorny relations between Iran and Arab Gulf states will be softened up gradually on both sides, resulting from the new facts of life that are emerging daily.

Iran and its “North-South Corridor”: Since the removal of economic sanctions earlier this year, Iran has been busy redrawing its economic relations with the whole world. The most noticeable moves are towards its neighbours to the north, mainly Caspian Sea countries, including Russia. The Iranians have proposed an ambitious plan to dig a giant canal stretching from the southern shores of the Caspian Sea to the warm water shores of the Arabia Sea in the south.

Although the project is still only a blueprint, Iranian authorities are very excited about the idea of linking the two seas, the Caspian and the Arabian, to provide the world with a new trade route, vitalising economic transactions between countries in Central Asia and the rest of the world.

In the same context, Iran is also actively developing its transportation and trade connections with China, India, Pakistan, Afghanistan and Oman.

In recent months a lot of developments have taken place in areas such as trade, shipping, railways, natural gas pipelines and oil exports.

I expect by the end of this year, Iran will have concluded many very important economic cooperation projects with its neighbours in Central Asia, the Caspian Sea, China, India, Pakistan, Afghanistan and Oman. Through these developments Iran will probably have the best economic regional cooperation network in the larger Middle East, including its close economic cooperation with Iraq, Syria and Lebanon.

Arab neighbours will envy Iran for that and will be looking to maximise their regional cooperation prospects as well. The new Egyptian-Saudi strategic partnership fits well into this context of developments in the Middle East.

The writer is former senior political affairs officer at the UNDPA.

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