Egyptian President Abdel Fattah El-Sisi began his third presidential term in April 2024. Since his arrival in power in 2014, the country’s foreign policy has moved toward alliances and engagement with many countries once considered as rivals or adversaries. These changes are a response to regional and global dynamics that have led Egypt to consider de-escalation and new alliances to meet domestic needs and address regional challenges. Given the rapid dynamics of developments in the Middle East and the interlinked challenges as a result of the interconnected actions of regional countries, Egypt began to consider new relationships to address domestic and external problems with the aim of counterbalancing or fulfilling its previously unmet goals.
Financial diversification
The economy plays a significant role in the transformation of alliances and the shift in Egypt’s foreign policy outlook. With a population of approximately 118 million, Egypt is the most populous Arab country, and feeding this population, which consumes twice the global average of bread, has made it the world’s largest importer of wheat.
Egypt’s financial crisis, with its direct effects on inflation, corruption, government debt, and the devaluation of the national currency against the dollar, has led to social discontent. Throughout the 20th century, the interplay between Egypt’s economic challenges and its foreign policy has been a consistent feature of Egyptian politics, dating back to the Nasser era. Following the 1956 nationalisation of the Suez Canal, Egypt moved away from Western countries. This stance was maintained until the late 1970s when socio-economic discontent forced President Anwar al-Sadat to reestablish relations with the West and end Egypt’s state of war with Israel. One of the factors that led to this realignment of foreign policy was the January 1977 “Bread Uprising.”
Egypt’s default approach to solving its economic problems is to receive financial aid from the Persian Gulf monarchies and loans from global funds. This strategy has however generated concern. The International Monetary Fund has made the allocation of loans conditional on economic and financial reforms, leading to social discontent and further devaluation of the national currency, and posing security risks in the eyes of Egyptian officials. Financial aid from Persian Gulf monarchies such as Saudi Arabia, Kuwait, and the United Arab Emirates (UAE) is on the decline. Between July 2013 and August 2016, the three countries provided Egypt with about $30 billion in aid. In recent years, their approach has nevertheless changed, motivated by the idea of not being seen as “cash machines”, leading El-Sisi to mock them, claiming that “they have money like rice”. Instead of grants, they have shifted to quick-return investments in real estate, hotels, the banking sector, digital payments, and share purchase in companies and banks. Among these, the UAE’s $35 billion investment in Egyptian beaches to build tourist attractions, or the purchase of part of the shares of several digital finance, bitumen, petrochemical, fertilizer, container and cargo companies by a Saudi Arabian company in August 2022.
In response to these changes, Egypt began to look for other donors and investors to reduce its reliance on its former financial allies. After restoring relations with Qatar, El-Sisi visited Doha in April 2025 and agreed on a $7.5 billion investment package. Turkey also increased its investment in Egypt to $3 billion, creating more than 50,000 jobs in the textile sector alone. The Suez Canal is one of Egypt’s main sources of revenue, generating a total of $143 billion since its nationalization. The canal is essential to Egypt’s economy, but after Iran-backed Houthi rebels attacked merchant ships in support of Palestine since October 7, its revenue nearly halved over the last year. El-Sisi said the decrease in traffic due to Houthi attacks has caused approximately $800 million in monthly losses for the country.
Egypt improved relations with Iran after the de-escalation between Iran and Saudi Arabia in March 2023. Egypt hopes to increase its revenue from the canal to $13 billion this year, a goal that is now out of reach unless Cairo can increase maritime traffic with Iranian help in pacifying the Houthis in the Red Sea.
Geopolitical activism
The new geopolitical equations and Egypt’s behaviour in the diversity of its foreign policy exchanges and orientations are a response to the fluidity of international relations and the change in the new world order from a unipolar hegemon to the increasing role of multiple eastern and southern actors in the international system. In response to these developments, Egypt expanded its behavioural participation and shifted from traditional relations with former actors to multilateral engagement with other actors.
One of the most important actors with which Egypt has a relationship is the U.S. Since the Egyptian-Israeli peace treaty, Camp David Accords, of 1978/79, Washington has been one of Cairo’s largest financial backers after Israel. In 2023, Egypt received approximately $1.43 billion in military aid and about $130 million in economic development assistance from the U.S. Since 1979, Egypt has received $51 billion in military aid, which is spent on American-made defense equipment. However, U.S. aid to Egypt has been accompanied by fluctuations that have pushed Cairo towards multilateral engagement with other actors, without seeking to replace Washington. U.S. aid to Egypt has presented several problems. First, it has been repeatedly cut for human rights reasons. For example, the Biden administration announced in January 2022 that it was cutting $130 million in military aid to Egypt due to human rights concerns.
Second, this aid comes with conditions that reduce Egypt’s flexibility. It is largely shaped by U.S. geopolitical goals rather than Egypt’s national security needs. A large portion of Egypt’s military budget must be spent on U.S. weapons and defense systems, which prevents it from diversifying its military purchases. In addition, the U.S. dictates how the aid is to be spent, limiting the equipment that can be bought. For example, Egypt has purchased a large number of M1A1 Abrams tanks with U.S. assistance, many of which are now useless. In response, Egypt has sought military and political diversification with other countries. In 2021, Cairo signed a deal with France’s Dassault Aviation to buy 30 Rafale fighter jets and began joint exercises with the country in the Mediterranean in February 2022. Regarding Russia, Moscow is the main arms exporter to Egypt, which is Russia’s fourth-largest market after India, China, and Algeria.
Cooperation with Russia is not limited to military deals. In November 2015, Russia promised to build Egypt’s first nuclear power plant and four third-generation reactors, and to supply fuel. The total cost of the project was $28.75 billion, 85 percent of which Russia covered with a loan to Egypt with repayments over 22 years, starting in 2029. The nuclear deal opened the door for both sides because it required ongoing negotiations and research and development. In addition, Egypt’s strong ties with China, Russia, and India have led it to seek new non-Western alliances such as the BRICS group that Egypt officially joined on January 1, 2024. Joining the BRICS presents several advantages: economically, it offers a great deal of opportunities; geopolitically, it enables Egypt to have an increasingly balanced and diversified foreign policy regarding blocs and global flexibility. In terms of Egypt’s African foreign policy, the presence of Iran and Turkey in Sudan and Ethiopia is beneficial to Cairo. Egypt is in dispute with Ethiopia over the construction of the Grand Ethiopian Renaissance Dam which would affect Cairo’s share of the Nile River. Turkey was the second-largest foreign investor in Ethiopia after China in 2021 and signed a military cooperation agreement with Addis Ababa that year amid escalating tensions with Cairo. With Ankara’s help, Egypt could more easily resolve the issue diplomatically.
In Sudan, Iran is also providing military assistance to the pro-Egyptian Sudanese Armed Forces (SAF) against the Rapid Support Forces (RSF) in the civil war. Given Sudan’s security risks to Egypt, Tehran, and Cairo could play a significant role in maximising common interests in the Horn of Africa. El-Sisi’s second and third terms as president ushered in new relations and a new initiative to diversify Egypt’s foreign policy behavior. Witnessing the changing global order and the proliferation of global actors, El-Sisi changed his partnerships in response to his own unfulfilled foreign policy goals. Cairo de-escalated tensions with Qatar and Turkey, initiated joint relations with Iran despite lacking formal ties, and continued to deepen ties with China, Russia, and the European Union. However, it remains to be seen whether this Egyptian behavior will transform again in light of the new Middle East order after October 7.
