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Saudi King’s Visit to Egypt: Strengthening Economic and Strategic Objectives

Roshan Writes: Recently King Salman made a four day visit to Egypt, and pledged for a sustained economic aid to Egypt. Saudi Arabia’s two prong approach in creating a large investment fund ($16 billion) for the development of Egypt has economic and political connotations.

Roshan Writes: Egypt’s economy had been under duress since the time Egypt underwent political destabilisation during the Arab Spring. Egypt economy got disrupted and was on a downhill when President Hosni Mubarak and Mohamed Morsi got ousted, but a total collapse was prevented by the intervention of Saudi Arabia, and other oil rich gulf countries like Kuwait and UAE. The most prominent aid provider to Egypt  has been Saudi Arabia, which has not only given soft loans but has also provided Foreign Direct Investments (FDIs).Recently King Salman made a four day visit to Egypt, and  pledged for a sustained economic aid to Egypt. Saudi Arabia’s two prong approach in creating a large investment fund ($16 billion) for the development of Egypt has economic and political connotations. Economically Saudi Arabia wants to diversify its investment opportunities and is planning to develop Egypt’s Sanai region. This approach will give opportunities to Saudi investment companies to build infrastructure in Egypt and create a better connectivity between the two countries over the Red Sea. This will help Saudi Arabia in diversifying its economy, as economic indicators show that its economy is not doing very well. Hence, Saudi Arabia is looking to diversify in other lucrative areas of ‘oil supply chain’ like refining, transportation and production, and in these fields, Egypt provides them with good opportunities.

Strategically also Saudi Arabia wants to increase its influence in this region.  Saudi Arabia had helped in expanding Egypt’s Suez Canal, which is a major transit area and through this it is trying to enhance its strategic presence in this water pass. If Iran has a geographical advantage in controlling the Strait of Hormuz, Saudi Arabia through financial aid is trying to artificially create its influence in the Middle East and North Africa Region (MENA).It already is the largest producer of oil amongst these nations and with its enhanced investments in Egypt, it will significantly try to increase its influence, especially in the affairs of Suez Canal. Iran after the lifting of sanctions has increased its oil production and this canal will see an increased shipment of oil containers in future.

Thus there is a significant shift in Saudi Arabia’s foreign policy under the new ruler King Salman. Though the fundamentals remain the same but the approach seems to be more nuanced and aggressive. The main agenda is to prevent Iran from emerging as a regional power. Saudi Arabia’s involvement in Yemen, Syria and Lebanon are indicators that the kingdom is not ready to share its power with any other country and least of all with Iran. Saudi Arabia’s military engagements will in future impact its economy. Already the continuing downward trend in the oil prices and Saudi reluctance to control this is creating fissures amongst the countries of this region. It needs to be seen how long Saudi Arabia can keep the Gulf Cooperation Council (GCC) countries united and maintain its economic supremacy and continue its ideological war against Iran. In this scheme of things it is essential that Saudi Arabia has Egypt in its block, because Egypt is geo-strategically important in this power game.

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