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Print Edition> World
UPDATED: April 13, 2015 NO. 16 APRIL 16, 2015
The Egyptian Upturn
Cairo's ambitions in domestic and global affairs are recovering
By Liao Baizhi

CAPITAL INVESTMENT: Egyptian President Abdel Fattah al-Sisi (right) talks with Prime Minister of the United Arab Emirates Sheikh Mohammed bin Rashid al-Maktoum (second right) as they viewed a scale model of Egypt's planned new capital displayed at an investment conference in the Red Sea resort of Sharm el-Sheikh on March 14 (XINHUA/AFP)

In early 2011, the political situation in Egypt was fraught with seemingly endless turbulence after the Arab Spring rocked the Middle Eastern country. In the following more than two years, it underwent two regime changes, three constitutional amendments, six referendums as well as frequent cabinet reshuffles. Since President Abdel Fattah al-Sisi took power last June, the country has finally tilted toward stability as the new leader focused on promoting both security and reconstruction. This favorable turn of events has opened up a host of possibilities for Egypt to regain its regional stature.

New found stability

The Sisi administration has presently attained full control of Egypt's political processes, winning the concerted support of armed forces, police and the judicial branch. The country has also introduced new legislation regulating demonstrations and an anti-terrorism law, which have played a positive role in maintaining political stability. Although opposition groups including the Muslim Brotherhood insist on continuing to fight against the government, their strength and influence have been weakened. Even persistent unrest in the Middle East and the increased threat of terrorism has been unable to shake Egypt's new foundation of stability.

So far, the first two parts of the Sisi administration's three-step political reform roadmap--drafting and ratifying a new Constitution and electing a president through a democratic process--have been completed, and the third step of holding a parliamentary election is being prepared. The transparency of the process has lent the new government legitimacy and recognition from the international community.

Egypt's underdeveloped economic structure and weak industrial base have long contributed to the country's dependence on foreign aid. About 40 percent of Egyptian people live under the poverty line, relying on energy and food subsidies to survive. However, the outbreak of the Arab Spring and ensuing chaos have resulted in the withdrawal of large amounts of foreign investment from Egypt, leaving the country with a severe shortage of funding. After taking power, Sisi resolutely slashed energy subsidies by 40 percent (about $5.2 billion) and implemented a new economic stimulus plan. In recent months, foreign investment began a gradual flow back to Egypt. In March, about 2,500 people from nearly 100 countries attended the Egypt Economic Development Conference in Sharm el-Sheikh. Official data showed that during the three-day event, Egypt signed direct investment contracts worth $36.2 billion, undertook $18.6 billion in financed projects and won $5.2 billion in loans from international institutions.

In order to boost economic development and improve the quality of people's lives, the Sisi administration is seeking to prioritize the development of infrastructure and the energy sector. The Egyptian Government is planning to construct a new Suez Canal parallel to the current channel and invest $11.8 billion to turn the Suez Canal banks into a global economic zone. Its other ambitious plans include a $45-billion new capital city, a $1.97-billion desert reclamation project and the construction of 3,500 km of highways and a high-speed railway crossing five provinces with huge investment. The government has signed 35 agreements with foreign energy enterprises on oil and gas exploration including a $12-billion contract with British Petroleum. It will also invest large sums into wind, solar and nuclear energy development. The International Monetary Fund estimated that the economic growth of Egypt in 2015 will reach 3.8 percent from last year's 2.2 percent.

Diversified diplomacy

Since 1979, the United States has been the biggest provider of military and economic assistance to Egypt, totaling more than $70 billion in aid over the years. However, U.S.-Egyptian relations came to a deadlock when Washington accused the Sisi administration of violently cracking down on opposition groups. To improve Egypt's diplomatic environment, Sisi sought to deepen ties with Moscow, visiting Russia twice last year in February and August, respectively. In early 2015, Russian President Vladimir Putin made a trip to Cairo, during which both countries agreed to establish a free trade zone between Egypt and the Russia-led Eurasian Economic Union. Russia pledged to help build Egypt's first nuclear power plant and train personnel to create a new nuclear power industry in the country. The two sides also signed a $3.5-billion arms deal. The closer ties between Cairo and Moscow have predictably upset Washington. The United States subsequently reengaged with Egypt, promising to resume military aid. In addition, Sisi has also visited Italy and France and announced a major deal to purchase advanced French warplanes in an attempt to ease relations with European countries.

In the Middle East, the Sisi administration has strengthened Egypt's alliances with friendly Gulf countries. Saudi Arabia and the United Arab Emirates are among those that have provided strong financial support to help the Sisi administration counter outside pressures--even at the risk of worsening relations with Turkey, Qatar and other pro-Muslim Brotherhood forces. They have also made great efforts to silence media outlet Al Jazeera's criticism of Egypt.

After taking power, Sisi also worked to restore Egypt's status in the African Union. In June 2014, the African Union's Peace and Security Council restored Egypt's membership in the organization, which was suspended following former President Mohamed Morsi's removal from power in July 2013. Currently, Egypt is actively negotiating with Ethiopia and Sudan to solve their long-lasting dispute over the sharing of Nile waters.

In the meantime, Egypt has also played a big role in mediating Israeli-Palestinian ceasefire talks, intervening in Libyan civil conflict as well as promoting Islamic reform. Together with Saudi Arabia, Egypt has proposed establishing a joint force of the Arab League to counter terrorist forces and safeguard regional stability. These series of diplomatic moves have helped the country to overcome its political paralysis in the last few years and expand its regional influence.

Sisi's personality and political savvy have played a major role in stabilizing Egypt's domestic situation and raising its international profile. As a tough-minded politician, Sisi and his administration are capable of implementing ambitious projects, such as the long-delayed Suez Canal economic corridor plan that stalled in the era of late Egyptian President Gamal Abdel Nasser. The new canal project's schedule has even been shortened from three years to one year. At present, Sisi enjoys wide domestic support, with his approval rating reaching as high as 82 percent at the beginning of the year.

Despite its slow emergence out of political turbulence starting in 2011, Egypt is still undergoing a key phase of restoring the economy as well as social reconstruction--both of which will require assistance from the international community. China, as a large stakeholder in the Middle East, also needs a reliable partner like Egypt in the region for mutual support. The two countries have long enjoyed a traditional friendship and attached major importance to furthering bilateral relations. During Sisi's Beijing trip last December, China and Egypt upgraded their strategic cooperative partnership to a higher-level comprehensive strategic cooperative partnership.

China has always viewed Egypt as a dependable partner in the Middle East. It was the first Arab country to establish diplomatic relationship with the People's Republic of China after its founding in October 1949. Successive Egyptian leaders have greatly valued the country's relationship with China. Compared with many other regional countries, Egypt's domestic situation has historically been much more stable. As a big power in both the Arab world and the African continent, Egypt's status is likely to increase as it becomes another important pillar of the Arab world besides Saudi Arabia. China and Egypt share a similar stance on a wide range of issues. Furthermore, China can offer its rich development experience to Egypt.

From an economic perspective, Egypt can act as the bridgehead of China's Belt and Road Initiative (Silk Road Economic Belt and 21st-Century Maritime Silk Road) in the Middle East. With a population exceeding 90 million, Egypt offers a huge potential market and a large labor force. In the meantime, the country strongly aspires to develop its energy sector and improve its infrastructure such as railways and ports--each of which highly conforms to China's New Silk Road strategy.

Egypt can also serve as a connection for China to exercise its soft-power diplomacy in the Middle East. Egypt is a widely known cultural power in the region, with movies and literature works that are popular throughout the Arab world. At the same time, Egyptians have a keen interest in Chinese culture and values. Mandarin Chinese is currently taught in 10 Egyptian universities, producing many masters of the Chinese language. In addition, Egypt is home to two Confucius institutes and the oldest Chinese culture center in the region. China should make full use of these advantages to guarantee a successful "Year of China" in Egypt in 2016. The two sides should also increase mutual trust and mutual support at both the governmental and nongovernmental levels by deepening people-to-people exchanges, cultural cooperation as well as tourism.

The author is an associate research fellow with the China Institutes of Contemporary International Relations

Copyedited by Joseph Halvorson

Comments to liuyunyun@bjreview.com

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