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Egypt and Iran: Prospects for Rapprochement

In May 2023, Sultan Haitham bin Tariq of Oman made separate state visits to both Egypt and Iran—two trips that were largely seen as an attempt to mediate between the two major Middle Eastern powers. Muscat, which has long worked to develop cordial relations with all of its neighbors and enjoys close ties to both Cairo and Tehran, is well-positioned to play this role. For decades, the Sultanate has been seen as a key facilitator of regional dialogue; Oman was one of the few Arab countries that refused to sever its diplomatic ties with the Syrian government of Bashar al-Assad after the civil war broke out in 2011. Decades earlier, it was among a handful of Arab states that declined to condemn Egyptian President Anwar Sadat’s peace treaty with Israel and resisted pressure to isolate Egypt. Muscat has also led in the negotiation between the Saudis and the Houthi rebels to end the war in Yemen. It played a key role in the recent Iranian-Saudi rapprochement, as well as both the original round of U.S.-Iran nuclear negotiations and the limited attempts to renegotiate a second deal after the first fell through.

A Decades-Long Estrangement

Although Egypt and Iran are located on opposite ends of the Middle East and have vast political, economic, and cultural differences, they share several distinguishing characteristics. Along with Turkey, they are among the most populous countries in the Middle East. A large population necessarily means a well-educated and skilled workforce, and Egyptian and Iranian professionals—including teachers, doctors, and businesspeople—have made significant contributions to socioeconomic development not only at home, but also in neighboring states. Finally, while most states within the Middle East trace their national origins to the colonial era, Cairo and Tehran are heirs to two of the most ancient and storied civilizations in the world. This millennia-long history has created and reinforced a strong sense of nationalism in both countries.

The combination of all these factors has cultivated and fed a controversial self-perception in both Cairo and Tehran. Most Egyptians perceive their country as the leading Arab state and justifiably claim the status of a regional power. Similarly, Iran’s history and political culture underscore a strong sense of Persian pride—and a deep-rooted perception of victimization at Tehran’s current economic and political challenges Many Iranians believe that foreign powers (variously including Russia, Britain, and the United States) have conspired to deny them their natural status as the dominant power in the Middle East.

The Egyptian-Iranian rivalry goes back several decades, with significant implications not only for bilateral relations but also for regional and international security. Shortly after the 1952 revolution in Egypt, President Gamal Abdel Nasser championed the cause of Arab nationalism and allied his country with the Soviet Union. Under Shah Mohammad Reza Pahlavi, the Iranian government pursued the opposite strategy, forging close ties to the United States, Israel, and conservative Arab governments. Diplomatic relations between Cairo and Tehran were severed in 1960 and not restored until August 1970, one month before Nasser’s death. The drastic alteration of Egypt’s domestic and foreign-policy orientation under Nasser’s successor, Anwar Sadat, brought Cairo and Tehran closer. Sadat initiated limited economic reform and political liberalization, ended Egypt’s alliance with the Soviet Union, established close relations with the United States, and made peace with Israel—laying the foundation for a new period of good relations between Cairo and Tehran.

The honeymoon between the two countries came to a crashing halt in 1979, when the Iranian people overthrew the Shah and established a new “Islamic Republic” with Ayatollah Ruhollah Khomeini at its head. The new Iranian leaders strongly condemned the Egyptian-Israeli peace treaty, and raged at Sadat after he welcomed the deposed Shah to Egypt (where he died and is buried). After Sadat was assassinated by an Islamist fanatic in 1981, the Iranian government renamed a street in Tehran after the assassin and erected a commemorative mural praising the event. (The street has since been renamed; the mural remains in place.) Sadat’s successor, Hosni Mubarak, adhered to his foreign policy and supported Iraq in its war against Iran from 1980 to 1988. Diplomatic ties between the two countries were severed in 1980 and have not been restored since; with the recent restoration of ties between Saudi Arabia and Iran, Egypt remains the only Arab nation without an embassy in Tehran.

Why Now?

In the last few years, both Egypt and Iran have faced serious economic and political challenges. These challenges have likely convinced the leaders of both nations to adjust their policies and introduce new initiatives. The COVID-19 pandemic and the Russian invasion of Ukraine have had a particularly devastating impact on Egypt, which is heavily dependent on imported Russian and Ukrainian wheat and did not benefit from the recent surge in global oil prices as many of its neighbors did. Cairo has successfully negotiated and received a number of loans from the International Monetary Fund (IMF), and has successfully solicited financial assistance from Gulf states including Saudi Arabia, the UAE, and Qatar. However, the country’s high level of borrowing is clearly unsustainable. In recent years, the Egyptian pound lost half of its value, and its inflation rate is the highest in decades. The loans were not conditioned on Cairo’s obedience to Riyadh, Abu Dhabi, or Doha, but Egypt cannot ignore the wishes of its donors, either. Gulf financial aid is increasingly conditioned on serious economic and political reform. It is not by chance that this potential warming of Egyptian-Iranian relations comes after both Saudi Arabia and the UAE have re-established diplomatic ties with Tehran. Egypt’s potential rapprochement with Iran comes on the heels of a successful agreement with Turkey, trading ambassadors with Ankara for the first time since Egyptian leader Abdel Fattah el-Sisi’s seizure of power in 2013. As in the Iranian case, Egypt’s outreach to Turkey came only after Saudi Arabia and the UAE restored their own relations with the Turkish government

Iran has managed to survive U.S. President Donald Trump’s “maximum pressure” policy and the severe economic sanctions that resulted from it. But these sanctions, which have remained in place under President Joe Biden, have dealt a heavy blow to the country’s economic development. Like the Egyptian pound, the Iranian rial has lost much of its value, and its inflation rate is the highest in the Middle East. The war in Ukraine has brought Russia and Iran closer. Iran is one of few countries that supplies the Russian army with weapons to continue its aggression on Ukraine. In response, the West increased sanctions on both Tehran and Moscow, forcing them to sell their oil to Asian markets at a steep discount. The administration of Iranian President Hassan Rouhani focused on negotiating and signing the nuclear deal with the United States, but Trump’s withdrawal from the deal in May 2018 eliminated the economic benefits Iran had seen following its signing in 2015. President Ebrahim Raisi’s main focus, on the other hand, has been spurning engagement with the United States and the West in favor of ending Iran’s regional isolation. Egypt is a major player in the Arab world and the broader Middle East, and a rapprochement with Cairo would significantly enhance Iran’s reputation in the Arab world.

Regional Dynamics

The potential thawing of relations between Cairo and Tehran should not be viewed in isolation from other recent changes in the Middle East. Indeed, the rapprochement, should it come to fruition, would merely be the latest sign of a wave of de-escalation across the region. In the last few years, several of the Middle East’s most notable adversaries have decided to change course, abandoning decades-long rivalries and seeking joint efforts to define and articulate a new strategic landscape.

At least two forces are behind these key changes. First, for decades, Arab leaders have spoken in grand terms about reducing their dependence on oil revenues and diversifying their economies. Faced with the growing climate crisis and the increasing competitiveness of green renewable energy sources, these words are finally becoming serious. There is a growing global consensus that an energy transition is a “must.” Investments in renewable energy have already exceeded those in oil and gas; the share of oil in the global energy mix is likely to remain dominant in the coming years, but the era of oil is clearly coming to an end. In response, several Middle Eastern countries have introduced and are implementing bold economic reform programs. In order to attract foreign investment and encourage the private sector, there is a need to end regional disputes.

The second reason behind this wave of de-escalation is the perception, right or wrong, that the United States is less committed to the Middle East and more focused on its rivalries with China and Russia. Senior U.S. officials have pushed back against this perception, insisting that Washington needs to maintain a presence in the Middle East in order to keep commodities markets stable and support its allies. But a close examination of recent rapprochements between former adversaries suggests that regional leaders have decided to step up and take charge of their own futures. In the last three years, Iran has made peace with the UAE and Saudi Arabia; Qatar has secured an end to the trade embargo by its four former blockading nations, including Egypt; the Arab world has largely restored ties with President Assad; Israel has established relations with several Gulf and Middle Eastern states under the auspices of the “Abraham Accords”; and Turkey has improved its relations with Saudi Arabia,  the UAE and Israel. These developments indicate that many regional leaders now think diplomacy and dialogue are more likely to bring peace, stability, and prosperity than proxy wars and conflicts.

The Way Forward

Egypt and Iran are two major regional powers with a combined population of close to 200 million people. A rapprochement between Cairo and Tehran is certain to contribute to regional peace, trade, and investment. Despite decades-long U.S. sanctions, the Islamic Republic has never been fully isolated. Unlike Europe, the United States and Israel, Arab countries are less worried about Iran’s nuclear program and more worried about Tehran’s regional policy. Arab leaders, including Egyptians, appear to have decided to try engagement instead of confrontation. It will take some time to find out if this new approach will work as Cairo and Tehran intend it to. But the experience of the last decades shows that confrontation has not worked, and indeed has fueled political instability and economic decline. Right now, many Middle East  leaders have decided to de-escalate and engage in talks to settle their disagreements, and a rapprochement between Cairo and Tehran is a significant step in this direction.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Issue: Geopolitics
Country: Iran

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Dr. Gawdat Bahgat is a Non-Resident Senior Fellow at Gulf International Forum and a Professor at the Near East South Asia Center for Strategic Studies at the National Defense University. He is the author of 11 books on the Middle East. His areas of expertise include energy security, proliferation of weapons of mass destruction, Iran and American foreign policy.


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