Saudi Arabia has extended its financial support of the Egyptian government to an added $8 billion in 5 years, along with energy concessions and other assistance, despite facing a budget crunch at home.
The announcement followed a meeting between Deputy Crown Prince Muhammad Bin Salman, Second Deputy Premier and Minister of Defense, and Egyptian Prime Minister Sherif Ismail in Cairo.
Saudi Arabia views Egypt as a key ally in regional affairs, but Egypt has not been a full partner on all regional crises. While Egypt has been supportive of Saudi Arabia’s war in Yemen, the agreement on how to deal with the region’s other conflicts seems to stop there. On the crisis in Syria and Iraq, Egypt fully supports a political solution with Bashar al-Assad remaining in power. And, at a meeting in March of this year at Sharm El-Sheikh that brought together regional leaders, Egypt’s President Sisi read aloud a letter from Russia’s President Vladimir Putin urging a political solution to the war.
After it was read, then-Saudi Foreign Minister Saud al-Faisal took the microphone and lashed out at Russia in a speech aired live on TV.
Egypt received pledges of $12 billion from Gulf Arab allies in March.
Since then, Saudi Arabia and Egypt signed “The Declaration of Cairo,” which aims at enhancing mutual cooperation between the two countries on military, investment, trade, politics, culture and media.
Egypt is a party to the recently announced 32-member “Islamic military alliance,” aimed at countering terrorism in the region.
Saudi Arabia’s financial support of Egypt comes as the Kingdom is facing added fiscal strain at home due to low oil prices and a costly war in neighboring Yemen. The Kingdom is drawing down on foreign reserves and slashing new projects at home, with rumors being quashed recently that its ambitious and much-needed $22 billion metro project in Riyadh might be hit with delays, despite being only 25% completed.
Saudi Arabia is also seriously considering revenue producing tax options that were dismissed or delayed in the past. A recently announced property tax will squeeze billions out of land owners, though that measure is mostly intended to lower property and housing prices for the growing Saudi middle class. Saudis will also implement a new tax on air travel in Saudi airports.
Despite low oil prices, Saudi Arabia’s ambassador to Egypt, Ahmed al-Qattan, said that the investments would increase confidence in Saudi-Egyptian relations.
“The confidence of the Arab and Saudi investor will increase after the announcement of the increase in investments…These Saudi-Egyptian relations will gain in strength day after day.”
