players in Israel advocating the advancement of the peace process with the
Palestinians within the scope of regional architecture should review the
viability of the traditional regional alliances
Egypt and China following Xi’s visit
INSS Insight No. 795, February 11, 2016
Ofir Winter, Assaf Orion, Galia Lavi
http://www.inss.org.il/index.aspx?id=4538&articleid=11434

SUMMARY: In the course of the visit by Chinese President Xi Jinping to Egypt
on January 20-22, 2016, Egypt and China announced a five-year, multi-sector
cooperation agreement. This agreement injected substance into the
“comprehensive strategic partnership” formed during President Abdel Fattah
el-Sisi’s trips to China in 2014 and 2015. For Egypt, China constitutes an
optimal strategic partner, as deeper ties serve its economic-security
agenda. The cooperation with China suits Egypt’s desire to forge a sovereign
foreign policy that proceeds on the basis of purely Egyptian interests and
is not bound to international and regional axes. Israel views in a favorable
light any Egyptian-Chinese cooperation that will improve the
economic-security reality in Egypt and contribute to stabilization of the
current regime. Furthermore, an Egyptian foreign policy that lends less
weight to historical collective intra-Arab inhibitions may open up new
horizons for both Israel and Egypt. This can foster expanded bilateral
cooperative ventures, and perhaps trilateral ones – with China – as well,
based on shared economic interests.
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In the course of the visit by Chinese President Xi Jinping to Egypt on
January 20-22, 2016, Egypt and China announced a five-year, multi-sector
cooperation agreement. This agreement injected substance into the
“comprehensive strategic partnership” formed during President Abdel Fattah
el-Sisi’s trips to China in December 2014 and September 2015. On a symbolic
level, Egypt and China also declared 2016 as “the Egyptian-Chinese cultural
year.”

The visit to Egypt was a highlight of Xi’s tour of the region, which began
in Saudi Arabia and ended in Iran. From China’s perspective, this tour
represented an attempt to strengthen Beijing’s clout in the Middle East,
expand its economic activity, and reinforce its political standing at a time
of regional views of the diminished United States apparent involvement in
the Middle East, which has opened the theater to search new sources of
strategic support. The tour reflected China’s increasing concern regarding
the threat posed by the Islamic State, and its desire both to keep the
threat far from its borders and join in the struggle against terrorism. This
threat is fed primarily by the possible return to China of the thousands of
Sunni Muslim volunteers from the isolationist Uyghur movement in the
Xinjiang region, who left China to fight with the Islamic State in Syria and
in Iraq. China views Egypt as a partner in the war against terrorism, given
Egypt’s struggle against “Wilayat Sinaa’” (the so called Islamic State
province in the Sinai Peninsula), its role within the traditional Sunni
camp, and its regional and international stature as a non-permanent member
of the Security Council.

While for China the closer ties with Egypt bolster its longstanding policy
in Africa, for Egypt, the “comprehensive strategic partnership” with China
constitutes an interesting development from its traditional foreign policy.
Under Mubarak, Cairo served as an anchor in the regional US-oriented Sunni
axis; under el-Sisi, however, Cairo has cultivated a policy that varies its
sources of strategic support. Notwithstanding its relations with Washington,
Egypt is tightening its relations with Russia and China – two powers that
challenge America’s international hegemony. Egypt also balances its
relationships with Turkey and Qatar – often tense due to these states’
support of the Muslim Brotherhood – yet has no qualms about confronting
them, even in face of Washington’s endorsement (reflected, for example, in
its opposition to the ceasefire arrangement between Israel and Hamas that
Ankara and Doha proposed during Operation Protective Edge). Egypt even
refuses to modify its policy to cater to the interests of Saudi Arabia,
despite the fact that in recent years Riyadh has granted it generous and
critical economic assistance. In recent months, the disputes between Egypt
and Saudi Arabia have focused on a series of key regional issues, chief
among them the Russian involvement in the war in Syria, the attitude toward
Iran, and the civil war in Yemen.

Economic Implications

For Egypt, China constitutes an optimal strategic partner, as deeper ties
serve its economic-security agenda. The cooperation with China suits Egypt’s
desire to forge a sovereign foreign policy that proceeds on the basis of
purely Egyptian interests and is not bound to international and regional
axes. While the US aid brings with it expectations of democratic reforms,
and reliance on Saudi Arabia incurs a defined regional orientation,
cooperation with China is free of restrictions on Egyptian domestic and
foreign policy. Just as the Chinese President moved easily among rival
countries such as Saudi Arabia and Iran, so his Egyptian counterpart seeks
maximum room to maneuver in order to extricate Egypt from its current
economic crisis and security instability. It is no wonder that China was
lauded by Ahmed El-Sayed al-Naggar, chairman of the Board of Directors of
the Egyptian national daily newspaper al-Ahram, for creating a model for
“international economic relations based on peaceful cooperation and
exchanges of benefits without inclination towards hegemony of one country
over others.”

Indeed, concrete economic interests are the primary considerations in the
burgeoning relations between Egypt and China. China sees great potential in
the Egyptian market of nearly 90 million consumers for increasing the volume
of its exports, particularly in face of increasing production surpluses.
Furthermore, the Suez Canal is an essential trade route for China, including
in the framework of the One Belt One Road (OBOR) vision that aims to bridge
China, Europe, and Africa through infrastructure, transportation, and
communications.

For its part, Egypt is endeavoring to position itself as an attractive
target for Chinese investments in industrial sectors, minerals, agriculture,
fishing, tourism, and the automobile and shipbuilding industries. Chinese
capital is crucial for Egypt’s economic growth and for creating jobs for the
millions of unemployed, who are a threat to the regime’s stability. Among
the declared achievements of Xi’s visit are the launch of 15 projects
involving 100 Chinese companies, Chinese investments of $15 billion, and 21
signed memoranda of understandings for cooperative ventures in the fields of
electricity, trade, civil aviation, science and technology, communications,
and aerospace. China also undertook to provide $180 million in assistance to
Egypt, which is suffering from a severe shortage of foreign currency
reserves, as well as two loans totaling $1.7 billion, to strengthen small
and medium-sized industries. The test of these declared agreements will of
course be in their implementation.

The Chinese President’s visit allowed the Egyptian regime to announce
economic achievements at a highly symbolic time – on the eve of the fifth
anniversary of the “January 25 Revolution.” This year, the festive date was
marred by concern about a renewed outbreak of protests and demonstrations
against the regime, due to the young generation’s growing frustration with
the political and economic situation in Egypt. An article in al-Ahram
alleged that the Egyptian-Chinese summit extricated Egypt from “a foreign
plot intended to instigate a civil war on Egyptian streets” on the
anniversary of the revolution. Although this allegation sounds somewhat
exaggerated, the fruits of the Chinese visit offered President el-Sisi a
golden opportunity to instill hope for a better future among Egypt’s
citizens and strengthen the legitimacy of his regime.

The Israeli Angle.

For Israel, the deepening ties between Egypt and China have several
potential implications. On the negative side, the Chinese President is
liable to forge closer ties to Egypt and Arab countries by paying in
“Israeli currency,” as it did in past decades. In an open letter to the
Egyptian public as well as during his visit to the Arab League headquarters,
Xi conveyed China’s unconditional support for “the establishment of an
independent Palestinian state with full sovereignty based on the 1967
borders, with its capital in East Jerusalem.” Another disturbing issue
relates to Egypt’s weakening affiliation with the United States, in favor of
other sources of support.

On the positive side, Israel views in a favorable light any Egyptian-Chinese
cooperation that will improve the economic-security reality in Egypt and
contribute to stabilization of the country and the current regime.
Furthermore, Egypt’s willingness to forge an independent foreign policy that
focuses on its own national interests and lends less weight to historical
collective intra-Arab inhibitions may open up new horizons for both Israel
and Egypt. This can foster expanded bilateral cooperative ventures, and
perhaps trilateral ones – with China – as well, based on shared economic
interests.

Finally, the new partnership between Egypt and China constitutes a reminder
of the dynamism that characterizes the current Middle East. Thus, for
example, players in Israel advocating the advancement of the peace process
with the Palestinians within the scope of regional architecture should
review the viability of the traditional regional alliances, considering the
emergence of new strategic alliances that do not adhere to the familiar
regional paradigms. Even if these strategic alliances are not necessarily
formed at the expense of old ones, they might be able to shape regional
diplomacy that is multi-layered, complex, and more diverse. Egypt is still a
key member of the Sunni axis with ties to the United States, even if this
axis is shakier than in the past. Insofar, Egypt is maintaining this
affiliation in tandem with its ties to countries such as Russia and China;
in the future, given certain economic and security interests, it is quite
possible that Egypt will form additional relations that might challenge a
pro-Western affiliation.