A government source said this week Cairo is determined to press ahead with the floatation of the Egyptian pound — “maybe in the second half of this month” — with or without the financial assistance it has requested from its Gulf allies Saudi Arabia and the United Arab Emirates (UAE). Saudi Arabia refused the request and UAE also declined to meet Cairo's request in full. “We were hoping for $2 billion from the UAE but have received only half of this. Further assistance was promised but it is not yet forthcoming,” said a concerned government source. Cairo had hoped Riyadh and Abu Dhabi, which furnished Egypt with generous financial support following the ouster of Mohamed Morsi in the summer of 2013, would between them provide the $4 billion necessary to beef up currency reserves ahead of the devaluation of the pound required to access a $12 billion IMF loan. Answers to the question why the UAE is not coming to the rescue despite being aware of the impact of its refusal on the ability of the Egyptian authorities to float the pound, vary according to who is asked. In Cairo officials argue the UAE is reluctant to provide additional assistance to Egypt at a time when Riyadh is withholding help. They point to the close ties that bind Abu Dhabi and Riyadh on the Gulf Cooperation Council and the solid partnership enjoyed by the two countries' effective rulers, the UAE's Mohamed bin Zayed and Saudi Arabia's Mohamed bin Salman, who share a vision of the GCC at the helm of the Arab world. Yet according to one retired Egyptian diplomat “there is a crystal clear awareness on the side of Riyadh and Abu Dhabi that when push comes to shove Egypt remains the one country they can turn to”. He argues that both countries are aware they are guaranteed Egyptian support if faced with Iranian aggression as Tehran tries to expand its regional influence. And both, adds the diplomat, know that whatever happens in Egypt will have serious repercussions across the region. “There was deep concern in the UAE during the [one-year] rule of Mohamed Morsi. Abu Dhabi felt that if Islamists managed to keep hold of power in Egypt then they would expand across the entire Arab world.” Today, he says, the UAE, and to a lesser extent Saudi Arabia, “remain unwilling to take risks as far as Egypt is concerned” which is why the UAE was “very helpful in encouraging Kuwait, and in cooperating with Egypt through commercial parties, to fix the situation that ensued when monthly oil supplies from Saudi Arabia were abruptly suspended in last month of October”. UAE diplomats and officials tell a different story about the UAE's reluctance to provide the requested financial assistance in full. Abu Dhabi, they say, is “sick and tired” of being taken for granted. UAE officials have repeatedly complained about Cairo's failure to push towards economic independence. An Egyptian diplomat serving overseas said he was “really dismayed” to hear a UAE counterpart tell him that it was one thing for Abu Dhabi to provide a generous package of emergency assistance to Egypt during the months that followed the tumultuous transition of 2013 and quite another for Cairo to expect to be a permanent item on the UAE's budget. A businessman with close links to both Cairo and Abu Dhabi says that following the ouster of the Muslim Brotherhood the UAE was hoping to see Egypt seriously pursue the economic reforms necessary to allow the Egyptian economy to pick up. He points out that “the Saudis, during the reign of the late King Abdullah, provided financial assistance willingly, while the UAE offered both financial assistance and financial advice”. The UAE footed the bill for a PR company in Washington to promote the new political regime in Cairo and paid for leading financial consultancies to advise Cairo on the measures necessary to promote economic growth. It appointed a minister of state to coordinate with Cairo over the implementation of an ambitious but gradual economic reform plan that was put on the desk of President Abdel-Fattah Al-Sisi during his first weeks in office. One UAE government official, endlessly quoted in Egyptian business and official circles, complained vociferously about “missed opportunities and time wasted” as the Egyptian authorities failed to adopt necessary economic reforms while “immersing the country in mega-project with no immediate purpose”. He is also said to have questioned the choice of ministers holding economic portfolios, expressed frustration with the time Cairo has taken to formulate a convincing investment law when Egypt desperately needs to attract foreign investors, and complained about the lack of incentives offered to local businesses. The time, effort and resources the UEA spent on working with Egyptian intellectuals and researchers to produce suggestions for political and economic reform has, he claimed, been wasted. “I don't think the UAE was expecting Egypt to take a pill and swallow it just like that. They wanted to provide decision-making bodies with the information and studies necessary to help them make their own choices on how to reform the economy,” says the businessman. As Egypt took its time over formulating economic reforms it was also dragging its feet over the political reforms seen as necessary to projecting the kind of positive image that might attract investors. Unlike Riyadh in the winter of 2015 the UAE never asked Egypt to accommodate Islamists. “All we wanted was to keep the international press free of annoying news coming out of Egypt. That was the advice of the PR company working in Washington: create a positive image and eliminate the negative image. But it was not happening,” says a UAE source. He adds that by spring this year, following many direct high-level talks, the sentiment had taken root in Abu Dhabi that the Egyptian regime was losing the momentum that had swept Al-Sisi to the presidency. The crunch came with the Egyptian authorities' arrest of a leading media business figure earlier this year. The UAE intervened directly, demanding his prompt release. Egyptian sources say this turning point in bilateral relations was followed by a gradual withdrawal by the UAE and the suspension of research and consultancy funding. The UAE source insists that his country's worries over the situation in Egypt cannot be alleviated by pouring in extra billions to bump up the CBE's the reserves. “I think it is a bit too late in the day for us to invest more than we have already to help Egypt stand on its own feet. Now we are very worried,” he says. Those worries, he adds, can only be alleviated by the regime in Cairo adopted a new approach and “this is not something that can be provided by anyone on behalf of Egypt”. Dismay over the UAE's hesitation to provide additional financial assistance to prepare the ground for tough and long overdue economic reforms is not the only reason for Cairo's unease at Abu Dhabi's position. Officials in Cairo are also concerned over what they claim are leaks to the Western press by the UAE's economic advisory team that worked in Egypt. One official in Cairo has openly accused a UAE source of providing The Economist with information for its recent, highly critical cover story on the Egyptian economy. The same official also criticises what he says is the too generous hospitality Abu Dhabi has accorded to Ahmed Shafik, Mubarak's last prime minister and a presidential candidate in the summer of 2012 and the “less than positive” remarks UAE diplomats posted overseas have made on the prospects for political and economic stability in Egypt. Yet the same official acknowledges Egypt and the UAE share solid mutual interests, not least aborting the regional advance of Islamists. “Our joint cooperation in Libya to support a secular regime, even if only in the west of the country, has continued despite other differences,” he says, adding that Cairo and the UAE share similar reservations about Riyadh's deals with militant Islamist groups in both Yemen and Syria. “We would both prefer to keep Bashar [Al-Assad] in power than to see him replaced with any Islamist regime.” He adds that the same goes for Palestine, where Egypt and the UAE are both working to ensure that President Mahmoud Abbas is succeeded by a secular figure opposed to Hamas. Sources also argue neither Egypt nor the UAE wants to see Tehran expand its influence over the Middle East. That said, it will require concerted efforts for Egypt and the UAE to dispel their mutual concerns. Cairo has to reassure the UAE that the valuable political and financial support it has been given over the last three years will not go to waste and that it is plotting a convincing path away from political and economic turmoil. And the UAE needs to reassure Cairo that it remains deeply committed to supporting Egypt and is not contemplating any political schemes or supporting any individuals or groups perceived by the regime as adversaries.
