Can Qatar Regain Influence In Egypt?

Nearly three years after Hosni Mubarak was removed from power, Egypt has become a battleground among regional actors with geopolitical and economic stakes in Egypt's future. It is within the context of Egypt's desperation for money from abroad that foreign aid remains highly influential in Egyptian politics.
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Last month hundreds of Egyptians burned Qatari flags outside Doha's embassy in Cairo to protest Qatar's alleged interference in Egypt's affairs, in spite of the $8 billion in foreign aid Qatar loaned to Egypt during Mohammed Morsi's presidency. Many of the Muslim Brotherhood's (MB) opponents perceived the assistance not as aid for Egypt's moribund economy, but rather as political support for the MB. Indeed, Doha's relationship with MB affiliates in Egypt, Libya, Palestine, Syria, and Tunisia has earned it a reputation for being one of the organization's primary state sponsors. This has in turn fostered numerous anti-Qatar demonstrations elsewhere in the Arab world. As Egypt's military wages an oppressive crackdown on the MB, Qatar will be challenged to balance the idealistic elements of Doha's vision for the region with a realistic understanding of the direction in which Egypt is now moving.

While the July military coup in Egypt constituted a major strategic loss for the Qataris, Kuwait, Saudi Arabia, and the United Arab Emirates welcomed Morsi's ouster and collectively promised Egypt's interim government $12 billion in aid in the coup's aftermath. While for many years these three states have viewed the MB as a threat to each ruling kingdom's legitimacy, Morsi's fall eased concerns about the future direction of the 'Arab Spring' from these counter-revolutionary states' vantage point. The UAE's Foreign Minister hailed Egypt's military as a "strong shield" and "protector" of Egypt that will help the country "reach a safe and prosperous future." Kuwait's Deputy Premier and Foreign Minister praised Egypt's armed forces for "realizing [the Egyptian people's] legitimate demands for security and stability and progress." Saudi Arabia's King Abdullah glorified General el-Sisi's forces for "manag[ing] to save Egypt" with "wisdom and moderation."

Whereas Tunisia and Turkey condemned the removal of Morsi, Qatar's Emir Al Thani refrained. According to Qatar's news agency, Qatar's head-of-state "sent a cable of congratulations" to Egypt's interim-president Mansour. Qatar's government stated that it "respect[s] the will of Egypt and its people across the spectrum." When violence ensued several days after Morsi's ouster, Doha condemned "unfortunate acts that take away innocent lives" and urged Egyptian authorities "to protect peaceful protestors and their right to express their opinions and positions." Thus, while Qatar was the only GCC government to condemn the military's use of violence and espouse the principles of individual rights (rather than stability), Doha did not call for Morsi's return to power or characterize the interim government as illegitimate.

There are three likely factors influencing Doha's approach. First, Qatar's new Emir viewed the excesses of Doha's pro-Islamist foreign policy as type of "arrogance" and sought to restore Qatar's pre-'Arab Spring' status of friendly relations with nearly all countries in the region. Second, its interest in improving ties with Qatar's GCC rival, Saudi Arabia, incentivized Doha to refrain from playing an active pro-MB role in Egypt following the coup. Third, Qatar accepted the reality that the prospects for Morsi and the Freedom and Justice Party returning to power were dim, thus Doha chose to pursue the best relationship possible with the new government in Egypt.

From Friend to Foe

To date, however, Doha's de facto damage control has failed to establish a positive relationship between Qatar and the Egyptian government. Just as Egypt accused Qatar of using its state-owned news network, al-Jazeera, as a weapon against the Mubarak regime in 2011 (which had made relations tense with Qatar for numerous reasons), the military-backed interim government maintains that al-Jazeera carries a pro-MB bias. The night of the coup, Egyptian security forces temporarily detained 28 staffers in the offices of al-Jazeera English in Egypt, and in late August the state detained three more on charges of not having proper press accreditation, prior to expelling them from Egypt early in September.

Also in September, the head of Egypt's Central Bank announced the return of $2 billion that Qatar deposited in late 2012 following failed negotiations over converting the money into bonds. Shortly thereafter, Egypt's Civil Aviation Ministry rejected a request from Qatar Airways to increase the number of flights between Egypt and Qatar. Weeks later, Cairo broadcast the Egypt-Ghana World Cup playoff game on Egyptian national television, constituting a violation of al-Jazeera's exclusive broadcasting rights. Egyptian Radio and Television Union's Essam al-Amir defiantly asserted that his government "will not observe the rights of al-Jazeera or abide by any judiciary provisions issued in its favor, since it has not respected the decision of Egyptian judiciary system and continued the activities of al-Jazeera Live Egypt in Egypt." Amir continued, "This will not be limited to the Ghana-Egypt game, but will also include any game the Egyptian television wishes to broadcast. No one will be able to stop us."

In early November Egypt returned a $500 million deposit to Qatar after Doha refused to extend the repayment's deadline, as requested by Egypt's interim government. In early December, Egypt returned another $500 million deposit to Doha. Since Morsi's ouster, further tension has occurred between the two states, as Qatar has hosted certain Egyptian dissenters, including Ahmad Sharkawi, who founded the group "Journalists against the Coup." In May, Qatar agreed to donate five shipments of liquefied natural gas to Egypt and negotiations over Egypt purchasing an addition 13 LNG cargoes were initiated. However, those talks have not resumed, which is not surprising given the extent to which relations between the two governments have deteriorated.

Prospects for an Egyptian-Qatari Rapprochement

Nearly three years after Hosni Mubarak was removed from power, Egypt has become a battleground among regional actors with geopolitical and economic stakes in Egypt's future. It is within the context of Egypt's desperation for money from abroad that foreign aid remains highly influential in Egyptian politics. This enabled Qatar to gain significant influence in Egypt in 2012, and has greatly complicated its relationship with Cairo ever since. Given its dire economic situation, Egypt's de facto government will remain dependent on foreign reserves, until the nation's economy improves markedly.

For now, the GCC states that favored the restoration of military-rule in Egypt are assisting Egypt as it struggles to pay its bills. How much longer the governments of Kuwait, Saudi Arabia, and the UAE intend to continue to aid Egypt's interim government remains to be seen. Abu Dhabi's recent statement that the UAE's aid to Egypt would "not continue for too long" indicates that perhaps Cairo may be pressured to overcome its political baggage with Doha and accept Qatar's economic assistance in the future. Surely, the economic lifeline that all three countries have provided to Cairo cannot last indefinitely.

Qatar therefore has potential to retain influence in post-Morsi Egypt, as the new government knows what is ultimately in its longer term economic interest. This must be weighed against the political price that the Egyptian government would pay by once again accepting money from Doha. Should Cairo do so, Doha will understand that business as usual under Morsi cannot occur with this government in place. At that point, Qatar will need to decide if it wishes to provide funds without political strings attached.

Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk advisory firm, and author of the book "Managing Country Risk."

Giorgio Cafiero is a research analyst with CRS based in Washington.

Reprinted with permission from Eurasia Review.

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