Egypt's delicate balancing act in the Iran war
Cairo faces criticism from its Gulf allies that support against Iran has been lacking. But Egypt's priority is to shield its fragile economy from the
Cairo faces criticism from its Gulf allies that support against Iran has been lacking. But Egypt's priority is to shield its fragile economy from the fallout of a widening conflict. The conflict between the US, Israel and Iran has pushed regional heavyweight Egypt into a diplomatic and strategic dilemma. Egypt is not only a close ally of the US and Gulf states — it is a signatory to the 1979 Camp David Accords with Israel — but was also on the verge of restoring full diplomatic ties with Iran in early 2026. Cairo's tightrope walk has so far included publicly condemning Iranian attacks on Gulf states while offering limited military support. It has sought to position itself as a mediator between Tehran and Washington, alongside parallel efforts by Pakistan, Turkey and Qatar. President Abdel-Fattah el-Sissi also visited the United Arab Emirates in May. "Abdel-Fattah el-Sissi views the conflict primarily as a threat to domestic stability," Michelle Pace, a Middle East analyst and academic visitor at the University of Oxford, told DW. "Egypt's core objective is to stay out of the Iran war while containing its economic and security fallout." However, this approach has caused tensions with Egypt's Gulf partners, who expect support from their allies in the face of Iranian attacks on their territories, interests and assets, Timothy E. Kaldas, deputy director of the Washington-based Tahrir Institute for Middle East Policy, told DW. "There are not very subtle statements coming particularly from the United Arab Emirates that indicate frustration and anger with Egypt," he said. For example, Anwar Gargash, foreign policy adviser to the UAE presidency, recently wrote on X that "The Arab Gulf states have been a support and partner to all in times of prosperity … so where are you today in this time of hardship?" Regional analysts understand the statement was directed at Cairo.
Tourism has plummeted in Egypt as a result of the region-wide conflict Image: Nese Ari/Anadolu/picture alliance Economic dependence Egypt, the most populous Arab nation with around 120 million people, also feels the the economic ripple effects of the war with Iran. After the Iran-aligned Houthi militia in Yemen resumed attacks on shipping in the Red Sea and Bab al-Mandab Strait in support of Iran, traffic through Egypt's Suez Canal was reduced. A recent analysis by the International Crisis Group found that Suez Canal revenues fell by 38% in the first quarter of 2026. "The war is hurting an economy that had been showing tentative signs of recovery from the doldrums of COVID-19 and the consequences of wars in Ukraine and Gaza," the analysis said. Egypt's minister of petroleum and mineral resources, Karim Badawi, said Wednesday that Egypt had managed to reduce arrears owed to oil and gas partners from about $6.1 billion in June 2024 to zero in June 2026. The economic recovery after years of protracted crisis has been largely driven by Gulf investments, the report's authors noted. "Saudi Arabia and Kuwait have deposited $5.3 billion and $4 billion with the Egyptian central bank, respectively, while the United Arab Emirates has injected $35 billion into the country through a major real estate acquisition and Qatar has committed to investing $29.7 billion in another massive property deal," the Crisis Group's analysis said. The World Bank, the EU and the International Monetary Fund have also helped to stabilize Egypt's economic in recent years. Now, the outlook appears to be worsening again. Not only have Suez Canal revenues fallen, but tourism has also declined, and energy and food prices have increased. Furthermore, the Gulf states are themselves facing significant economic losses and enormous costs: damaged buildings and infrastructure must be repaired, munitions replenished, and defense capabilities expanded, Kaldas pointed out.
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