Egypt’s Dangerous Game

Egypt’s sudden tantrum, with threats to invade Tel Aviv and false accusations that Israel is violating its treaty obligations, is not surprising in light of its rapidly weakening regional position.  At least since the days of Gamal Abdel Nasser, Egypt has seen itself as the leading Arab voice despite its many economic and military setbacks.  Like the French eternally trying to reclaim lost diplomatic glories, it scrambles to be taken seriously whenever a crisis erupts.

Until recent days, Egypt has sought to preserve two primary interests during Israel’s war on Hamas:  keeping Palestinians out of Egypt and restarting its lucrative smuggling trade with Hamas, all while posing as the wise adult in the room.  In proposing a mass transfer of Gazans to Egypt among other countries, U.S. President Donald Trump has delivered not only a threat to Egypt’s stability but, in effect, insulted its manhood.  Trump announced his proposal suddenly and unilaterally, in effect daring Egyptian President Abdel Fattah el-Sisi to defy him.  That’s classic Trump – do what you’re told or risk my wrath.

Thanks to Houthi attacks on international shipping, Egypt’s tolls and transit revenues from traffic through the Suez Canal declined by 60% in 2024, a loss of $7 billion.  Egypt’s bloated military is propped up by $1.4 billion in annual aid provided by the U.S.

Since taking control of Gaza in 2007, Hamas has turned it into a vast, fortified military arsenal.  Weapons are everywhere – in tunnels, in hospitals, in children’s bedrooms.  Most of those weapons entered via Egypt, through smuggling tunnels but also in surface traffic through the Rafah crossing.  Weapons transit into Gaza has been win-win for Egypt:  profitable for Egyptians and useful for keeping Hamas’s attention on Israel rather than fellow Islamic terrorists in Sinai.

The end of this trade has enraged Egypt to the point of irrationality.  It accuses Israel of violating the peace treaty by controlling the Gaza side of the Rafah crossing and the Philadelphi Corridor along the border with Egypt – even though Israel was in control of both when the treaty was signed in 1979 and maintained that control until it pulled out of Gaza in 2005.  At the same time, Egypt has sent 30% of its military assets into the Sinai Peninsula, which is an actual, blatant violation of the treaty.

As it escalates its threats against Israel militarily and pursues its diplomatic campaign to dislodge Israel from its border, Egypt now seems prepared to jettison its relationship with the U.S. as well.  Along with the rest of the Arab world, it reacted with horror to Trump’s resettlement proposal for Gaza’s population.  Jordan’s leader, King Abdullah II, has attempted to flatter Trump and offered to receive a token number of Gazan children, playing for time until Trump’s scheme morphs into something less devastating to Jordan’s interests.  Sisi has flatly rejected the proposal and canceled a scheduled meeting with Trump this week.  Egypt plans to present its own plan for Gaza, presumably headlined by Israel’s evacuation of the border, at the end of the month.

Insulting Trump rarely works out well for the insulter.  After Iran shot down a U.S. drone in 2019, Trump’s attempt to de-escalate by forgoing a military response was met with insults from the Iranian president, who said the White House was “suffering from intellectual disability.”  A few months later, Trump surprised his own military commanders by ordering the assassination of Iran’s legendary general Qasem Soleimani.

But Sisi is an angry man.  Despite his ridiculous but persistent accusations of treaty violations, Israel remains in Rafah and Philadelphi.  Egypt is second banana to Qatar in “mediation” efforts with Hamas.  Trump has made an untenable demand of Egypt with brusque disregard for its feelings.  At a minimum, Sisi’s equally brusque response risks suspension of direct U.S. financial assistance to Egypt.  But Trump’s options for punishing Egypt are not limited to $1.5 billion a year.  With the falloff in Suez Canal revenues, the International Monetary Fund increased its lending to Egypt from the $3 billion originally agreed in 2022 to $8 billion in 2024.  The U.S. is the largest financial contributor to the IMF and has the most voting power.  The U.S. can block major proposals because 85% of votes are required to pass them.

Egypt is not about to attack Israel, which would destroy its military and perhaps retake the Sinai (maybe renaming a slice of it “Palestine”).  Sisi is blustering.  But it was arguably just such bluster that triggered Israel’s rout of Egypt in the Six Day War.  As Egypt’s ability to influence events in the Middle East wanes, Sisi may decide he needs to project power both to reclaim the national honor and convince Trump to back off.  He has already gotten away with his own substantial treaty violations without visible U.S. resistance.  If there is a next phase of the ceasefire with Hamas and it fails to dislodge Israel from the Rafah crossing, Egypt might arrange a “pricetag” assault on Israeli border troops while maintaining what it considers plausible deniability.  Or claim self-defense and blame Israel’s continued presence for a volatile situation where anything can happen.

Anger may blind Sisi to the ease with which the U.S. can devastate Egypt economically and Israel can humiliate it militarily.  If Egypt’s military government is overthrown, what comes next – the Muslim Brotherhood redux?