US President Donald Trump talked on the phone with his Egyptian counterpart Abdel Fattah al-Sisi on Saturday. It was the first time both leaders had spoken since the former’s inauguration on 20 January, and just three days after Sisi rejected a US proposal to expel Palestinians from Gaza to Egypt.
Statements by the White House and the Egyptian Presidency about their conversation did not refer to Trump’s expulsion plan for Gaza.
Nevertheless, speculation is rife in Cairo about the possible toll that Egypt’s rejection of the proposal could have on its relations with the US in the future.
These ties have had their ups and downs over the years, but Trump’s first term in office was marked by improved ties with Cairo after four years of tension with the Barack Obama administration, which was angry at the 2013 military coup against Islamist president Mohamed Morsi and Egypt’s poor human rights record.
Trump, who cited “good chemistry” with Sisi in 2016 and famously referred to him as his “favourite dictator”, last week described the Egyptian leader as a “friend” of his.
He expressed confidence that Sisi would do something to help the Palestinians of Gaza live safely and away from violence.
Answering a question on Thursday about whether the US would impose tariffs on Egypt and Jordan for refusing to take in Gaza refugees, the American president doubled down on his proposal, saying the two countries would do it because his country helped them in the past.
This puts the Egyptian president in a precarious situation.
On the one hand, Sisi does not want to anger Trump. On the other, it would be difficult to change tack on an issue Egypt has taken a firm stance on since Israel’s war on Gaza began, namely the displacement of Palestinians from Gaza to Sinai, which he has called a “redline”.
On 29 January, Sisi reiterated that the planned transfer of Palestinians from Gaza was a form of “injustice” his country cannot participate in. The Egyptian president’s rejection is grounded – among other things – in the firm opposition by the Egyptian public to this plan.
If Cairo were to acquiesce to accepting Palestinian refugees as part of their forced displacement, Sisi would not be able to guarantee that the public, or indeed the military, would remain silent.
Nonetheless, analysts in Cairo believe his rejection will be consequential, especially with Trump showing no sign of budging on his position to settle the Palestinian-Israeli conflict in his own way.
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Tightening the noose
Egypt’s dependence on hot money, loans from international crediting institutions, and foreign currency deposits from fellow Arab states are where American leverage could interfere in the coming period to make life difficult for Cairo.
The populous Arab country has been struggling economically for almost a decade now, having initially reeled under the impact of terrorism and the effects of Covid-19, and then suffering the impact of Russia’s invasion of Ukraine and Israel’s war on Gaza.
In addition, Houthi attacks against ships transiting the Red Sea to and from the Suez Canal reportedly cost Cairo $7 billion in lost revenues in 2024.
If Trump succeeds in convincing hot capital investors and fellow Arab states to withdraw their money from the Central Bank of Egypt, the US could put a great deal of pressure on Cairo, exacerbating Egypt’s economic problems.
With an economic noose tightening around Egypt, Cairo might be forced to accept at least some version of the proposal to displace refugees from a depopulated Gaza Strip.
Any additional economic deterioration in Egypt, however, could have severe political, security, and social ramifications for both the country itself and the wider region.
Egypt’s strategic importance has fuelled international economic support over the years, including from the European Union, which considers it a cornerstone of regional stability, analysts in Cairo say.
“This is why I don’t expect Trump to play any role in undermining the Egyptian economy in the future,” Alia al-Mahdi, the former dean of the College of Economics and Political Science at the Cairo University, told The New Arab.
“Egypt is a longstanding ally of the US and its economic instability will be dangerous for the region,” she added.
Security and stability
Trump’s reaction to Egypt’s categorical rejection of his transfer proposal for Gaza cannot be offhand.
Egypt is a main party to the American security strategy in the region, possessing a powerful army that is seen in Washington as an advantage for regional stability.
Together with being the first Arab country to make peace with Israel in 1979, Cairo is seen as a valuable partner by the US in counterterrorism efforts.
It has also been instrumental in mediating peace talks between Palestinians and Israelis over the decades, with its contribution to the latest ceasefire deal between Hamas and Israel helping it acquire ever greater importance for US policymaking.
Perhaps the US Department of State’s latest decision to issue a waiver for Egypt, along with Israel, from Trump’s order to pause all foreign development assistance for 90 days is an indication of Egypt’s importance to the US.
Egypt has been receiving approximately $1.5 billion in military and economic aid from the US since signing the 1979 peace treaty with Israel. While most of this aid goes for the purchase of US arms and spare parts, it oils the wheels of Egypt’s military upgrade, which best serves Egypt’s security interests.
Whether Egypt’s rejection of Trump’s Gaza displacement proposal will impact this US assistance in the next four years remains to be seen.
There is also speculation about whether it would affect other diplomatic issues, including Trump’s involvement in the row between Egypt and Ethiopia over the latter’s construction of a dam on the Blue Nile, Egypt’s main source of fresh water.
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Before the end of his first term in 2020, Trump was close to helping the two sides hammer out a deal on the construction and operation of the dam.
After the failure of talks between the two countries, the US president seemed to back Egypt’s right to defend itself against the impact of Ethiopia’s infrastructure project, including by suggesting that Cairo may “blow up” the dam.
Trump and Sisi discussed the dam issue on Saturday, with some reports indicating that it was used to pressure Egypt over the forcible relocation of Palestinians.
“I believe the US president would continue to back Egypt in this row,” Mona Omar, a former assistant to the Egyptian foreign minister, told TNA.
“Things have changed on the dam issue since Trump’s first term, but as a man who has branded himself as a ‘peacemaker’, Mr Trump – I think – will try to help Egypt and Ethiopia reach consensus on the dam which is a fact on the ground now,” she added.
Fine line
Sisi has been vocal against Israeli plans to depopulate Gaza and displace its residents, once warning that the displacement of Gaza’s population into Sinai would imperil peace with Israel.
Nonetheless, Trump’s proposal is forcing the Egyptian president to walk a fine line between pleasing the American leader, and jeopardising his country’s security and allowing the liquidation of the Palestinian cause.
To avoid angering Trump and opening the door for the transfer of Gaza’s population, Sisi has thrown the ball into the court of public opinion, attributing his rejection of the plan to widespread popular opposition.
Last week, he said Egypt’s population of over 100 million would go out on the streets to object to the displacement of Gaza’s residents if he approved Trump’s plan.
So far, Egypt’s parliament, professional unions, religious establishment, and political parties have expressed opposition to the proposal.
Public anger has also started to translate into protests in Cairo and other cities, including in Sinai, where thousands of people protested near the Rafah crossing on the border with Gaza on Friday.
Saleh Salem is an Egyptian journalist
