Egypt’s Looming Economic Crisis, and Why It Should Worry Israel

March 16, 2023 | Eran Lerman
About the author: Eran Lerman is vice-president of the Jerusalem Institute for Strategic Studies and teaches Middle Eastern and Islamic Studies at Shalem College.

During the past few months, the value of the Egyptian pound has plummeted, while Cairo struggles to impose austerity measures to prevent a fiscal catastrophe. Eran Lerman argues that further economic deterioration in the most populous Arab country could threaten the Jewish state:

[T]he continued stability of the political order in Egypt is among Israel’s most important national interests, if only because the alternative—the collapse of governance in a nation of 105 million on our border and possibly a full or partial takeover by radical totalitarian Islamists in the Sinai Peninsula and/or Egypt—would itself constitute a grave danger to Israel’s national security.

Moreover, President Abdel Fattah el-Sisi’s regime—despite points of friction from time to time—has positioned itself as a constructive actor when it comes to Arab-Israeli normalization, joining the Negev Forum (alongside the U.S., Israel, the UAE, Bahrain, and Morocco) and serving through its intelligence service as an effective go-between with Hamas on a range of issues, including the fate of Israelis and bodies held in Gaza. Egypt played a role in the Aqaba emergency meeting [last month to help reduce terrorism from the West Bank], and will host the next round.

While it is true that Cairo’s position on the Palestinian question remains unchanged, and its posture toward Israel in UN institutions remains quite hostile, cooperation in other aspects of the relationship, including the war on terror in Sinai, is closer than ever. The regime now claims to have achieved a decisive outcome in the struggle against the “Sinai Province” of Islamic State—to some extent, as it is willing to admit in private, with Israel’s help.

As Lerman goes on to explain, Jerusalem can assist Cairo in finding a way out of its current predicament. And, although the causes of Egypt’s economic woes are unlikely to dissipate anytime soon, there are a few reasons for hope.

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