Engagement of Arab Gulf States in Egypt and Tunisia: Rationale and Implications

Expert Conference

Date
26 May 2015
Time
-
Event location
DGAP, Berlin, Germany
Invitation type
Invitation only

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What do these developments mean for German and European foreign policy in the region? Is there a possibility of cooperation between Germany/Europe and the Gulf? These were some of the questions discussed in a day-long expert conference organized by the DGAP’s Middle East and North Africa program in cooperation with the German Federal Foreign Office. The event took place on May 26, 2015.

The conference was part of a DGAP project dealing with the Gulfs’ engagement in the two North African countries  and supported by the German Federal Foreign Office. A substantial DGAP publication on the topic can be examined here.

While Egypt’s and Tunisia’s future paths are first and foremost determined by domestic actors, social dynamics, and specific power structures, external actors are playing an increasingly important role in shaping politics and developments in the two countries. Saudi Arabia, Qatar, and the United Arab Emirates (UAE) have become influential actors through their widespread financial investments in economic development and stabilization programs as well as direct and indirect financial and political support of different political powers in Egypt and Tunisia.

The conference was divided into four panels, designed to examine specific strategies and interests guiding the foreign policies of Saudi Arabia, the UAE, and Qatar, to shed light on major sectors and fields of involvement in Egypt and Tunisia, to scrutinize the political as well as economic implications of these endeavors and projects, and to assess the potential for cooperation between Gulf and German/European partners. In addition to German experts, specialists from the Gulf countries as well as from Egypt and Tunisia provided insight into the developments in the region.

The first panel examined the major determinants of the foreign and regional politics pursued by Saudi Arabia, the UAE, and Qatar. All three countries’ foreign policies toward the North African countries are significantly determined by their own domestic conditions and regional rivalries and serve as an important nation-branding tool. A major point of concern was the increasing militarization of Gulf politics, especially with regard to the current conflict in Yemen. This militarization is seen as being rooted in the Gulf States’ perception of increasing threats surrounding the Arabian Peninsula and the international community’s decreasing willingness to become militarily involved in the region.

The second panel analyzed the main projects and sectors of recent Gulf support in Egypt and their impact on the country’s political and economic processes. While a large share of the financial support from the Gulf states took the form of grants and loans deposited in the Central Bank of Egypt to prevent the country’s insolvency, participants broadly agreed that Gulf investments will not lead to trickle-down effects. Moreover, they were not only geared at stabilizing Egypt economically and protecting Gulf businesses in the country but also aimed to influence domestic politics. Panelists also pointed out that many of the promises made to Egypt were empty, and that it was crucial to access and integrate Egypt’s large informal economic sector for long-term sustainable economic development. The UAE is expected to continue its support for Egypt, pushing also for political reforms that directly affect UAE investments and businesses in the country, while Saudi Arabia is confronted with its own internal constraints. With the decline in oil prices, it is expected to reduce its support for Egypt and focus more on project-based assistance rather than providing generous loans and grants as before. Overall, Gulf investments are mostly concentrated in real estate, tourism, energy, agriculture and agribusiness, and transport.  

The third panel looked at Gulf engagement in Tunisia and its effect on the country’s political and economic developments. The volume of Gulf investments in Tunisia is much smaller than in Egypt due to Tunisia’s lesser significance for the Gulf states. Despite some projects, Gulf investments in Tunisia have thus far borne little fruit. Politically, the UAE and Saudi Arabia are less worried about the Ennahda party’s role in Tunisia’s political future than about the Muslim Brotherhood’s role in Egypt. Ennahda was not seen as having a transnational agenda, and has proved willing to cooperate with other Tunisian political players and movements in the political transition process. Economically, the Gulf states were not as anxious about Tunisia’s economic stability as they were about Egypt’s, as they had relatively few investments in Tunisia. While Tunisian officials are certainly interested in attracting investments from the Gulf, they are not willing to grant them any preferential treatment (as is the case in Egypt or Lebanon, for example). This was considered a major obstacle to future cooperation.

The fourth and final panel critically discussed recommendations and outlook for German and EU engagement and possible cooperation with the Gulf states. While there was debate over the shortcomings of the Deauville Partnership, it was agreed that a closer coordination between the Gulf states and German/European partners was desirable and that a political dialogue with the Gulf needs to be deepened to increase awareness about the Gulf’s interests and needs, to identify overlapping interests, and to better align actions.

About fifty guests took part in the May 26 event, which was held in English under the Chatham House Rule.

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