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Iran and Egypt: a complicated tango?

18 October 2012
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With the tectonic shifts in the political landscape of the Middle East yet to settle, much still hangs in the balance. For Iran, this presents an opportunity to enhance its standing and gain new influence as countries such as Egypt make the transition towards a more democratic system of governance, which inevitably entails greater influence for Islamist groups and parties. The ruling elite in Iran was delighted when the Arab Spring increased the prominence of the Muslim Brotherhood in Egypt, and even more so when Mohamed Morsi was elected president of Egypt earlier this year. Tehran believed it would finally get the chance to establish a working relationship with a major country in the region whose leadership shared some of its Islamist values. President Morsi, however, has turned out to be more reticent.

Upending the old order does not automatically convert old enemies into new friends. The Egyptian-Iranian relationship is being redefined, but it will be no less complicated than before. All the intricacies of this fraught relationship were exposed during the Summit of the Non-Aligned Movement (NAM), held in Tehran in August. There, President Morsi ruffled his hosts’ feathers by criticising Syrian President Bashar al-Assad, a staunch ally of Iran. But Morsi’s speech should be read as a cautious recalibration of the relationship rather than a categorical rejection. This was also how it was eventually understood by Tehran, who refrained from confrontation with Morsi over Syria and instead focused on furthering diplomatic and trade ties with Egypt.

Understanding the Egypt-Iran relationship

The relationship between Egypt and Iran has been rocky throughout the post-Second World War period. While maintaining diplomatic relations, the two countries often found themselves at odds with one another because of their respective ideological allegiances. Relations between Nasser’s revolutionary Egypt and Iran began to sour when Iran’s Prime Minister Mohammad Mossadegh was toppled in a CIA-backed coup in 1953 and the Shah became increasingly dependent on the US. Nasser saw this and the Shah’s de facto recognition of Israel as a betrayal. Nasser’s support for anti-Shah groups then formalised the split.

When Anwar Sadat came to power in October 1970, Egypt adopted a more westward-looking foreign policy which naturally brought it closer to the monarchy in Tehran. This close relationship and Sadat’s signing of the Camp David Accords became liabilities in the eyes of the newly established Islamic Republic. When Sadat was assassinated in October 1981, a street in Tehran was named after the ringleader of the assailants. The two states broke off diplomatic relations and have yet to restore them.

Relations did not improve as Egypt supported Iraq during the 1980-1988 Iran-Iraq War, but following Khomeini’s death, some Iranian political figures hoped for an improvement in relations with Egypt. In an interview conducted earlier this year, former President Ali Akbar Hashemi Rafsandjani said he “wanted to re-establish ties with Egypt, but could not”. Throughout his presidency, Mohammad Khatami tried to develop trade relations with Egypt as well, but it was really only after the revolution which ousted Mubarak in February 2011, that Iran found an opportunity to try to mend fences.

In a post-Mubarak world

On 22 February 2011 and for the first time since 1979, Iran sent two warships through the Suez Canal to Syria for a training exercise. In its request for permission, Iran said the ships would have no military equipment, nuclear material or chemicals on board and Egypt subsequently allowed the ships safe passage. Israel called this an Iranian provocation that ‘Israel cannot forever ignore’. A year later, Iran repeated the action. A further series of exchanges between Iran and Egypt suggested relations were on the mend. In April 2011, the Egyptian government’s spokesperson stated: ‘The former regime used to see Iran as an enemy, but we don’t.’ That same summer, an Egyptian delegation visited Tehran and met President Mahmoud Ahmadinejad and Foreign Minister Ali Akbar Salehi. Ahmadinejad showered the Egyptians with praise, saying: “Egypt is cherished and we will invest there with all our weight (…) we are more than ready to put all our expertise and capabilities at Egypt’s service. Egypt’s prosperity is prosperity for Iran, and vice versa.” This was followed by a visit to Cairo by an Iranian delegation made up of politicians and businessmen.

At the same time, Egypt’s relations with Israel were souring. Egypt blamed Israel for starting hostilities that led to violence in the Gaza strip in March 2012 and, in spite of the 33-year-old peace treaty, an Egyptian parliamentary resolution stated: ‘Egypt will never be the friend, partner or ally of the Zionist entity [Israel] which we consider as the first enemy of Egypt and the Arab nation.’ In early 2012, after winning the first round of Egyptian elections, the Muslim Brotherhood raised the possibility that the peace treaty with Israel would no longer be binding. This made Israel nervous and raised the spectre of Egypt turning to Iran in one way or another.

But the new Egyptian government played an intricate balancing act to avoid alienating its allies. It maintained an ambiguous stance via-a-vis Iran: In July 2011, while courting Gulf states at a meeting of the Arab League, the then Egyptian foreign minister and newly elected Arab League chief, Nabil Al-Arabi said: “Relations with Iran won’t be at the expense of Egypt’s relations with the Arab Gulf, or [at the] expense of [Gulf states’] security and stability.” This helped to woo Gulf Cooperation Council members, who individually pledged significant economic assistance packages to Egypt, including $3 billion from the United Arab Emirates and $4 billion from Saudi Arabia, likely in an effort to coax Egypt away from Iranian influence. To Iran’s dismay, this was followed by assurances from the Muslim Brotherhood that despite recent statements, the peace treaty with Israel would be upheld.

President Morsi in power – a change in policy?

When Morsi, one of the leading figures of the Muslim Brotherhood, won the presidential elections in June 2012, Iran rushed to congratulate him and called his victory one of the ‘final stages of the Islamic Awakening’. But when Iran’s Fars News Agency published an interview in which the new president allegedly called for closer ties with Iran, Morsi was quick to deny it. It seems Tehran wrongly assumed that Morsi’s victory guaranteed a rapprochement with Egypt. Although a rebalancing towards Iran seems to be in the works, it is clearly not on a scale or at the speed hoped for in Tehran.

Nevertheless, Iran continued its efforts to strengthen relations and invited Morsi to attend the summit of the Non-Aligned Movement (NAM) that Tehran was hosting in August. After much suspense, it was announced that Morsi would attend, but only for a few hours on his way back from a visit to China. The decision – like the meeting itself – was criticised as implying endorsement of the legitimacy of the Iranian regime. For example, Thomas Friedman of the New York Times wrote a scathing piece stating: ‘(Morsi) is lending his legitimacy to an Iranian regime that brutally crushed just such a movement in Tehran. This does not augur well for Morsi’s presidency. In fact, he should be ashamed of himself.’

The problem was that Egypt, which had held the NAM presidency for three years, now had to pass it onto Iran. In such a situation, it is custom that the state handing over the presidency is present when the first meeting is held in the successor state. Declining the invitation would have been a strong anti-Iran statement – stronger than Morsi was willing to make at a time while he was still formulating the new government’s foreign policy. He wanted to keep his options open: “We need to establish relations with all countries worldwide… Egypt is a pivotal country, and we want to play the role Egypt deserves to play”, said the government’s spokesperson in August.

In less than four months, Morsi has demonstrated that his foreign policy is not ideological, but pragmatic and intended to secure Egypt’s future, especially economically. Morsi’s first visit was to Saudi Arabia, which has offered considerable financial assistance to Cairo since the uprising. On his first trip outside the Middle East, he visited China, to secure financial investments in Egypt and deepen political exchanges. The trip underlined that the Middle East views Asia, and particularly China, as a new important political and economic partner. It remains to be seen how many of these diplomatic forays will yield tangible benefits for Morsi and Egypt.

Morsi’s visit to Tehran followed the same pattern. For him, the relationship with Iran – a regional power too big to ignore – does not yet need to be clearly defined. Morsi chose to go to Tehran because it was the lesser of two evils. He addressed criticism by choosing to spend the least amount of time possible in Tehran and declined an invitation to visit Iran’s nuclear sites.

Most significantly, Morsi, in a statement made at the opening of the summit, stuck to his view that Assad must step down. His voicing of support for the Syrian uprising was a clear snub to Iran, which has made clear that it is supplying the Syrian regime with political, military and technical assistance in its battle against the rebels. In addition, he demonstrated that from now on Egypt would conduct a foreign policy that was independent of foreign constraints and put its own interests first. He had outlined this vision in a piece written before he was elected: ‘Egypt must emerge again…to occupy its rightful place on the world stage…Egypt's destiny is to lead. If I am elected on Sunday, I will make sure that Egypt fulfils its destiny.’

Initially, Iran panicked: coverage of Morsi’s speech was contradictory and one interpreter mistranslated it, replacing Syria with Bahrain so that his comments were in line with the regime’s rhetoric. Morsi also received criticism from an Iranian official who labeled him politically immature. But Iran rapidly reviewed its options and instead advertised Morsi’s attendance – and that of Ban Ki-Moon, UN Secretary-General (who was also under pressure not to attend), as a success. After all, what better proof that the Islamic Republic is not isolated? It is likely Iran expected some negative press, but this was offset by the benefits of attracting such high-profile guests to their event. A few days later, an Iranian official said the speeches showed Iran’s ‘high tolerance’ for criticism. And despite Morsi’s snub, Iran continued to call for cooperation with Egypt.

Regional ambitions and realities

After sanctions imposed in July by the EU halved Iran’s oil exports, Tehran has been scrambling to find new buyers for its oil. Egypt looked like a potential market after it stated it had ‘no objections’ to buying Iranian oil. In September 2012, Iranian Oil Minister Rostam Qasemi said Iran was in talks with Egypt to sell two million barrels of oil (worth approximately $200 million). But a week later, Morsi’s government changed its mind and denied there had ever been such talks. During that time, the US Treasury reiterated that anyone doing business with Iran’s energy sector would be barred from accessing the US financial system, unless they had obtained waivers, which Egypt had not. It is likely once Egypt realised this, it was not willing to risk putting its US-provided debt relief amounting to $1 billion in jeopardy just to buy Iranian oil.

A more pressing issue for all parties is Syria. Here Morsi’s cooperative efforts to find a regional solution to regional crises reveal his belief in the importance of Egypt and its relations with other countries in the region, including Iran. Besides pledging financial and political support for Syrian refugees, the international stalemate on what to do in Syria prompted him to announce an initiative to halt the violence in August. The most notable aspect of his plan was that it would involve cooperation by a quartet of states that are not in the habit of working with one-another: Egypt, Iran, Saudi Arabia and Turkey. Among the four, Iran is the sole supporter of the Assad regime. A spokesman on behalf of Morsi argued that Iran “could be part of the solution rather than part of the problem [because] if you want to solve a problem, you have to gather all the parties that have a real influence on the problem”. In June, Kofi Annan, the UN’s envoy, called for the inclusion of Iran in a ‘contact group’, which would work to de-escalate the crisis (more recently his successor Lakhdar Brahimi appealed to Iran to help implement a cease fire in Syria). But US Secretary of State, Hillary Clinton rejected this, “The red line for us was the inclusion of Iran” she said. By involving Iran in the quartet, Morsi not only capitalised on Iran’s desire to be part of a regional solution to the Syria crisis, but also showed that he was concerned with action rather than political or religious allegiances.

Morsi’s outreach to Iran despite their differences, demonstrated that he planned to conduct a pragmatic but robust foreign policy. Morsi is aiming to re-establish Egypt’s former position as a regional power. But he will do so by keeping his options open, courting all those willing to work with Egypt. Morsi will uphold existing agreements and strategic relationships with countries such as Israel and the United States, while breaking with Mubarak’s very pro-western foreign policy. In an interview with the New York Times while in the US, Morsi made it clear that he would not be a US puppet but was nevertheless keen to continue relations with Egypt’s ‘real friend’.

But Morsi will also continue to engage in trade talks and political dialogue to solve regional problems with Iran. According to a former Egyptian ambassador, Egypt sees Iran as ‘a modern Middle Eastern state with a rich heritage, strategic location in the vicinity of generous oil and gas resources, and an active foreign policy’. This is not a country that can be ignored. But Morsi also does not want to end up being seen as veering too close to Tehran. Thus, despite representing the Muslim Brotherhood, an Islamist party, his foreign policy has so far not been primarily determined by ideological convictions.

Finally, Morsi’s foreign policy will also be geared towards both preserving his popularity at home, and more importantly, boosting the ailing Egyptian economy. An increase in unemployment coupled with falling investment and structural problems, has led to growth in real GDP of only 1.5% according to the IMF. To that effect, Morsi will continue to reach out to the West, China and the Gulf countries, to secure financial assistance to overcome Egypt’s rising economic problems.

But it is likely that Morsi will be faced with numerous bumps along the road. Conducting a balancing act in an effort to keep all of Egypt’s allies and neighbours happy will not be easy. In fact, it will undoubtedly make all parties nervous about Morsi’s true intentions. This is certainly true regarding the US. Following a spate of protests in the Middle East in September, the US decided to hold off on making a final decision on aid to Egypt (which previously amounted to roughly $1.5 billion a year). In the region, most of Egypt’s neighbours have noted the change in its foreign policy. The trick for Morsi now will be to ensure that his juggling act does not end up penalising Egypt’s current relationships.

As for Iran, given its current situation - weakened economically by sanctions and politically by changing regional dynamics and continued international isolation - it is content to accept Morsi’s statements on Syria, if it means that the two countries can establish a new pattern of cooperation. Iran jumped at the occasion to demonstrate that it is able to accept criticism, even when it is delivered on its soil. If Iran is able to capitalise on Egypt’s newfound responsiveness, and get a concrete deal on oil sales for example, then it will have won a new partner helping it to mitigate the effect of sanctions. In the meantime, Iran can at least argue, plausibly, that it is not as isolated as the West would like it to be.

The developments in the relationship between Egypt and Iran will complicate matters for those negotiating with Iran on its nuclear programme. Should Iran feel as though it is getting something concrete out of its rapprochement with Egypt, then it will feel less isolated and will likely be emboldened in its desire to stand up to the West. With all this in mind, the EU must approach the evolving Egyptian-Iranian relationship with caution and pragmatism. Regional, if not always literal, neighbours like Egypt will probably never join the ‘isolate Iran’ campaign as enthusiastically as those participating from a safe distance. This should not necessarily be seen as a serious problem but rather a reality that can allow for a constructive development of ties that can ease some of the tensions that fuel many of the problems that affect people in the region and beyond.

Dina Esfandiary is a Research Associate with the Non-Proliferation and Disarmament Programme at the International Institute for Strategic Studies in London.