Geopolitics of Small Islands: The Stalemate of Tiran and Sanafir’s Transfer Impacts Egypt-Saudi Relations

In June 2017, Egyptian President Abdel Fattah el-Sisi consented to ceding sovereignty over the islands of Tiran and Sanafir to Saudi Arabia. However, nearly six years on, the issue remains unresolved. The deadlock is not primarily due to widespread public criticism and rejection among Egyptians of relinquishing the islands to Saudi Arabia, as they consider them to be a part of Egypt’s territory. Rather, the impasse is a result of political, economic, and financial differences between Riyadh and Cairo which have been simmering over the past few months. El-Sisi is purportedly hindering the transfer of sovereignty over the islands to exert pressure on Saudi Arabia and achieve economic and financial benefits that could alleviate Egypt’s severe economic crisis. Whether this strategy will succeed in securing Sisi’s desired benefits from Saudi Arabia remains to be seen.

The Importance of the Two Islands

Tiran and Sanafir, two uninhabited islands situated approximately four kilometers apart in the Red Sea, hold immense strategic significance owing to their control over the entrance to the Gulf of Aqaba, which serves as the primary conduit for maritime traffic to the ports of Aqaba in Jordan and Eilat in Israel. The Straits of Tiran, a stretch of considerable importance that facilitates Israel’s access to the Red Sea, lie in close proximity to Tiran island at the entrance to the Gulf of Aqaba, which serves as the only port for land-locked Jordan, making it a crucial access point for the nation’s maritime trade activities. Tiran island is the closest of the two islands to the Egyptian coast, situated at a mere six kilometers’ distance from the resort town of Sharm el-Sheikh that overlooks the Red Sea. The geographical location of these islands renders them key assets in the region and subject to varying degrees of political interest and contention.

The ownership of Tiran and Sanafir is a contentious issue with conflicting accounts over which country should have sovereignty over the two islands.

The ownership of Tiran and Sanafir is a contentious issue with conflicting accounts over which country should have sovereignty over the two islands. While some accounts confirm Egypt’s ownership of the islands, others indicate that they belong to Saudi Arabia. Such differences in interpretation have made the issue a bone of contention between the two countries. The history of the dispute dates back to the early 20th century when the Ottoman Empire established its eastern borders and excluded Tiran and Sanafir from Egyptian territory. In 1906, the British-imposed delimitation of the Egypt-Palestine border granted Egypt formal political recognition and control over the Sinai including the islands of Tiran and Sanafir.

In the 1950s, Egypt and Saudi Arabia entered into an agreement that saw the two islands transferred to Egypt. The transfer was motivated by concerns that Israel, which was engaged in a military conflict with the Arabs, might seize the islands, which could threaten the security of both Egypt and Saudi Arabia. Egypt subsequently established its military bases on the two islands for several decades which enhanced the public sentiment that they are part of Egyptian territory. During the Tripartite Aggression in 1956, where Israel, France, and the UK attacked Egypt as a response to former President Gamal Abdel Nasser’s decision to nationalize the Suez Canal, Israel seized control of the two islands and the 1967 war broke out after Nasser closed the Strait of Tiran, preventing Israel from accessing the Red Sea. During the conflict, Israel occupied the two islands and returned them to Egypt after signing the 1979 Egypt-Israel Peace Treaty. However, the issue of the ownership of the two islands remained unsettled until Sisi’s decision to give them away to Saudi Arabia as part of a bilateral agreement to draw the maritime boundaries between the two countries.

The strategic importance of Tiran and Sanafir islands is paramount due to their geographical location which carries considerable political implications for their control. Located at the mouth of the Gulf of Aqaba, a crucial pathway linking Jordan and Israel to the Red Sea, these islands serve as a vital nexus for shipping and trade, and are among the few waterways that connect Asia and Europe. For Egypt, the islands are of utmost importance for maintaining its strategic interests in the Suez Canal, the world’s most important international trade routes, and in the Sinai Peninsula. With Egypt in charge of the strategic Straits of Tiran, which link the Red Sea to the Gulf of Aqaba, Tiran island, in particular, holds significant strategic value for Egypt. Similarly, the two islands possess geostrategic advantages for Saudi Arabia, as their control would enable Riyadh to govern the entrance to the Gulf of Aqaba and enhance its position as a regional power. Moreover, this move would contribute to the political and economic ambitions of Saudi Crown Prince Mohammed bin Salman who aims to assert himself as a regional leader.

Beyond the Current Deadlock

Despite being ratified by Sisi six years ago, the issue of ceding Tiran and Sanafir to Saudi Arabia still raises issues between Riyadh and Cairo. Recent reports indicate that Sisi has halted the transfer of the two islands, citing technical differences concerning the installation of surveillance cameras to replace the multinational forces stationed on them as part of the Egypt-Israel peace agreement in order to maintain the demilitarization of the two islands. However, underlying reasons for Sisi’s reluctance extend beyond these technical issues and at the core lies a dispute between Egypt and Saudi Arabia over a financial and economic support package that Sisi was expecting from Mohammed bin Salman. This support package is meant to assist Egypt in dealing with the severe economic crisis it currently faces with unprecedented levels of inflation, foreign debt, and poverty. Multiple high-ranking Saudi officials have highlighted that such aid would not be provided without conditions. For instance, Saudi Finance Minister Mohammed Al-Jadaan’s comments at the Davos Forum in January 2023, where he indicated that Saudi Arabia is changing its financial and economic assistance policies toward the country’s allies, were widely interpreted as alluding to Egypt, which has been heavily dependent on Saudi assistance since the military overthrew former President Mohamed Morsi in 2013. In fact, when Sisi announced the transfer of the two islands to Saudi Arabia back in 2016, it was accompanied by massive financial and economic agreements that were signed between the two countries during a five-day official visit of Saudi King Salman bin Abdelaziz to Cairo in April 2016. These agreements included nearly $22 billion in economic, financial, and oil aid which led Egyptian analysts and commentators to speculate that the transfer of the two islands was a component of the financial package. It is worth noting that over the past decade, Saudi Arabia has pumped billions of dollars into Egypt for political, strategic, and economic reasons.

Recent reports indicate that Sisi has halted the transfer of the two islands, citing technical differences.

However, Sisi’s heavy reliance on external financial and economic assistance has raised concerns among Saudi officials regarding the long-term viability of the Egyptian economy. For Saudis, Sisi’s dependency on foreign debt and external financial assistance has a damaging impact on the Egyptian economy, which is afflicted with significant structural issues, particularly given the unprecedented level of external debt, as well as the lack of foreign investments. Additionally, the Saudis are apprehensive about the expansive role of the Egyptian military in the economy, which has a profound impact on the private sector and foreign investments. To address these concerns, the Egyptian government has signed a deal with the International Monetary Fund (IMF) that mandates the curbing of the military’s economic activities and providing greater space for the private sector in exchange for a $3 billion loan. The Saudi government also has begun to re-evaluate its financial aid to Egypt, with plans to shift its emphasis from grants and deposits to investments in companies and government institutions. This policy shift has led to tensions between the two countries in recent months, as evidenced by a media spat involving prominent figures from both sides. Nevertheless, tensions have subsided in light of recent statements by officials from both countries.

The Israeli Factor

As a signatory to the peace treaty with Egypt in 1979, Israel is a crucial party in the transfer agreement of Tiran and Sanafir from Egypt to Saudi Arabia. Hence, its consent was necessary for the transfer to take place and become a reality. In fact, Israel welcomed the Egyptian-Saudi deal on Tiran and Sanafir and gave its blessing to it as it entails several significant gains for Tel Aviv. Specifically, the agreement between Cairo and Riyadh paves the way for the formal normalization of relations between Saudi Arabia and Israel, a development that would have significant strategic implications for both countries and the entire Middle East region. Also, transferring sovereignty over the islands of Tiran and Sanafir from Egypt to Saudi Arabia means that Riyadh will assume the responsibility of upholding the treaty’s provisions regarding Israeli shipping through the Straits of Tiran. In 1967, the Straits of Tiran were closed by Egypt, which subsequently led to a military confrontation with Israel. In 1979, Egypt signed a peace agreement with Israel, wherein it pledged to uphold the principle of unhindered navigation in Aqaba and Eilat. Saudi Arabia has committed to honoring this pledge subsequent to its acquisition of the two islands. It is worth noting that unlike Egypt, Riyadh has no official peace agreements or treaties with Israel and, on the surface at least, lacks diplomatic relations with it. Further, the agreement between Saudi Arabia and Israel will result in an intensification of economic and security cooperation between the two nations, akin to the outcome of the United Arab Emirates (UAE) and Israel following the signing of the Abraham Accords in 2020. Israel is counting on the Biden administration to broaden the scope of the Abraham Accords to include other Arab countries, particularly Saudi Arabia.

US Pressure

The Biden administration is keen on mediating an agreement between Egypt, Saudi Arabia, and Israel regarding the transfer of the two islands. This agreement is crucial for the administration as it could bolster the Abraham Accords, which were initiated by former President Donald Trump and resulted in the normalization of relations between Israel and four Arab countries. Normalizing diplomatic relations between Saudi Arabia and Israel could be a significant achievement and advance Israel’s integration into the region, enhancing its position as a regional power, thereby becoming one of President Biden’s lasting legacies in the region.

Therefore, the Biden administration has been diligently working on a normalization “road map” between Israel and Saudi Arabia over the past year, with the islands transfer deal serving as a key component. This effort has involved urging both Egypt and Saudi Arabia to finalize the agreement. During President Biden’s visit to the Middle East in July 2022, he secured Israel’s approval for the deal and sought to announce it during his trip to Saudi Arabia. However, tensions between Washington and Riyadh, as well as Sisi’s reluctance to proceed, hampered the finalization of the agreement. Moreover, the issue of the two islands deal was raised again in December 2022 by US National Security Advisor Jake Sullivan during a conversation with Sisi on the sidelines of the US-Africa summit in Washington. Sullivan emphasized the Biden administration’s desire for the necessity to implement the deal.

The Biden administration has been working on a normalization “road map” between Israel and Saudi Arabia, with the islands transfer deal serving as a key component.

Further, while economic and financial tensions between Saudi Arabia and Egypt have complicated the two islands transfer process, some reports suggest that Sisi delayed handing over the islands to Saudi Arabia in order to exert pressure on the US to release military aid that had been frozen for two years, and to prevent criticism of Egypt’s human rights record. Egypt receives approximately $1.3 billion in annual military assistance from the US, with around 10 percent ($130 million) of this aid having been suspended due to concerns raised by certain members of Congress regarding Egypt’s human rights abuses. Nevertheless, in order to bring the islands transfer deal to fruition, the Biden administration appears willing to revisit both the issue of suspended military aid and concerns about human rights abuses. It is important to note that the two islands are currently under the supervision of a multinational force of observers (MFO) led by the US, in accordance with the 1979 peace agreement between Egypt and Israel. The MFO was supposed to leave the islands in December but the situation remains unresolved.

In summary, it seems that Sisi’s regime is utilizing the issue of Tiran and Sanafir islands to pursue political, economic, and financial advantages. The regime is likely to proceed with the transfer of the two islands to Saudi Arabia in the coming months after securing these gains and it remains to be seen what the long-term implications of this issue will be; not only for Egypt and Saudi Arabia but also for the entire region.

The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.

Featured image credit: Shutterstock/Viktor Prymachenko