The Limits on Egypt’s Gaza “Containment Strategy”

On May 12, Egyptian Foreign Minister Sameh Shoukry stated that the peace agreement with Israel “has been Egypt’s strategic choice for 40 years, and it represents a main pillar of peace in the region.” That policy is very unlikely to change despite the failure of the Biden administration to pressure Israeli and Hamas to accept the three-stage ceasefire Washington proposed on May 31, with Egypt’s full support. For whatever one thinks of Shoukry’s “pillar of peace” formulation, it reflects Cairo’s calculation that, at the very least, managing the precarious and often bloody status quo in Gaza has allowed Egypt to focus on the threat of jihadist forces in the Sinai. That threat remains, even though President Abdel Fattah Al-Sisi declared in January 2023 that Egypt was “able to vanquish” the Islamist insurgency. Thus, while the Gaza conflict represents the single greatest foreign policy test that Egypt has faced in decades, Sisi and his generals are determined to pursue what Egyptian officials call a “containment strategy” that is designed to prevent the conflict in Gaza from spilling across the border into the badlands of Sinai.

One measure of Egypt’s resolve to sustain this strategy is that it has tolerated Israeli actions that Egyptian officials repeatedly warned could trigger negative responses, including a suspension of the peace treaty. For Cairo, the reddest of lines would be an Israeli bid to push into the Sinai the million plus Palestinians who had fled to Rafah. While some 100,000 Palestinians crossed the border, Prime Minister Benjamin Netanyahu grasped the dire consequences of any mass refugee move for relations with Egypt and the United States, and thus rejected calls from ultra-hardliners to expel Palestinians or reoccupy Gaza. But Israel has brazenly ignored other red lines, as was amply shown on May 29 when Israeli troops took up positions on the Egyptian side of the 100-meter wide, 8 mile long Philadelphi Corridor separating Rafah from Egypt. Although Egyptian officials stated in January that “any Israeli move in this direction will lead to a serious threat to Egyptian-Israeli relations,” Israel suffered no consequences when it defied Cairo. Thus, while the May 27 death of an Egyptian border guard in an exchange of fire with Israeli troops—followed by the June 4 killing of three Israeli soldiers and one Egyptian officer—highlighted the rising tensions between Israel and Egypt, “containment” remains Cairo’s default option. To be sure, Egypt has very little diplomatic leverage and, as far its leaders are concerned, no other better way of balancing its multiple interests in the region.

Egypt and Israel: From Peace Treaty to Military Cooperation

Not only was Egypt’s 1979 peace treaty with Israel a seismic shift in its foreign relations; it set the stage for transforming Egypt’s domestic politics. Unlikely to ever again be drawn into another regional war with Israel, the Egyptian military shifted its ambitions to the home front by becoming a major player in the national economy. This shift was facilitated by the treaty itself, which prohibited Egypt from stationing troops in Sinai. However, in the wake of the Arab Spring and the escalating threat posed by jihadist forces in the peninsula, Israel agreed to a modification of the treaty that allowed Egypt to deploy a large number of troops in the Sinai. Moreover, Israel provided vital strategic and military assistance to Cairo, thus eventually becoming what Sisi himself acknowledged to be an unprecedented level of cooperation, one that both states viewed as a vital part of a joint counterterrorism campaign. But the rise of Hamas in Gaza and in particular its 2007 takeover, complicated Cairo’s calculations. For Sisi and his generals, Hamas represented a tepid variant of the Islamist threat it wanted to deflect or destroy. But Israeli leaders effectively tolerated if not encouraged Hamas’s rise in an effort to divide Gaza Palestinians from their West Bank compatriots. Netanyahu cemented this strategy by periodically using Israeli military air and ground forces against Hamas—a policy known as “mowing the lawn”—but eventually secured funds from Qatar to literally buy a measure of apparent if fragile stability that, as it turns out, Hamas used to prepare for its October 7 attack on Israel.

Cairo and Tel-Aviv have different if not clashing visions of Gaza’s political future.

But if the ensuing war in Gaza demonstrated that the status quo on which Israel and Egypt had relied was unsustainable, what is equally clear is that the leaders of both countries have different if not clashing visions of Gaza’s political future. Egypt has backed the Biden administration’s May 31 proposal for a three-stage ceasefire designed to free Israeli hostages and secure a permanent ceasefire that would allow a reformed Palestinian Authority to assert its leadership in Gaza, thus setting the stage for a two-state solution that Saudi Arabia backs. Netanyahu has rejected every element of this approach, thus raising very public concerns among his own military leaders as to whether he has any coherent political strategy for moving Israel beyond fighting an endless insurgency. Egypt, not to mention the United States, shares these worries, but is ultimately depending on the Biden administration to get both Israel and Hamas to accept a deal that neither actually supports. For Cairo, there is no diplomatic light at the end of the many tunnels that literally and figuratively have linked Egypt to Gaza and its suffering citizens.

Egypt’s Tunnel Visions

Indeed, the tunnel issue exemplifies the contradictions that have enveloped Egypt’s efforts to balance peace with Israel with its growing hopes to rekindle a meaningful diplomatic process on the Palestinian issue. Egyptian officials claimed that “more than 1,500 tunnels were destroyed and the border wall with the Gaza Strip has been strengthened,” thus rendering smuggling operations “impossible.” But claims by Israeli military leaders that they discovered at least 20 tunnels following the incursion into Rafah and their operations on the Egyptian side of the border have stoked theirsuspicions that,by design or default, Egypt had left many of Hamas’s tunnels intact.

Whether such fears were justified or not, it appears that Egypt had numerous and even compelling reasons to avoid a full-on assault on Hamas’s tunnels. These included the key role that the tunnels played in channeling a huge variety of goods to Gaza, thus effectively supporting its economy. The tunnels have also been a major source of income for many Gazans. Moreover, because many of the weapons or weapon components that Hamas has secured were smuggled by sea or even across the land border from Israel, destroying more tunnels would probably have only dented the flow of weapons and materials to Hamas while imposing major hardships on Gazans.

Beyond the debate regarding the tunnel smuggling issue, it is worth noting that in January, Israel reportedly informed Cairo of its intention to place troops on the Egyptian side of the Philadelphi Corridor. Netanyahu said as much in late December 2023 when he declared that control of the Gaza-Egypt border “must be in our hands.” That Israel eventually acted on this threat without eliciting a strong response from Cairo does not suggest that Egypt was complicit in Israel’s move. But it does underscore the conflicting pressures facing Egypt’s leaders. After all, Egypt’s leaders are not keen to being seen as turning their backs on the Palestinians, or worse, facilitating an Israeli military onslaught that has brought massive destruction and loss of innocent civilian life.

The difficult situation facing Sisi and his allies has been amply displayed by the controversy over which country is responsible for slowing or stopping food shipments through the Rafah border crossing. Unwilling to be seen as complicit in the Israeli military’s control of the border, Egyptian officials have refused to let aid pass through Rafah. This position has led some Israeli officials—and their supporters in Washington—to declare that it is Egypt rather than Israel that is hindering aid deliveries. Such assertions have surely vexed Egypt’s leaders. But because they have little power over the key protagonists in the Gaza war—and know that the Biden administration is unwilling to risk a decisive confrontation with Netanyahu—at the end of the day Cairo’s increasingly tricky containment strategy serves one overriding goal: regime survival.

Cairo: The More Things Change, the More They Stay the Same?

One dimension of this strategy is the geo-strategic and economic benefits that Cairo has accrued from peace with Israel. Since 2016, sporadic IDF-Egyptian military cooperation in northern Sanai has played an important role in Egypt’s conflict with jihadists. As for economic relations, while modest when compared to Egypt’s trade with Turkey, the Gulf countries, and the United States – or when compared to the levels of US economic aid—trade between Israel and Egypt actually grew in 2024. (Since 2023, that trade includes the exports of natural gas through a subsea pipeline from Israel’s offshore Tamar field, an important energy source that Egypt uses domestically and for export). Egypt’s foreign relations depend on engaging with as many regional partners as possible, and that rule of thumb has not changed with the Gaza war.

On the domestic front in Egypt, the war has sparked wide unhappiness and occasional open street demonstrations from Egyptian citizens, who have watched the carnage in Gaza unfold in real time on the internet and satellite television. The largest of such protests occurred in October 2023, when a government-organized protest that was meant to display support for Egypt’s Gaza position backfired with protesters condemning Sisi’s policies. Overall, some 120 protesters were reportedly detained by the police, while far smaller numbers have been arrested. The government appears particularly eager to clamp down on any demonstrations in universities, a vast arena which effectively articulates the aspirations of the country’s large and amorphous urban middle class. But these protests have not endangered a regime that has ample coercive capacity, and whose ultimate stability depends on preventing the country’s ailing and still massively subsidized economy from slipping into more troubled waters.

The Political Economy of Regime Survival

Those waters became even choppier in the wake of the Gaza war. Concerned that armed Islamist groups would sabotage its Mediterranean gas extraction plans, Israel suspended its Tamar operations during the early weeks of the Gaza war, later resuming its exports but at a scaled down rate. Israel’s actions prompted Egyptian authorities to extend rolling blackouts in the country from one to two hours a day, a move that experts note was taken to increase its own gas exports. But Egypt’s far greater economic headaches were induced by a severe drop in Suez Canal revenues, as Houthi attacks in the Red Sea drove up shipping insurance rates, thus prompting a significant decline in shipping and in canal revenues from December 2023 to April 2024.

Egyptian officials leveraged Gaza war developments to gain concessions from European governments and multilateral organizations.

But in another telling display of their capacity for turning lemons into lemonade, Egyptian officials leveraged these developments to gain concessions from European governments and multilateral organizations worried about the implications of economic and social instability in Egypt and the looming possibility of illegal migration across the Mediterranean Sea. Thus, in March 2024, a group of European countries announced the provision of $8 billion in new economic assistance for Egypt. The International Monetary Fund followed suit by not only increasing its proposed aid package from $3 billion to $8 billion, but also by signaling that this aid would not be conditioned on promises by Egypt to scale down the highly protected private and semi-public enterprises controlled by the military.

The United Arab Emirates provided the icing on this aid cake when it announced that the Abu Dhabi Development Holding Company had agreed to pay $35 billion to construct a massive development project along the Mediterranean coast. While this announcement seemingly presaged a shift from donor aid to direct foreign investment, it in fact provides a model of Gulf foreign subsidies of the Egyptian ‘private’ sector whose purpose is to shore up domestic stability and the military’s control. The fact that Egypt’s foreign currency reserves reached $46.13 billion in June—its highest on record—has given the regime greater breathing space to manage the economy, even as the country’s foreign debt climbed to $168 billion by the end of December 2023. Moreover, Sisi’s ‘reelection’ last December (with, of course, 89.6 percent of the vote), went by with little fanfare or enthusiasm, thus demonstrating his domination of a political field that offers no real openings for contestation in a 114 million populace, the vast majority of whom are preoccupied with the daily grind of economic survival.

The Biden White House’s Grim Horizons

Egypt’s capacity to move beyond the tactical calculations of its containment policy will ultimately depend on the capacity of the Biden administration to secure a ceasefire in Gaza that sets the stage for a wider political solution to the Palestinian-Israeli conflict. But if there is no going back to the precarious status quo that had existed before October 7, Egypt’s leaders know that as long as Netanyahu remains in office and is dependent on his ultra-nationalist allies in government, he will spurn any notion of a wider political vision for both Israelis and Palestinians. And with Biden unwilling to put maximum pressure on the Israeli prime minister, as well as having difficulties in his reelection campaign, Egypt’s leaders will have little choice but to contain their unhappiness as they tweak their containment strategy.

And yet, hope springs eternal. In a recent Washington Post piece, two US Middle East policy experts argue that Israel and the United States should agree on a plan for Gaza to be “demilitarized” using a foreign force drawn from the Arab world and other countries. After discussing the potential benefits of such an initiative, they then note that “We have not tried to address all issues, including whether this process can begin without a political horizon for eventual Palestinian self-governance—or at least clarity on whether the Palestinian Authority is actually going to be reformed.” That they believe it is possible to have a credible US-Israeli discussion on demilitarization without addressing the broader political context may signal a wanted (or unwanted) concession to Netanyahu. But it will not provide an impetus for Arab countries to support a proposal that, as the authors themselves note, will require cooperation from Egypt. For this purpose, they propose that “the Biden administration could provide a significant financial incentive to Egypt to stop the smuggling by allowing Egyptian contractors to take the lead in the reconstruction of Gaza.”

Yet, even if business tycoons in Egypt and the Gulf would jump on such selective incentives (as they are called in the development business), the ‘Let’s Make a Deal’ pragmatism evinced by these two authors seems disconnected from the multiple realities and forces that have led Israelis and Palestinians to their present nightmare. That the United States shaped some of these realities is a significant, if perhaps inconvenient, truth that has cast a dark shadow over the efforts of the Biden administration to forge a regional vision of Palestinian-Israeli peace that now seems as irrelevant as ever.

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: Anas Mohammad