The conflict between the US, Israel and Iran has pushed regional heavyweight Egypt into a diplomatic and strategic dilemma.
Egypt is not only a close ally of the US and Gulf states — it is a signatory to the 1979 Camp David Accords with Israel — but was also on the verge of restoring full diplomatic ties with Iran in early 2026.
Cairo’s tightrope walk has so far included publicly condemning Iranian attacks on Gulf states while offering limited military support. It has sought to position itself as a mediator between Tehran and Washington, alongside parallel efforts by Pakistan, Turkey and Qatar. President Abdel-Fattah el-Sissi also visited the United Arab Emirates in May.
“Abdel-Fattah el-Sissi views the conflict primarily as a threat to domestic stability,” Michelle Pace, a Middle East analyst and academic visitor at the University of Oxford, told DW. “Egypt’s core objective is to stay out of the Iran war while containing its economic and security fallout.”
However, this approach has caused tensions with Egypt’s Gulf partners, who expect support from their allies in the face of Iranian attacks on their territories, interests and assets, Timothy E. Kaldas, deputy director of the Washington-based Tahrir Institute for Middle East Policy, told DW.
“There are not very subtle statements coming particularly from the United Arab Emirates that indicate frustration and anger with Egypt,” he said.
For example, Anwar Gargash, foreign policy adviser to the UAE presidency, recently wrote on X that “The Arab Gulf states have been a support and partner to all in times of prosperity … so where are you today in this time of hardship?” Regional analysts understand the statement was directed at Cairo.
Economic dependence
Egypt, the most populous Arab nation with around 120 million people, also feels the the economic ripple effects of the war with Iran. After the Iran-aligned Houthi militia in Yemen resumed attacks on shipping in the Red Sea and Bab al-Mandab Strait in support of Iran, traffic through Egypt’s Suez Canal was reduced. A recent analysis by the International Crisis Group found that Suez Canal revenues fell by 38% in the first quarter of 2026.
“The war is hurting an economy that had been showing tentative signs of recovery from the doldrums of COVID-19 and the consequences of wars in Ukraine and Gaza,” the analysis said.
Egypt’s minister of petroleum and mineral resources, Karim Badawi, said Wednesday that Egypt had managed to reduce arrears owed to oil and gas partners from about $6.1 billion in June 2024 to zero in June 2026.
The economic recovery after years of protracted crisis has been largely driven by Gulf investments, the report’s authors noted. “Saudi Arabia and Kuwait have deposited $5.3 billion and $4 billion with the Egyptian central bank, respectively, while the United Arab Emirates has injected $35 billion into the country through a major real estate acquisition and Qatar has committed to investing $29.7 billion in another massive property deal,” the Crisis Group’s analysissaid. The World Bank, the EU and the International Monetary Fund have also helped to stabilize Egypt’s economic in recent years.
Now, the outlook appears to be worsening again. Not only have Suez Canal revenues fallen, but tourism has also declined, and energy and food prices have increased.
Furthermore, the Gulf states are themselves facing significant economic losses and enormous costs : damaged buildings and infrastructure must be repaired, munitions replenished, and defense capabilities expanded, Kaldas pointed out.
“The availability of financial support, even if they wanted to provide it, may be coming under pressure, especially given that Egypt will be competing with reconstruction needs in Lebanon, Syria and Gaza,” he said.
Diplomatic pressure
Meanwhile, the US is also turning the diplomatic screws on Egypt. Reuters reported on May 25 that US President Donald Trump said he had asked Saudi Arabia, Qatar, Pakistan, Egypt, Turkey and Jordan to join the Abraham Accords and normalize relations with Israel as part of his push to secure support for a potential agreement involving Iran.
In 2020 and 2021, the United Arab Emirates, Bahrain, Morocco and Sudan already normalized ties with Israel, under the Abraham Accords. Saudi Arabia halted negotiations after the Hamas attack on Israel on October 7, 2023 and the ensuing war in Gaza, and made the establishment of a pathway for an independent Palestinian state a condition. Egypt and Jordan signed peace treaties with Israel in 1979 and 1994, respectively.
Kaldas views Trump’s latest push for normalization as more of a desperate effort to claim some sort of achievement in the Iran conflict.
“Egypt is also concerned about the hostile posture of the Israelis in the region, so giving them any sort of additional diplomatic support is almost certainly not something that the Egyptian government is going to want to do at this time,” he said.
Ties between Egypt and Israel have been deteriorating since the Gaza war. Israel has repeatedly said it would like to see millions of Palestinians in Gaza relocate to Egypt.
Moreover, Cairo is also wary of an outright collapse of Iran, Michelle Pace warned: “This would strengthen Israel’s regional dominance,” she said, adding that all of this limits Cairo’s strategic autonomy and pushes it toward pragmatic diplomacy rather than confrontation.
Crackdown on political dissent
At the same time, Cairo also needs to consider public discontent, Kaldas noted, adding that “In Egyptian public opinion, quite a large portion of the population is on Iran’s side in this war and sees it as the wronged party.”
For Egyptian President Abdel-Fattah el-Sissi this means “not sticking his neck out too much in defense of what most Egyptians see as US-Israeli aggression against Iran.”
However, public signs of dissent remain prohibited. Since the outbreak of the Gaza war, occasional demonstrations have been broken up by police and participants detained.
Sarah Leah Whitson, former director of the human rights organization DAWN, warned that other conflicts in the Middle East have allowed the Egyptian government to avoid scrutiny of its deplorable human rights record.
“Thousands remain unjustly imprisoned in sham trials; dozens of journalists and human rights activists are detained, while thousands more face new charges in mass terrorism cases,” she told DW. “The military’s power has expanded dramatically with the same powers of arrest and prosecution of over ordinary citizens as the justice ministry.”
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