Time to recalibrate 

Dina Ezzat , Wednesday 8 Jun 2022

With no end in sight to the war in Ukraine countries of the Middle East are working to circumvent the political and economic repercussions of the conflict.

Russia - Ukraine War
ONE HUNDRED days into the war in Ukraine, it is still not clear how the conflict might be resolved. In addition to unprecedented inflation, the food and energy shortages the war has caused the world over especially where the poorer countries are concerned are an ongoing and pressing global concern. Yet despite calls for moderation and negotiation towards a compromise, both the Western powers backing the Ukraine and Putin-led Russia are recalcitrant, and the situation looks disturbingly like a prelude to World War III. (photo: AFP)


On 14 June, Ursula von der Leyen, president of the European Commission, is expected in Cairo for talks with President Abdel-Fattah Al-Sisi. Economic cooperation, especially in the energy sector, will be high on the agenda of the visit though, according to Christian Berger, EU ambassador to Egypt, Von der Leyen will also consult with President Al-Sisi on a wide range of political issues relating to regional stability.

On 19 June, Foreign Minister Sameh Shoukri is expected in Luxembourg for a meeting with his EU counterparts to adopt changes to the Egypt-EU Partnership Priority Document. According to Berger, the six-page text covers three chapters related to cooperation on political, economic, and governance issues for the next seven years.

According to government officials in Cairo, while 2021 saw major advances in relations with the EU after a lengthy period of stagnation, the war in Ukraine has lent further momentum to cooperation, with the push coming from both sides.

Ukraine and Russia are key suppliers of grain and of tourists to Egypt. The war has led to spiralling costs of wheat, and a collapse in the numbers of Ukrainian and Russian tourists arriving in Egypt, both of which have seriously impacted Egypt’s foreign currency reserves. Cairo is keen to secure economic assistance from the EU to boost its food security, while the EU wants a deal with Israel and Egypt covering gas supplies.

During her visit in Cairo, Von der Leyen is expected to attend the signing of a three-way gas deal bringing together Egypt, Israel, and the EU. The Israeli minister of energy is expected to be in Cairo for the occasion, and for a ministerial meeting of the East Mediterranean Gas Forum.

According to government officials, Egypt’s European partners are also “proving supportive” in the ongoing negotiations Egypt is conducting with the International Monetary Fund for a new programme to help overcome the economic disruptions caused by the war in Ukraine and the Covid-19 pandemic. They say that both Europe and the US recognise the need to keep the Middle East as stable as possible to avoid having two explosive spots simultaneously, a realisation that has spared Egypt and other Arab countries from pressures over matters of governance.

“I think governance will remain an issue for discussion with our partners in Egypt and elsewhere in the region but for now it is trumped by concern over the stability of Egypt and of the region as a whole,” said one Cairo-based European diplomat. He added that there is no telling when the war will end and that what the West needs now is to ensure the stability of the east and south Mediterranean and the Middle East in order not only to secure stable gas supplies but to avoid any possible waves of migration.

Prioritising stability over conflict is also impacting US relations with its traditional Arab Gulf allies. According to a Gulf-based political source, while several Arab Gulf capitals, especially Abu Dhabi and Riyadh, remain unhappy about the political position of the current US administration vis-à-vis their security and political concerns, there are signs of rapprochement.

“There have been unannounced talks, at quite a high-level, in an attempt to prioritise cooperation over disagreement,” he said, and there are already signs of success — he cited not only the “positive statements” of US Secretary of State Antony Blinken on the US administration’s desire to work towards better relations with its regional allies, but also OPEC’s agreement to increase output in July and August.

According to another Gulf-based source, the delay of Biden’s visit to the region, where he was supposed to meet with the leaders of the GCC, Egypt, Jordan and Iraq, should not be viewed too negatively. He argued that the delay has as much to do with the troubles of the Israeli government — Israel was scheduled as Biden’s first stop — as anything else.

“The visit may take place in July or even later, but it will take place. One of the effects of the war on Ukraine is that it has reminded both the US and Gulf countries just how much they depend on one another,” said the source. He added that leading Arab Gulf capitals have realised that the “US that left Afghanistan late last year amid chaotic scenes is not as weak as they thought it was.”

“The US secured a solid trans-Atlantic coalition in the face of Russian aggression and has not pulled its diplomatic punches at the UN General Assembly which has passed resolutions condemning the Russian war against Ukraine,” he said. At the same time, he added, Washington has realised that it cannot count on its Gulf allies to pump more oil whenever Washington wants.

He argued that one result of the war will be a higher level of US engagement in the region that goes beyond the nuclear deal with Iran and will include both the Israeli-Palestinian and Israeli-Lebanese fronts. 

Not that there is any panacea in sight. The region can still expect political hiccups, especially in Syria and Libya, areas from which the world’s attention has strayed. And the economic crisis, provoked by the war and the pandemic, shows no signs of abating anytime soon.

Senior financial consultant Wafik Grais believes the food crisis will worsen if war goes on much longer because Ukraine will not be able to plant a new crop. This will have a social impact on the everyday lives of citizens.

Grais noted that there are no obvious alternatives to Ukrainian and Russian wheat, especially given the trend to ban exports by some grain producing countries. States in the region, he says, will have to use as much clout as they can muster to persuade exporters like India and China to release more of their harvests.

Grais also warns of the effect of the war on the region’s debt. Rising commodity prices and falling hard currency revenues will lead to widening budget deficits which in turn increases the need to borrow, yet servicing debt is becoming ever more expensive given the tightening monetary policy of the US Federal Reserve.

“We will emerge with much more debt if the countries of the region do not boost their exports,” Grais said.

Additional reporting: Niveen Wahish

A version of this article appears in print in the 9 June, 2022 edition of Al-Ahram Weekly.

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