Egypt as a Middle Power: Short-Term Efficacy vs. Long-Term Fragility

The author would like to acknowledge Emilia Kohlmeyer’s valuable research contribution to this paper

Statements and views expressed in this commentary are solely those of the authors and do not imply endorsement by Harvard University, the Harvard Kennedy School, or the Belfer Center for Science and International Affairs.

Key Judgments

• Rather than pursuing global political or normative contestation, Egypt seeks to leverage its regional centrality to consolidate and sustain a political economy model predicated on the government’s megaproject agenda as the basis for regime legitimacy. This capital-intensive development model, which increasingly relies on external financial support, serves as the primary driver of Egypt’s contemporary middle power role.
• Since 2013, Cairo has significantly expanded the scope and depth of its great power relationships. While prioritizing its relationship with Washington, Egypt has spent the last decade cultivating a broad array of defense, economic, energy, and technology ties with Russia, China, and a number of European Union member states.
• Overall, Egypt’s middle power diplomacy can be described as “strategic partnership without strategic alignment.” The expansion and diversification of its great power relationships has not translated into a discernible strategic shift in Cairo’s foreign policy. Instead, Egypt has adopted a strategy of diplomatic hedging, remaining neutral toward the Russia-Ukraine war and avoiding involvement in issues related to the U.S.-China competition, while basing its bilateral relationships with Beijing and Moscow on a fundamentally pragmatic transactional logic designed to support Egypt’s domestic economic agenda.
• Assessed against this core objective, Egypt’s diplomacy has achieved significant success. Cairo’s success in employing its position for diplomatic leverage, enhancing the value of its strategic role to extract geopolitical rent, and securing diverse external resources on a large scale — all while avoiding the pitfalls of strategic alignment with its partners — has validated the core tenets of its foreign policy. As such, Egypt’s middle power role has largely fulfilled its intended function: guaranteeing steady external support to consolidate its foundational political economy model.
• The long-term sustainability of Egypt’s middle power role will depend on its ability to address two fundamental challenges. The first relates to the fragility of its domestic development, which relies on a strategy of extracting geopolitical rent rather than affecting deep socioeconomic transformation. Economic diversification remains constrained by a weak industrial base and currency volatility, while the heavy involvement of military-affiliated business has hampered ambitions to transition to a political economy model based on export-oriented growth, broad-based productivity, and technological upgrading. The second fundamental challenge will likely emanate from the evolving dynamics of great power competition. In particular, a potential shift in U.S. policy regarding the margin of autonomy afforded to allies vis-à-vis the U.S. rivalry with China could force a binary choice on Cairo, directly challenging Egypt’s core strategy of strategic diversification. 

 

Egypt’s Role and Importance as a Middle Power

Egypt’s contemporary position is predicated on a distinct foreign policy role that stands in contrast to other aspiring middle powers. The conventional conception of middle power states is commonly associated with role projection at the global level, at times seeking to influence the normative and policy frameworks of global governance — whether in technology, finance, climate, or trade, depending on a particular state’s priority interests — or to affect the trajectory of great power competition, especially amid heightened U.S.-China rivalry. 

In contrast, Egypt’s middle power role has evolved in a different direction. Positioned at the nexus of Africa, the Middle East, and Europe, Egypt has sought to assert itself as a pivotal middle power, leveraging its strategic geography, diplomatic weight, and military hard power capabilities. However, rather than aspiring to affect global political and normative contestation — a role Cairo assumed during its revolutionary foreign policy during the mid-20th century — its current posture relies on leveraging its regional geopolitical centrality to consolidate and sustain a particular political economy model. This emerged in the aftermath of the political upheaval brought about by the Arab Spring and the overthrow of the Mubarak regime. 

Egypt’s current middle power role is best understood in the context that has defined the post-2011 revolution political dispensation. President Abdel Fattah el-Sisi came to power at a time of profound national security and economic crisis. Numerous events converged to produce a national emergency, including political upheaval as a result of the January 2011 and June 2013 revolutions, increased threats from domestic terrorism, instability along Egypt’s borders with Libya and Gaza, decreased water security due to Ethiopia’s construction of a mega-dam on the Blue Nile, and an economy in disarray. As a result, the regime has operated under a “crisis mentality,” constantly seeking to stave off potential collapse brought about by these simultaneous challenges. 

Over the past decade, many of these crises have been successfully addressed (terrorism, political stability) or contained (Libya), while others remain unresolved (the standoff over the Grand Ethiopian Renaissance Dam). While this improvement provided President el-Sisi greater latitude to address Egypt’s pressing economic situation, the sense of crisis lingered and came to define much of the regime’s political power structure. A key feature of this structure is the consolidated authority of the presidency. Previously, under the Hosni Mubarak and Anwar Sadat regimes, civilian ministries enjoyed some measure of policy autonomy. Under President el-Sisi, however, decision-making has been dominated by a centralized presidency and the president himself. Civilian institutions, including cabinet ministries, are largely relegated to an implementation function, with major policy initiatives originating top-down from the presidency.¹

A corollary of this centralized decision-making has been the dismantling of Mubarak-era political structures. The Mubarak and Sadat regimes relied on a specific political apparatus, the National Democratic Party (NDP), that operated within a semblance of multiparty politics. The NDP had a mandate to maintain a parliamentary base and channel political demands from key constituencies to ensure a strong foundation of popular support. Following the dissolution of the NDP in the wake of the January 2011 revolution, the current regime did not recreate a pro-government political party. Instead, it has relied on a popular mandate and the support of several loose pro-regime political coalition in parliament.² 

Finally, perhaps the most notable aspect of Egypt’s current political dispensation is the consolidation of the military’s political and economic roles. Since the establishment of the republic in 1952, the military has been perceived as the primary pillar of regime support. However, this role has been subject to important changes. The 1973 Arab-Israeli war marked the beginning of the gradual depoliticization of the military, and the face of political life became increasingly “civilianized.” Under President el-Sisi, this trend was reversed. The military as an institution assumed a more prominent role in national affairs, supported by a constitutional and legislative framework that reinforced its budgetary, legal, and institutional autonomy. It also played a greater role as an economic actor, including serving as the primary implementation arm for ambitious national megaprojects.³

This consolidation has been coupled with a distinct political economy predicated on a state-led neoliberal policy framework, emphasizing large-scale national megaprojects as key drivers of economic growth and modernization. While these initiatives have significantly improved infrastructure and boosted investment flows, they have not fully addressed persistent structural constraints. Egypt’s weaknesses in trade and production continue to weigh on its economic trajectory. Despite remaining a leading destination for foreign direct investment in Africa and the Middle East — particularly in infrastructure and manufacturing — Egypt’s integration into global value chains remains limited.⁴ High trade barriers, weak logistics infrastructure, and a narrow industrial base constrain export performance, while innovation is hampered by minimal investment in research and development. Egypt’s exports remain dominated by low-value goods, and its reliance on imports for domestic consumption and industrial inputs exposes it to external shocks. These imbalances, combined with limited private-sector dynamism, reflect the limitations of Egypt’s current growth model in a shifting global economy.⁵

Indeed, outside the real estate and energy sectors, Egypt’s broader economy has experienced prolonged stagnation. State borrowing has sharply limited private-sector access to credit, with private investment averaging just 6.3% of gross domestic product (GDP) over the past decade — well below the average for middle-income economies. This reflects structural shortcomings: Egypt’s economic model has been driven not by sustained productivity, but by securing external inflows through loans, grants, and politically driven investments from Gulf partners and international donors.⁶

Egypt now faces significant, ongoing challenges to macroeconomic stability. By 2024, public debt had risen to over 90% of GDP, with debt-servicing taking up 61% of general government revenue. Gulf-backed investments have offered temporary relief as Egypt contends with a difficult regional security climate and declining Suez Canal revenues as a result of Houthi attacks on Red Sea shipping that forced the partial suspension of maritime traffic.⁷ These balance-of-payments crises and mounting debt service obligations have exposed fundamental vulnerabilities in Egypt’s growth model.⁸ As a result, in 2023 the country experienced the most severe cost-of-living crisis in its modern history, with headline inflation peaking at 38% and food inflation soaring to 71%. This pressure was compounded by sharp currency depreciation as well as a severe import crisis resulting from acute shortage of foreign currency.⁹ 

Foreign support enabled Egypt to address this crisis. Once again, Cairo turned to the International Monetary Fund (IMF), securing its fourth assistance package since 2016, with Egypt becoming the Fund’s second largest borrower after Argentina. The new program committed Cairo to a broader reform agenda aimed at curbing public debt and restoring macroeconomic balance.¹⁰ After months of resistance to currency liberalization, the government implemented a 60% devaluation of the Egyptian pound and raised interest rates significantly — measures that helped unlock an $8 billion agreement with the IMF in March 2024, bolstered by additional support from the World Bank and the European Union.¹¹

The adoption of this capital-intensive development model, underpinned by an increasing dependence on external financial support, have created the drivers defining Egypt’s contemporary middle power role. Cairo has intensified efforts to diversify its international partnerships and reduce strategic dependence on any single power bloc, thereby maximizing its options for external support. This strategy aims to reorient Egypt’s economy toward industrial upgrading and the government’s program of national megaprojects. 

Crucially, Egypt’s current position marks the culmination of a historic transformation in its role as a middle power. Today, its status reflects the extent to which foreign policy is driven by the regime’s immediate strategic, political, and economic imperatives. 

 

The Shift from a Transformational to a Transactional Foreign Policy 

In many ways, after the 1952 transition from monarchy to republic, Egypt embodied the core attributes of a traditional middle power state. Whether through its role as a leading normative power championing national liberation and nonalignment globally during the post-colonial era, its formidable reserve of “soft power” that enabled it to act as a cultural and political trendsetter for the Arab world, or its geopolitical influence over decisions of war and peace in the Middle East, Egypt exemplified the quintessential middle power model long before the concept entered international relations theory in the post-Cold War era. 

What’s more, the multidimensional scope of Egypt’s role aligned with standard definitions of “middle power,” even while considering the term’s often varied and elusive nature. Broadly speaking, mainstream definitions of middle power statehood are often framed in terms of self-conception, recognition by other states, material capabilities, and regional and global impact.¹² Other definitions correlate with dominant paradigms of international relations theory, highlighting the material and institutional capacities primarily associated with realism, alongside the behavioral attributes more identified with liberal and constructivist frameworks.¹³ By most measures, Egypt fits comfortably within the middle power category.¹⁴ 

Egypt’s role as a founding member of the Non-Aligned Movement during the 1950s and 1960s reflected this middle power status globally. Propelled by a drive to expel the remnants of British colonialism in the Middle East, nonalignment served as a platform for Cairo to project its cause. The movement brought together the norms of anti-colonial struggle, self-determination, and neutrality toward the U.S.-Soviet rivalry in a way that profoundly influenced Cold War politics while maintaining its coherence as a bloc of like-minded states in the post-Cold War era. 

This global role very much complemented Egypt’s regional soft power. Building on its history as one of the region’s earliest examples of modern statehood — dating back to the early 19th century — Egypt exerted enormous influence in shaping the political and cultural developments of its regional environment. Ideologically, Egypt was central to the currents dominating Arab politics, from pan-Arabism and political Islamism to the cause of Palestinian liberation as the defining issue of inter-Arab affairs. In tandem with this role, Egypt served as the primary driver for the region’s cultural production. Egyptian art, entertainment, literature, and education set the trends for much of the Arab world during the formative period of post-colonial state-building in the 1960s and 1970s, and beyond. 

The geopolitical impact of Egypt’s middle power role has been equally significant. For decades, Egypt was central to regional politics of war and peace, primarily as a front-line state in the Arab-Israeli conflict and subsequently as the first Arab state to sign a peace treaty with Israel in 1979. Similarly, Cairo’s Cold War alignments – having moved away from its posture of strict non-alignment in response to the mounting pressures of its conflict with Israel and its need for development assistance – was a major factor in influencing the Middle East geopolitical balance. After a period of close relationship with Moscow beginning in the mid-1960s, Egypt’s defection from the Soviet camp and subsequent alignment with the United States following the 1973 war marked a major turning point in the Cold War, greatly diminishing Soviet influence in the Middle East and ushering in an era of American dominance in the region. These developments paved the way for Egypt’s emergence as a central regional security actor over subsequent decades. As a major regional military power, a designated Major Non-NATO Ally of the United States, and a key participant in U.S. Central Command (CENTCOM), Egypt consolidated its role as a pivotal state in Middle East security dynamics. This position was further cemented by its strategic location between the Red Sea and the Mediterranean and its control over the Suez Canal. 

Jon Alterman, one of the more astute observers of Egyptian politics, captured this shift in Egypt’s middle power position more than two decades ago, writing: “For almost a quarter century now, Egypt’s government has largely sought to manage its relations with the outside world rather than create new realities. In so doing, Egypt departed from a 30-year history in which its leaders actively sought to shape their international environment.”¹⁵

The trajectory of this transformation can be traced back to Egypt’s defeat in the 1967 Six-Day War with Israel. Following the conflict, Egypt’s post-1952 revolutionary orientation gave way to a pragmatic focus on national interest, regional stability, and domestic development. This shift under Gamal Abdel Nasser’s successors had profound implications for Egypt’s status as a middle power. Whether measured by indices of material and normative power or by regional and global influence, the last four decades have witnessed a gradual shift from Egypt’s prior leadership to a more “conventional” foreign policy. 

The country’s shifting regional role has been the subject of scholarly analysis and political commentary, especially when juxtaposed against the rise of other regional poles vying for influence — primarily the Gulf states, Iran, Turkey, and, more recently, Israel.¹⁶ Globally, Egypt’s position as a leading normative power championing nonalignment was transformed alongside the Non-Aligned Movement itself. Following the Cold War, the movement evolved from an advocate for global neutrality into a platform for the various policy agendas of the Global South within the United Nations and other multilateral fora.¹⁷ These changes unfolded against a backdrop of rising socioeconomic challenges in Egypt, with successive governments becoming increasingly preoccupied with chronic balance-of-payment deficits, sluggish productivity, persistent poverty, and a bloated public sector that acted as a perpetual drag on economic performance.¹⁸

None of this is to suggest that Egypt forfeited its middle power status — only that the orientation of that role has changed. Egypt retains its position as the Arab world’s most populous state, its leading military power, and its principal mediator in the Israeli-Palestinian peace process. Together, these attributes reinforce Egypt’s position as an overall regional stabilizer. Egypt’s ability to successfully leverage its strategic assets for geopolitical rent has been a key factor in its transformed status. Its geostrategic position, commitment to upholding the peace with Israel, role as a broker in Israeli-Palestinian negotiations, and long-term partnership with the United States and other Western states in counter-terrorism and combating Islamist militancy have all consolidated its status as a critical power. These assets position Cairo to solicit financial, economic, material, and developmental support from a variety of international and regional actors. The most visible manifestations of this support include the long-standing U.S. economic and financial assistance package — the second-largest U.S. foreign aid program after Israel — and the financial assistance provided by the Arab Gulf states since Egypt’s transition from a revolutionary to a status-quo foreign policy.¹⁹ No less significant has been the developmental assistance Egypt has solicited from international financial institutions, including the World Bank and IMF, various global development funds, international development agencies, and bilateral development assistance programs.²⁰

Critically, Egypt’s transformed middle power status carried significant implications for its great power relationships. Commensurate with its transition to a status-quo power, Egypt’s strategy shifted from employing its great power relationships to advance transformational foreign policy objectives to a more transactional approach. This method was predicated on maintaining strategic ties with the United States and other Western powers to extract geopolitical rent. 

Even as Cairo deepened its military and diplomatic ties with Washington following the Cold War, particularly through its engagement in the Israeli-Palestinian peace process, the bilateral relationship took on a more transactional quality. In return for decades of U.S. military and economic assistance, Egypt granted the United States preferential transit through the Suez Canal, Egyptian airspace for its military forces, and general alignment on regional security objectives.²¹ While these mutual benefits proved invaluable during major regional security crises, the transactional nature of the military-to-military relationship prevented it from maturing into a full alignment on military doctrine or broader strategic objectives. Similarly, the close diplomatic engagement between Cairo and Washington did not preclude serious political differences where the two countries’ interests diverged, including over Sudan, Libya, and Iraq, as well as the Israeli-Palestinian conflict.²² 

At the same time, under former President Hosni Mubarak, Egypt gradually diversified its great power relationships. Egypt restored its ties with the Soviet Union in 1984, deepened its commercial and trade relationship with the European Union (which became Egypt’s largest trading partner through the EU-Egypt Association Agreement, signed in 2004), and initiated sustained bilateral engagement with China after a prolonged period of estrangement. While these developments did not challenge the centrality of Cairo’s strategic partnership with Washington, they did underscore Egypt’s latent desire to avoid overreliance on the United States at a time when the rationale for the bilateral U.S.-Egyptian relationship faced increasing scrutiny. 

It is against this backdrop that the current dynamics of Egypt’s middle power diplomacy vis-à-vis its great power relationships are best understood. The political upheaval of the 2011 revolution, followed by the 2013 military-backed popular uprising against the Muslim Brotherhood, prompted a major re-evaluation of Egypt’s foreign policy. This era magnified the drivers of transactionalism, strategic hedging, and diversification of Cairo’s great power relationships. As a result, under President el-Sisi, Egypt successfully leveraged its middle power status to expand its strategic relationships with Russia and China while balancing these emerging ties with its long-standing partnership with Washington and its economic relationship with the EU. 

 

The Domestic and Foreign Policy Imperatives of Egypt’s Contemporary Middle Power Role

Post-2013, following the rise of the el-Sisi regime, two overarching factors converged to shape Egypt’s management of its great power relations. First, Egypt struggled with a lingering crisis of confidence in its relationship with the United States. In response to the Egyptian military’s intervention against the Muslim Brotherhood regime in the summer of 2013, the Obama administration adopted an ambivalent — and at times contradictory — position. While refraining from a formal determination that the military’s actions constituted a “coup” to avoid triggering U.S. law mandating a cutoff of assistance to Egypt, the administration eventually suspended delivery of a number of critical weapons systems.²³ 

Although the suspension was temporary, the administration’s equivocation had deep and lasting effects on the bilateral relationship, coming at a time when the Egyptian military faced multiple overlapping crises that posed a near-existential threat to Egypt’s stability. Moreover, the administration’s decision was not made in a vacuum but against a backdrop of long-standing tensions over conditionalities on U.S. assistance due to human rights and democratization concerns, as well as limitations on weapons sales in compliance with Washington’s policy of preserving Israel’s Qualitative Military Edge (QME).²⁴ While the 2013 aid suspension underscored the critical importance of the United States’ partnership for national security interests, it also reinforced Cairo’s enduring suspicions as to its reliability. From then on, hedging against the uncertainties in its partnership with the United States emerged as a key driver of Egypt’s foreign policy. 

The second core factor driving Cairo’s great power strategy during this period relates to the transformation of Egypt’s political economy, shaped by the regime’s political imperatives. The political dispensation that emerged from the post-revolutionary upheaval was marked by a complex array of domestic and regional crises. This profoundly impacted the specific developmental model that the regime adopted, as well as the legitimacy narrative formulated to underpin its mode of centralized political control. The regime responded with a narrative predicated on “saving Egypt from the brink of collapse,” alongside a transformative vision for Egypt’s economic development driven by a highly interventionist state role.²⁵ 

The central pillar of this strategy was massive state-funded public investment in an ambitious program of national megaprojects, with the Egyptian military acting as the primary implementation arm. The expansion of the Suez Canal, completed between 2014 and 2015, and the construction of the New Administrative Capital (NAC) east of Cairo stand out as the program’s flagship projects.²⁶ Yet the scope of the state-led megaprojects program extended to a wide array of sectors, including public infrastructure, extractive industries, manufacturing, real estate, urban development, land reclamation, and agribusiness.²⁷ Although estimates vary regarding the aggregate public investment on these projects, they indicate the ambitious scope of the overall program. According to President el-Sisi, Egypt spent approximately EGP 10 trillion (nearly $323 billion) on infrastructure projects alone over the past decade, including roads, ports, and railway development.²⁸ Notably, this figure excludes the investment cost of the NAC, which is estimated at an additional $50 billion.²⁹

Beyond its expansive scope, the megaprojects program possesses distinctive features that have transformed Egypt’s political economy and redefined the regime’s basis of legitimacy. The government’s narrative underscores these projects’ value not only as drivers of economic growth but also as the critical foundation for transformative state-building. Accordingly, Egypt’s megaprojects program is often framed in visionary terms, best captured by President el-Sisi’s reference to the establishment of a “new republic” and articulated in the government’s official “Egypt 2030” vision document.³⁰ The program thus became a key pillar of regime legitimacy, explaining the rationale behind the government’s persistent justification of the program in the face of mounting public debt and rising inflation.

The linkage between political legitimacy and the megaprojects program aligns with a further significant transformation of Egypt’s political economy under the current regime. Over the last decade, a form of state-led capitalism emerged, combining elements of neoliberal reform with a strong central government. In this context, Egypt’s national megaprojects were intended to attract foreign investment, create employment opportunities, and address mounting demographic pressures through massive investments in new cities, with the NAC as the centerpiece. However, the defining feature of this model is the military’s central role, replacing both the private sector and civilian state-owned companies that traditionally spearheaded public investment programs. The expansion and diversification of the military’s role reconfigured Egypt’s state-led capitalist model into what has been described as “Egypt’s State Capitalism 3.0.” ³¹ This phrase highlights the shift from President Nasser’s Arab socialism to Sadat and Mubarak’s emphasis on private sector-driven growth to the current model of military-led capitalism. Under this regime, the private sector remains subordinate to the military’s leading role in planning, managing, and implementing the government’s expansive megaprojects portfolio. 

The confluence of these two drivers — the lingering uncertainties in the U.S.-Egypt relationship and the military-driven state capitalism underpinning the regime’s strategy — produced a major reorientation of Egypt’s great power diplomacy. Concerns over the sustainability and reliability of the military partnership with Washington, and the long-term implications to defense planning, underscored the need to hedge against the vicissitudes of the relationship.³² In parallel, the ambitious megaprojects of “State Capitalism 3.0” prompted the regime to cultivate economic partnerships capable of meeting the investment and capitalization requirements of this strategy. These needs could not be met by a domestic private sector constrained by Egypt’s financial markets. 

Moreover, the military’s expanding economic role entailed special requirements for configuring Egypt’s external economic relationships. Priority was given to those partnerships that would accommodate the legal and regulatory frameworks that enabled heavy military involvement.³³ This reinforced Egypt’s reliance on foreign investment to meet its ambitious project targets. It also necessitated that much of this external investment be politically driven, sourced from actors that not only enjoyed a preferential relationship with Cairo but were also willing to accommodate the risks of major investment decisions involving the military in an uncertain economic environment. 

 

Strategic Partnerships Without Strategic Alignment

As a result of these drivers, the post-2013 period saw Egypt’s great power relationships expand in scope and depth. Cairo abandoned Mubarak’s cautious foreign policy approach and refocused on maintaining the relationship with Washington. At the same time, it cultivated a broad array of defense, economic, energy, and technology ties with a growing network of large powers, such as Russia, China, and several EU member states, including France and Italy.³⁴ 

Cairo’s expanding relationship with Moscow during this period provides an illustrative example of this trend. In response to the hesitancy of Western powers toward the new regime in Cairo following the 2013 uprising, reorienting relations with Moscow emerged as an early priority for Egyptian foreign policy. This served as the foundation for a growing partnership across a diverse array of sectors, most prominently defense, energy, and regional security. 

Another notable recent development in Cairo’s external partnerships is its accession to BRICS+ in 2024, when the group expanded for the first time since its founding and welcomed six new members. For BRICS, Egypt offers significant strategic and economic value. Egypt’s central position in the African Continental Free Trade Area (AfCFTA) provides a valuable export platform to African markets, making it an appealing destination for BRICS members looking to strengthen their economic presence on the continent.³⁵ From China’s perspective, BRICS expansion advances its strategy of cultivating a bloc of emerging economies to counterbalance the G7 with the support of the Global South.³⁶ Furthermore, this expansion complements a key objective of the Belt and Road Initiative (BRI), as BRICS members now control a significant share of global energy reserves and represent approximately 37% of global GDP.³⁷

Yet these expanding great power relationships — often referred to as “strategic partnerships” by Egyptian officials —have not translated into a discernible strategic realignment in Egypt’s overall foreign policy. Cairo’s budding energy and defense ties with Moscow did witness a policy convergence on several regional security issues, particularly the conflicts in Libya and Syria. However, this did not signal a break in Cairo’s long-standing relationship with Washington or a shift toward Moscow’s position with respect to the Russia-Ukraine war; instead, Cairo adopted a strategy of diplomatic hedging toward the conflict.³⁸

 

The Sino-Egyptian Relationship: A Key Example of Strategic Diversification

While Egypt’s relationship with Russia fits well within the current regime’s foreign policy, its burgeoning relationship with China best illustrates the hedging and transactionalism that characterizes Egypt’s great power diplomacy. Although still somewhat limited compared to the Russian relationship in certain areas — especially defense — the Sino-Egyptian relationship over the last decade has proven more closely aligned with the domestic imperatives of Egypt’s “State Capitalism 3.0” model. 

An early indication of this alignment came in December 2016 when President el-Sisi concluded a comprehensive strategic partnership with China, the highest tier of partnership designated by Beijing.³⁹ Since then, there has been a significant development of the bilateral relationship across multiple political and economic fronts.⁴⁰ Moreover, China’s economic development paradigm, the “Beijing Consensus” — which emphasizes state-led development, export-driven economic growth, and strict political control — aligns well with Egypt’s economic policy orientation, making it a viable alternative to traditional Western partners who often emphasize liberal political and economic reforms as a condition for aid.⁴¹

The emergence of strategic complementarities between Egypt’s domestic infrastructure projects and China’s BRI has been of particular significance.⁴² For China, Egypt has become a crucial partner in the BRI based on two priorities. First, Beijing’s 21st Century Maritime Silk Road (MSR) initiative identifies the Suez Canal as a vital maritime waterway for Chinese seaborne trade between the Indian Ocean, Red Sea, and Mediterranean. Egypt’s geographic position thus elevated its status as a critical partner for global maritime trade.⁴³ Given that nearly 90% of China’s international trade by volume and approximately 60% of its trade by value is transported via sea routes, this partnership is particularly important.⁴⁴ Second, China aims to stimulate demand for its products and services globally, particularly through the introduction of technological expertise and goods. Egypt’s large GDP, significant youth population, and various trade agreements make it a valuable entry point into African markets and natural resources.⁴⁵ In line with Egyptian priorities, Chinese cooperation has been heavily concentrated in sectors such as construction, industrial zones, and free trade areas.⁴⁶

Similarly, convergence on several significant policy issues reflects the expansion of the Sino-Egyptian bilateral partnership. For Cairo, China is an important global player more closely aligned with its foreign policy positions, particularly regarding Palestine and in light of tensions with the United States over its support of Israel.⁴⁷ From Beijing’s perspective, Egypt has proven itself a reliable supporter of China’s position on several signature policy issues, such as the "One China"⁴⁸ policy and its controversial policy towards the Uyghur minority.⁴⁹ China’s support for several ambitious hydropower projects in Africa is a notable exception to this convergence; in particular, its involvement in the Grand Ethiopian Renaissance Dam (GERD) directly conflicts with Egypt’s position, which views the project as an existential challenge to its water security.⁵⁰ Still, both Cairo and Beijing have decided to compartmentalize this issue, further underscoring the transactional nature of the partnership. 

In line with its transactional approach, this policy convergence does not signal a wholesale realignment of Egypt’s foreign policy toward China. Egypt’s cautious stance toward China’s Global Security Initiative (GSI) – launched by President Xi in 2022 as an alternative normative and political framework to the western-dominated global security order –  exemplifies this strategic balancing. Cairo has welcomed certain principles in theory, stating that it “appreciates the Global Security Initiative proposed by the Chinese side, and is ready to enhance communication and explore cooperation.”⁵¹ The GSI’s emphasis on sovereignty, noninterference, and sustainable security notionally aligns with Egypt’s declared positions and rejection of human rights-based critiques of its domestic and foreign policy.⁵² Yet, public endorsement of the GSI in formal agreements or at the highest political levels has been limited, reflecting Egypt’s broader hedging strategy toward its great power relationships.

In charting a path toward diversifying its great power relationships, Egypt’s has not aimed to effect a strategic realignment in its foreign policy. Rather, Cairo has sought to instrumentalize these relationships in order to maximize sources of external support across critical policy domains, thus sustaining the regime’s political economy model. This instrumentalization explains the overall scope and direction of Egypt’s middle power diplomacy. 

 

Policy Objectives

Four intersecting policy domains — economic support and investment, technology, energy and climate, and defense and military procurement — are central to Egypt’s reconfigured international engagement. Together, these spheres constitute the focal point of Cairo’s attempts to leverage its middle power status, maximizing returns on its “geopolitical rent” to support the regime’s ambitious domestic economic agenda. 

Economic support and investment have emerged as perhaps the most critical of these policy domains given the increasing financial requirements of the regime’s capital-intensive development program. These efforts reflect its broader ambition to transform Egypt from an import-dependent, rent-based economy into an industrialized and export-oriented model that is more integrated into regional and global supply chains. 

Energy policy, particularly in gas and renewables, has emerged as a key domain for international cooperation and strategic projection. While constrained by declining domestic energy production capacity and infrastructural stress, Cairo has attempted to position itself as a regional energy hub through liquified natural gas exports, interconnection agreements, and green hydrogen ambitions, even as it becomes increasingly dependent on energy imports.

Finally, Egypt’s evolving security strategy reflects a deliberate diversification of its military partnerships. While maintaining long-standing ties with the United States and Gulf partners, the previous decade witnessed a significant expansion in defense cooperation, most significantly — but not exclusively — with China and Russia. 

Together, these domains reflect Egypt’s shift toward a more transactional, opportunity-driven foreign policy. Energy infrastructure, industrial capacity, and defense partnerships are increasingly interlinked in the context of a strategy aimed at securing foreign capital, enhancing export competitiveness, and consolidating regime stability. 

 

Economy and Trade: Maximizing Gains for Egypt’s Political-Economy Model

The restructuring of Egypt’s political economy, particularly the expansion of state-led megaprojects, highlighted the need to secure substantial external and public financing. By one estimate, Egypt’s infrastructure financing gap through 2038 will reach $230 billion.⁵³ While short-term liquidity has been bolstered by foreign inflows — most significantly through Gulf-backed investments — the long-term sustainability of Egypt’s financing needs remains uncertain amid rising debt servicing costs and limited structural reforms. From 2015 to 2019, 91% of Egypt’s official development assistance came from loans, primarily from development finance institutions (58%) and bilateral partners (33%), while grants accounted for only 9%.⁵⁴ To manage this, Egypt has engaged in debt-for-development swaps as a mechanism to redirect foreign debt toward domestic investment priorities.⁵⁵

To address the broader fiscal challenge, Egypt has adopted a multipronged financing strategy centered on offering large-scale real estate investment opportunities to Gulf partners, pursuing industrial diversification, and accelerating renewable energy development. Development finance institutions, bilateral donors, and sovereign vehicles such as The Sovereign Wealth Fund of Egypt (TSFE) have played significant roles in this model. However, foreign direct investment (FDI) remains a relatively minor component of Egypt’s overall investment landscape, averaging only 16% of gross fixed capital formation (2008–18) and 2.49% of GDP in 2023.⁵⁶ Furthermore, this surge is still concentrated in non-tradable sectors, such as real estate and finance, rather than productivity-enhancing industries like renewable energy, information and communications technology, and agribusiness.

As a result, meeting the demanding capitalization requirements of Egypt’s ambitious domestic economic agenda has emerged as a critical strategic objective of its middle power diplomacy. This focus on diversifying its foreign partnerships is designed to reduce reliance on politically sensitive Western funding. This strategic pivot is evident in Egypt’s deepening economic engagement with Gulf states, particularly the UAE, as well as China and European creditors, all of whom have emerged as alternative sources of investment and trade financing. 

Between 2017 and 2022, Chinese investment in Egypt surged by 317%, even though 2022 Chinese FDI remained lower ($956 million) than U.S. FDI ($2.3 billion), which declined by 31% over the same period.⁵⁷ In parallel, Egypt has expanded its engagement with China under BRI,⁵⁸ with Chinese investment focused on the regime’s megaprojects program, including logistics, industrial zones, and free trade areas.⁵⁹

The Suez Canal offers a prime example of this convergence of priorities, contributing approximately 5% of Egypt’s GDP and 10% of its GNP. A critical source of hard currency, its modernization is a national priority.⁶⁰ For China, the largest user of the canal,⁶¹ it serves as a gateway to the EU, facilitating nearly 64% of EU-China trade and offering a more cost-effective and reliable alternative to land routes.⁶² The Suez Canal Economic Zone (SCZone), launched by Egypt in 2015, attracted more than $3 billion in Chinese investment as of 2024.⁶³ This included over $1.7 billion in the China-Egypt Technological Development Area (TEDA), located in the Suez Economic and Trade Cooperation Zone and modeled after China’s Tianjin TEDA.⁶⁴ This zone has become a cornerstone of Sino-Egyptian industrial cooperation, facilitating technology transfer, job creation, and export-oriented manufacturing.⁶⁵ 

Within the SCZone, cooperation has expanded beyond traditional industrial zones into high-tech domains and sustainable energy. In 2023, agreements worth $15.6 billion were signed to support green hydrogen initiatives and scale up manufacturing in fiber optics and telecommunications infrastructure.⁶⁶ Moreover, the zone now hosts research and development centers, data hubs, and facilities specializing in artificial intelligence and digital technologies.⁶⁷ These efforts align closely with China’s “Made in China 2025” strategy, which seeks to globalize Chinese tech leadership and stimulate external demand for its high-value services.⁶⁸ Egypt, in turn, views technological development as increasingly central to its national economic strategy, seeking to transition from an import-dependent economy to one with stronger capacities in digital infrastructure and innovation.

Beyond the Suez Canal, Chinese firms have diversified their investments across Egypt’s port infrastructure, reflecting a global trend in the increasing Chinese engagement at key nodal points along the Maritime Silk Road.⁶⁹ Both private companies and state-owned enterprises, such as COSCO Shipping Ports and Hutchison Ports, exemplify this engagement.⁷⁰ Hutchison Ports alone has invested over $1.5 billion in Egypt as of August 2022, including operations at the Port of Alexandria — which handles approximately 60% of Egypt’s foreign trade — and a container terminal at the Abu Qir Naval Base.⁷¹ 

Other flagship megaprojects include a 2017 agreement between the Egyptian government and the China State Construction Engineering Corporation (CSCEC) to develop the NAC’s central business district. This $3 billion commercial contract includes constructing the Iconic Tower, set to be Africa’s tallest skyscraper. Notably, 85% of the funding is to be sourced from Chinese state-owned banks, which provided an estimated $2.76 billion in buyer’s credit to Egypt’s New Urban Communities Authority (NUCA), responsible for development of the NAC.⁷² Beyond the NAC, CSCEC secured a $1.92 billion contract to construct a series of seafront towers in New Alamein, a major Mediterranean urban development project designated as the government’s summer headquarters.⁷³ 

This expansion of Sino-Egyptian ties reflects a deliberate shift toward a more pragmatic and diversified foreign policy, as Cairo seeks to complement its great power relationships by enhancing its engagement with a diverse array of middle powers. Gulf countries continue to play an important role in providing financial assistance to Egypt, though the relationship has evolved from a model of direct financial support toward a more commercially-driven dynamic. Following the 2013 uprising against the Muslim Brotherhood, Gulf Cooperation Council (GCC) countries, concerned about regional stability, provided Egypt with substantial aid, including billions of dollars in deposits to Egyptian banks. However, as those security concerns diminished, the countries became more reluctant to offer unconditional support and increasingly shifted toward investments with expected returns.⁷⁴ The 2024 landmark $35 billion Ras El-Hekma real estate deal with the UAE’s ADQ sovereign wealth fund exemplifies the new orientation of Egypt’s Gulf partnerships. Developed as a major urban, tourist, and investment hub on Egypt’s Mediterranean coast, it represents the largest investment project in Egypt’s history and one of the largest greenfield investments globally. Alongside similar deals, it propelled Egypt’s FDI inflows to $46.1 billion in the 2023-24 fiscal year.⁷⁵

Egypt has also maintained long-standing economic ties with Europe while increasing its reliance on export credit-backed loans from Germany, France, Italy, and the U.K. These loans have facilitated large infrastructure contracts for European firms and cemented a form of indirect creditor interest in Egypt’s solvency. The European Union’s 2024 €7.4 billion assistance package — comprising €5 billion in macro-financial support, €1.8 billion in investment commitments, and €600 million in renewable energy grants — reflects a broader structural shift toward nearshoring strategies and the integration of Egypt into emerging renewable and sustainable supply chains.⁷⁶ 

A South-South orientation also emerged as a pillar of Egypt’s diversification strategy with its 2024 accession to BRICS+, alongside its participation in the BRICS New Development Bank.⁷⁷ Instruments such as the BRICS Contingent Reserve Arrangement offer the potential for direct liquidity support in the future.⁷⁸ In practical terms, membership facilitates cooperation around immediate priorities such as food security — leveraging Russia’s role as Egypt’s primary wheat supplier — and bolsters key sectors such as tourism.⁷⁹ It also enhances Egypt’s political leverage and allows for a multialigned foreign policy that navigates between Western institutions and emerging global powers.⁸⁰ Finally, Egypt’s BRICS+ membership facilitates the diversification of its global partnerships, reducing dependence on Western-dominated financial institutions while amplifying its status within the Global South.⁸¹ As a result, Egypt is diversifying toward other middle powers and fellow BRICS members, such as India and Brazil, as well as leading Global South non-BRICS members, such as Turkey, each offering sector-specific opportunities. For example, Indian companies are showing an increasing interest in the industry and energy sector,⁸² while growing agribusiness trade with Brazil led to $3.3 billion in agricultural exports to Egypt in 2024.⁸³ What’s more, Turkey’s plans to establish an industrial zone in Egypt point to a rising South-South trade and investment axis, allowing Egypt to hedge against overreliance on any single bloc.⁸⁴

In sum, Egypt’s engagement with other middle powers is not merely reactive or opportunistic; it is a structured component of a broader political economy designed to secure flexible capital, reduce donor conditionality, and diversify external sources of support for its state-led development agenda. By leveraging its strategic location, infrastructure needs, and industrial ambitions, Egypt has positioned itself as a crucial interlocutor between emerging and established economic blocs, balancing Gulf liquidity, Chinese technology, European financing, and South-South engagement.

Despite deepening Sino-Egyptian cooperation, Egypt has not abandoned its U.S. partnership. Instead, it has repositioned itself to benefit from multiple centers of global finance, trade, and development. This allows Cairo to attract FDI and expand export-oriented sectors by tapping into diverse capital streams, ranging from U.S. investment in manufacturing and Chinese financing of transport and digital infrastructure to Gulf-funded real estate and energy projects. This pragmatic approach reflects a broader trend among middle powers that prioritize functional, interest-based partnerships over ideological alignment. By maintaining these diverse ties, Egypt aims to secure reliable financing, reduce exposure to unilateral trade restrictions, and increase its leverage in negotiating international aid and investment deals.

 

Technology Benefits as a Key Incentivizer

Technology development is also a key instrument in China’s economic agenda in Egypt,⁸⁵ underpinned by two crucial technologies: fiber optic cables and 5G networks. Eager to capitalize on the perceived qualitative and competitive cost advantages offered by Chinese technology firms, Egypt signed a 2024 agreement for a $15 million fiber optic cable factory producing 3 million kilometers of cables annually and exporting 40% of its output to Europe, the Middle East, and Africa. Alongside the factory, a $300 million technology investment fund, led by the Tsinghua Unigroup, will develop cloud services, data centers, electronic chip design, and artificial intelligence (AI) applications tailored for Arabic language products.⁸⁶ That same year, Huawei was chosen to facilitate the rollout of 5G throughout Egypt.⁸⁷

Notably, Egypt’s technology cooperation with China proceeded despite Washington’s warnings against the adoption of Chinese 5G technology. Citing security concerns relating to cyberespionage, data security, and intellectual property right theft, the United States argued that such infrastructure could compromise security cooperation.⁸⁸ While the Trump administration’s warnings had a mixed effect,⁸⁹ Cairo opted to hedge by partnering with both Huawei and Finnish telecom champion Nokia to roll out its national 5G network.⁹⁰ Egypt’s decision to balance these partnerships reflects not only Washington’s limited leverage over its allies’ technology decisions, but also the significant benefits provided by Egypt’s partnership with Huawei. Beyond considerations of cost, reliability, and quality, the partnership offers tangible advantages in technology transfer, localized production, and research and development capacity building, all of which align with Egypt’s technology development goals.⁹¹

 

Energy: An Instrument of Managing Egypt’s Great Power Relationships

Egypt’s energy policy, particularly in gas and renewables, constitutes one of the country’s most visible arenas of international cooperation and strategic positioning. By expanding gas infrastructure and renewable energy megaprojects, Cairo aims to become a regional energy hub and reorient to an export-led model. At the same time, however, it is constrained by declining domestic gas production, rising demand, and geopolitical supply shocks, compelling it to resume liquified natural gas (LNG) imports and deepen its energy partnerships with major powers.

The 2015 discovery of the offshore Zohr gas field — one of the largest in the Eastern Mediterranean, with an estimated reservoir of 30 trillion cubic feet — transformed Egypt’s energy position, enabling it to become a net LNG exporter by 2018. At the same time, it fostered infrastructure that allowed Egypt to become a key re-exporter of Israeli gas to Europe through. its two Mediterranean liquefaction plants at Idku and Damietta. This provided a unique infrastructure advantage, particularly as EU gas demand shifted following the Russia-Ukraine war. In 2022, Egypt signed a tripartite gas export agreement with Israel and the EU, positioning itself as a Mediterranean alternative to Russian supply.⁹² One year later, it had become the world’s 12th-largest LNG exporter.⁹³ Yet by mid-2023, declining output at Zohr and surging domestic consumption during summer heatwaves led to severe blackouts and the suspension of Egypt’s LNG exports.⁹⁴ Egypt reverted to a net energy importer, with imports accounting for 20.3% of total energy supply in 2023 — a staggering 656% increase since 2000 — heavily relying on long-term gas imports from Israel.⁹⁵

Beginning in October 2023, the Israel-Hamas war compounded these vulnerabilities, prompting several temporary shutdowns of Israel’s Leviathan gas field amid escalating regional tensions. This resulted in intermittent disruption of Israeli gas exports to Egypt.⁹⁶ As a result, Egypt’s dependence on Israeli gas has evolved from a geopolitical advantage to a strategic liability, especially in light of rising LNG import costs, which exceeded $3 billion monthly in 2025.⁹⁷

Egypt’s gas strategy evolved alongside an equally ambitious plan to develop renewable energy. Renewable capacity reached 9.1 gigawatts by the end of 2025, the highest in North Africa.⁹⁸ By focusing on renewables, Egypt can more efficiently leverage financing for its megaproject-driven economy. Flagship projects like the Benban Solar Park, Africa’s largest photovoltaic power station, have attracted billions in foreign investment and created thousands of jobs.⁹⁹ However, the share of renewables in Egypt’s electricity generation reached only 10.6% in 2022, well below the national target of 20%.¹⁰⁰

Green hydrogen has emerged as a cornerstone of Egypt’s renewable strategy. As president of COP27 at Sharm El-Sheikh, Cairo catalyzed a plethora of ambitious memoranda of understanding with Gulf, European, and Asian partners for green hydrogen and ammonia production, largely centered in the Suez Canal Economic Zone (SCZone). However, implementation remains limited due to insufficient renewable capacity and financing constraints.¹⁰¹

Importantly, Egypt’s energy sector has become a key vector for managing its great power relationships and its middle power diplomacy more broadly. As Egypt grapples with mounting energy insecurity — exacerbated by declining gas output, soaring import costs, and infrastructure stress — it has adopted a multipronged strategy that leverages foreign interest in gas and renewables to secure financing, technology, and geopolitical relevance.

U.S. and Western alignment remains strong in Egypt’s conventional energy development. Chevron, ExxonMobil, and BP are active in upstream gas projects responsible for producing around 70% of Egypt’s total natural gas output.¹⁰² At the same time, Egypt has increasingly relied on China to support its renewable energy expansion. Chinese state-owned enterprises and development banks have played a central role in solar infrastructure, green hydrogen, and port development, with recent expansion into hydrogen production, petrochemicals, and logistics in the SCZone.¹⁰³ Today, China dominates Egypt’s photovoltaic solar supply chain, offering cost-effective options.¹⁰⁴ Egypt’s green hydrogen ambitions have deepened this engagement, as demonstrated by the planned SCZone complex involving China State Construction Engineering Corporation and South Korea’s SK Ecoplant, which will use 800 megawatts of renewables to produce 250,000 tons of green ammonia and 50,000 tons of hydrogen annually.¹⁰⁵

As with other policy domains, Egypt has increasingly looked to regional partners to achieve its objectives. For the Gulf, Egypt offers its geographic advantage at the crossroads to the European market.¹⁰⁶ Gulf actors, such as the UAE and Saudi Arabia, co-invest in solar and hydrogen projects to foster regional electricity trade.¹⁰⁷ The Gulf is also seen as a viable alternative to Israeli gas imports, with Cairo reportedly in advanced talks with Qatar to provide LNG.¹⁰⁸ 

Egypt’s proximity to Europe, coupled with its renewable energy potential and energy export infrastructure, has made it central to the EU’s Mediterranean energy diversification agenda. As previously outlined, the 2022 tripartite gas agreement with Israel and the EU sought to cement Egypt’s role as a liquefaction and transit hub for East Mediterranean gas. Additional memoranda with the EU have focused on green hydrogen, electricity interconnectivity, and joint decarbonization planning.¹⁰⁹ Cairo further solidified its regional role by co-founding the East Mediterranean Gas Forum (EMGF) in 2020 with member states including Israel, Cyprus, Greece, Jordan, and Italy. The organization aims to create a regional gas market, reduce infrastructure costs, and enhance the export competitiveness of East Mediterranean gas. ¹¹⁰ Furthermore, regionally proximate financial institutions, including the European Bank for Reconstruction and Development and the African Bank for Development, have invested large sums in renewable capacity building, through projects such as the Benban Solar Park.¹¹¹

Overall, energy and climate policy form a critical axis of Egypt’s geopolitical and developmental strategy. Despite setbacks in gas production and renewable energy project implementation, Egypt continues to position itself as a key energy node linking the Middle East, Africa, and Europe. By leveraging its geographic location, strategic infrastructure, and diversified partnerships, Egypt utilizes its energy position as a tool for diplomatic hedging and structural transformation, rather than merely to achieve specific policy objectives in the energy sector. However, as global markets shift toward decarbonization, Cairo’s ability to maintain this position will depend on accelerating renewable energy deployment, improving resilience to external shocks, and ensuring equitable and well-financed climate adaptation.

 

Military Relationships as a Guarantor of Strategic Autonomy

Egypt has recalibrated its defense policy over the past decade, driven by regional instability, shifting global alignments, and internal regime dynamics. Today, its defense strategy is anchored in two interrelated priorities: mitigating regional instability and reducing overdependence on the military-defense partnership with the United States. The post-2011 security landscape presented Cairo with an unprecedented array of domestic and regional threats, which made security planning significantly more challenging. The rise of violent extremism in the Sinai Peninsula compelled the military to shift from conventional warfare to sustained counterinsurgency campaigning, requiring the deployment of advanced surveillance systems, unmanned aerial vehicles, and rapid-reaction units.¹¹² Simultaneously, the collapse of state authority in neighboring Libya created a porous western frontier exploited by arms traffickers and jihadist networks, compelling Egypt to upgrade its border surveillance.¹¹³

To the south, the GERD emerged as an existential threat to Egypt’s water security, prompting Cairo to expand its joint operations and military diplomacy across the Nile Basin and the Horn of Africa.¹¹⁴ These regional security concerns were further exacerbated by the 2023 Israel-Hamas war, specifically regarding the potential forced displacement of Palestinians from the Gaza Strip to the Sinai. Cairo declared this prospect unacceptable, with President el-Sisi framing it as a “red line” for Egypt’s security. 

Coinciding with the aforementioned rift in the U.S.-Egyptian military relationship, these emerging security challenges triggered a major reassessment of Egypt’s defense planning. This shift was driven by an acute urgency to diversify its military procurement and reduce reliance on any single provider. As a result, Egypt shifted significant arms deals to France, Germany, Russia, and — increasingly — China, not only to meet critical defense needs but to hedge against overreliance on the U.S. and preserve strategic autonomy.

Procurement data confirms this shift. Between 2013 and 2023, Egypt reduced its reliance on U.S. suppliers, with American arms comprising only 23% of its defense imports, down from 75% in the previous decade.¹¹⁵ In parallel, during the same period Egypt became the world’s third-largest importer of Russian arms, with military purchases increasing by over 44%, and Africa’s top buyer of Chinese military equipment.¹¹⁶ Egypt is leveraging its regional centrality not to contest the global order, but to sustain a megaproject-driven political economy underpinned by diversified ties to Washington, Moscow, Beijing, and Europe. This report examines how Cairo’s strategy of “strategic partnership without strategic alignment” has successfully extracted geopolitical rent and consolidated regime legitimacy, while largely avoiding great-power entanglements. This growing defense partnership was complemented by a landmark 2015 agreement between Egypt’s Ministry of Energy and Russia’s ROSATOM for the construction of a 4.8-gigawatt nuclear power plant, with a $25 billion Russian loan covering roughly 75% of total project costs.¹¹⁷

Egypt’s budding military and defense relationship with China has been particularly visible in drone technology. As of 2018, Egypt accounted for approximately 15.5% of China’s global drone sales, making it one of the top purchasers of Chinese unmanned aerial vehicles (UAVs), with recent reports indicating a move towards joint UAV production.¹¹⁸ The acquisition of Wing Loong UAVs has bolstered Egypt’s surveillance and combat capabilities, particularly in counterterrorism operations, providing Cairo with cost-effective, rapidly deployable, and relatively sophisticated multipurpose systems.¹¹⁹ Beyond drones, Beijing has supplied Egypt with various missile systems,¹²⁰ and — according to some reports — the Egyptian Air Force has expressed interest in acquiring Chinese Chengdu J-10C multirole combat aircraft.¹²¹ While defense cooperation with China remains limited in comparison to Egypt’s advanced military-to-military relationship with Washington and other Western states, such moves indicate a gradual rebalancing of Cairo’s procurement portfolio as it leverages Chinese technology to offset previous constraints on U.S. military aid packages.¹²² 

Several western analysts have noted that beyond arms sales, China’s defense engagement with Egypt could have broader geopolitical implications.¹²³ Under its “far seas” strategy, Beijing seeks greater naval reach and access to key maritime chokepoints. As such, Egypt’s ports, including Alexandria and Suez, have hosted Chinese military vessels and served as logistical nodes in China’s Maritime Silk Road. However, while naval drills and port calls highlight a marked increase in broader defense cooperation, Beijing’s overall approach remains transactional and calibrated to avoid direct entanglement in regional conflicts.¹²⁴

For its part, Cairo has carefully calibrated its growing military and defense cooperation with Moscow and Beijing to avoid jeopardizing its long-standing relationship with Washington. Successive U.S. administrations have restricted how regional allies, including Egypt, cooperate with strategic rivals such as Russia and China — particularly regarding the acquisition of advanced military and technological systems, such as fifth-generation fighter jets, 5G, and AI systems. In response to Washington’s long-standing refusal to sell Egypt the F-35 to Egypt in order to preserve Israel’s Qualitative Military Edge (QME), Cairo turned to Russia for the Su-35 fighter. However, under pressure from both the first Trump and Biden administrations — and threats of sanctions under the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA) — Egypt cancelled the deal.¹²⁵ Cairo’s interest in purchasing the Chinese J-10C multirole combat fighter also led to speculation as to whether this would elicit similar warnings from Washington and trigger U.S. sanctions, or if the J-10C — as a 4.5-generation system — falls below the advanced fifth-generation fighters threshold that typically activates CAATSA legislation.¹²⁶

Tellingly, Cairo remained interested in the sale despite its recent confrontation with Washington over the Su-35, signaling a willingness to probe the limits of U.S. tolerance. Given Cairo’s inability to meet its defense requirements within the limitations imposed by the U.S.-Egyptian security partnership, Egypt will likely continue to strike a balance between diversifying its procurement for advanced weapons systems and mitigating the risks associated with challenging U.S. restrictions.

China’s willingness and ability to provide sophisticated defense technologies that Western partners often hesitate to supply serves as a critical driver in this emerging relationship. While Russia has previously offered an alternative source of military hardware, the war in Ukraine — along with resulting geopolitical tensions and intensified U.S. sanctions — may complicate Egypt’s access to Russian equipment. In contrast, Beijing presents a less challenging and potentially more reliable avenue for advanced weaponry. By filling gaps that the United States, Europe, or Russia cannot or will not address, China not only strengthens its position as a key defense partner in the Middle East but also gains strategic leverage in a region of growing geopolitical significance.

This overarching hedging strategy also explains Cairo’s marked increase in military purchases from a diversity of other sources, in particular France, Germany, and South Korea.¹²⁷ France has emerged as a key defense partner, supplying submarines, missile systems, and 30 Rafale fighter jets in a €4.5 billion deal signed in 2021.¹²⁸ Similarly, Germany’s authorized arms sales to Egypt reached €4.34 billion in 2021 alone, more than any other single-year export in the country’s history, largely centered on naval assets such as submarines and patrol vessels.¹²⁹ These partnerships reflect shared security interests in regional stability, while also responding to Egypt’s growing demand for diversified, high-tech weaponry. Such capabilities are essential for Cairo to project force in the Red Sea, Eastern Mediterranean, and Sahel.

Overall, Egypt’s evolving security strategy reflects a deliberate attempt to hedge against Western — and in particular U.S. — conditionality, capitalize on multipolar competition, and enhance strategic autonomy. While the United States remains a core partner, especially in terms of intelligence, training, and overflight rights over Egyptian airspace, Cairo’s defense procurement diversification underscores its intent to reduce dependency and expand maneuverability in a turbulent regional environment. This hedging posture supports Egypt’s broader strategy as it seeks functional, interest-based defense partnerships across rival blocs, while reinforcing the Egyptian Armed Forces’ central role as both domestic power broker and regional actor.

 

Conclusion and Recommendations: The Success and Limitations of Egypt’s Middle Power Role

The link between Egypt’s political economy and its management of great power relationships has become the hallmark of its contemporary middle power role. Rather than effecting a strategic shift in overall foreign policy with potential global strategic implications, Egypt’s middle power diplomacy has focused on the instrumentalization of its strategic partnerships. This transactional, pragmatic approach is designed first and foremost to sustain the regime’s ambitious domestic economic agenda. 

Measured against this objective, Egypt’s middle power diplomacy has achieved significant success. Cairo’s ability to employ its position for diplomatic leverage, extract geopolitical rent by enhancing its strategic value, and secure diverse external resources on a large scale — all while avoiding the pitfalls of rigid alignment with its partners — has validated the core tenets of its foreign policy. As such, Egypt’s power role has largely fulfilled its intended function: guaranteeing a steady stream of external support to consolidate the regime’s foundational political economy model. 

However, while these factors suggest that Egypt has been successful in its middle power role in the near term, they also expose the limitations and inherent vulnerabilities of this position in the future. The predominantly bilateral nature of Egypt’s diplomacy means that its middle power role is unlikely to impact great power competition at the global level. This contrasts with other middle powers like India, whose complex relationship with China remains a critical factor across a myriad of strategic issues, including the U.S.-China rivalry, Indo-Pacific security, and global governance regarding finance, technology standards, supply chains, and climate diplomacy.¹³⁰ Similarly, middle power dynamics in East Asia have a direct global bearing, as the region serves as a major theater for U.S.-China competition, a factor that greatly complicates the bilateral relationships that middle powers in the region maintain with both Washington and Beijing.¹³¹

Here, Egypt’s positioning reveals the inherent limitations of its middle power role. While it employs hedging strategies to balance U.S. and Chinese influence — similar to other middle powers — its capacity to exert collective global weight together with these middle powers remains limited by structural dependencies, particularly on external finance and energy markets. While Egypt shares overlapping interests with countries like India, Brazil, and the UAE — especially in renewable energy, green finance, and multipolar economic partnerships — these relationships are often transactional rather than strategic. Egypt’s participation in BRICS+, for instance, reflects a desire for alternative financing and South-South cooperation but has yet to translate into collective bargaining power.

Because the Sino-Egyptian relationship rarely affects global politics or shifts the balance of power, it remains primarily transactional. This has allowed the growing matrix of ties between Cairo and Beijing (and, to a lesser degree, Moscow) to develop largely unencumbered by the strategic tensions of the global U.S.-China competition. Consequently, the most appropriate framework for analyzing Egypt’s great power relationships is one of strategic relationship management at the bilateral, rather than global, level. Assessing how Cairo, Beijing, and Washington have each adopted a distinctive approach to managing these bilateral relationships can shed light on Egypt’s future trajectory within the dynamics of great power competition.

For Egypt, this approach is predicated on managing both the Sino-Egyptian and U.S.-Egyptian relationship on separate tracks, leveraging its middle power position to maximize the benefits from each. At the same time, Cairo looks to its growing ties with Beijing (and Moscow) to hedge against its often-uncertain relationship with Washington. Egypt’s participation in global frameworks heavily influenced by China — particularly as a member of BRICS+ and a dialogue partner in the Shanghai Cooperation Organization (SCO) — does not reflect a desire to take sides in the great power competition. Instead, it reflects an interest in diversifying its engagement across Western and non-Western fora alike, all the while seeking opportunities that translate into direct benefits for its domestic development agenda. 

Accordingly, alongside BRICS and the SCO, Cairo has intensified its engagement with the G20 and G7 at the summit and working levels. It has also deepened its long-standing relationships with traditional development partners, including the EU, IMF, and World Bank, as well as the Arab Gulf states. Egypt’s economic crisis during the first half of 2024 clearly demonstrated the benefits of this diversification strategy. To stave off economic collapse, Egypt relied on the collective efforts of these actors to put together a robust rescue package totaling $70 billion, with contributions from the EU, an augmented loan from the IMF, and a massive UAE investment in the Ras El-Hekma project.¹³² It was a textbook example of Egypt’s ability to extract geopolitical rent in return for its stabilizing role in the Israel-Hamas war. 

In essence, Egypt’s continued reliance on Western financial support, its desire to maintain its strategic partnership with Washington, and the imperative to maximize returns on its geopolitical rent all mitigate against a formal strategic alignment with China. For Cairo, managing these diverse relationships is an exercise in balancing competing objectives; it seeks to maximize benefits from its relationship with China while maintaining its dependence on the United States — and by extension other Western partners — especially given its ongoing economic predicament. 

China’s approach to managing its increasingly diversified partnership with Egypt is similarly predicated on recognizing the inherent limitations of the relationship. Beijing does not seek to compete with Egypt’s long-standing relationship with the United States. Instead, it wants to carve out a distinct partnership that can safeguard its interests regarding the BRI-MSR project and ensure a firm political relationship with the region’s largest Arab state, anchoring Beijing’s position in the Middle East. Given Beijing’s limited regional security profile, the thorny issues of Middle Eastern geopolitics do not intrude on its relationship with Cairo in a way that would impinge on the interests of either actor. 

In contrast, the United States views Egypt’s relationship with China in more competitive terms. For Washington, Cairo’s growing ties with Beijing do not challenge the core tenets of the U.S.-Egyptian partnership: Egypt’s regional policy orientation (especially with respect to Israel) and the military-to-military relationship that anchors Cairo’s role as a regional stabilizer. However, the significant expansion of the Sino-Egyptian relationship has put Washington on edge, especially as it pertains to technology and defense. These concerns are not rooted in the prospect of a full strategic alignment between Egypt and China, but rather in the need to prevent the bilateral relationship from expanding in ways that could compromise U.S. security interests with a key regional ally. 

Consequently, the long-term sustainability of Egypt’s  power role will depend on its ability to address two fundamental challenges. The first relates to the fragile political economy model driving Egypt’s domestic development. The reliance on capital-intensive megaprojects, energy exports, and external financing reflect a rentier-based system — enhanced by Egypt’s successful strategy of geopolitical rent — rather than a strategy for deep socioeconomic transformation. Economic diversification remains constrained by a weak industrial base, currency volatility, and the heavy involvement of military-affiliated business entities, discouraging private-sector innovation. As such, Egypt’s export-oriented vision is not yet accompanied by broad-based productivity or technological upgrading — key conditions for sustainable middle power influence. 

Egypt’s reliance on strategic rent — through geography, energy, and global supply chains — thus presents short-term leverage but long-term fragility. While Egypt has adeptly leveraged its middle power position to expand its bilateral great power relationships and enhance strategic autonomy, its independence remains fragile. Over the long term, it will be difficult to sustain, with Egypt’s particular political economy model rendering it vulnerable to external shocks from global commodity prices, capital flows, and regional stability. This was demonstrated repeatedly over the last decade through the COVID-19 pandemic, the Russia-Ukraine war, and the Israel-Hamas war. ¹³³ 

The second challenge lies in the evolving dynamics of great power competition, particularly a potential shift in Washington’s tolerance for the autonomy afforded to its allies vis-à-vis its rivalry with China. Specifically, U.S. policy could move toward drawing “red lines” that define the boundaries of allied engagement with China, forcing a binary choice between Washington and Beijing across the areas of trade, technology, and defense. The Trump administration has already indicated the possibility of such a shift, framing BRICS as a hostile trading bloc.¹³⁴ Beyond the administration’s focus on global trade, a strategic or regional crisis could also trigger a shift. Possible examples include a future U.S.-China confrontation over Taiwan, a rupture in the U.S.-Egypt relationship over Washington’s support for Israel annexing the West Bank or forcibly displacing Palestinians from Gaza into Egypt, or a less supportive U.S. posture toward international rescue packages for Egypt’s distressed economy. 

Any of these developments could trigger a reassessment in Washington or Cairo, thereby challenging Egypt’s ability to continue managing its great power relationships along separate tracks. For Egypt, this dilemma would not only threaten its policy of “strategic partnership without strategic alignment,” but would also pose a threat at the domestic level, jeopardizing the regime’s stability. Given its heavy dependence on diverse external sources of support to sustain its current “State Capitalism 3.0” model, losing access to any major partner would undermine Egypt’s political economy. 

 

Policy Recommendations

 

For Egypt

Localize benefits of strategic partnerships

To maximize the developmental impact of its international engagements, Egypt must localize the benefits from its strategic partnerships. While current energy megaprojects and defense procurement deals have attracted substantial foreign investment, they often provide limited returns regarding domestic technology transfer, employment, or long-term industrial upgrading. To address this gap, Egypt should include enforceable provisions for local content, vocational training, and technology transfer in all large-scale agreements — particularly in sectors such as green hydrogen, renewable energy, and defense manufacturing. Such measures would enhance domestic value capture, support skills development, and ensure that the strategic benefits of these partnerships extend beyond elite or military actors to broader segments of Egyptian society.

 

Use climate finance as a platform for global influence

Egypt should frame its climate vulnerability as both a moral claim and strategic asset in global negotiations. Given its exposure to water scarcity, heatwaves, and coastal degradation, Egypt has a significant stake in shaping the contours of the international climate regime. Rather than acting strictly as a recipient of external support, Cairo can lead a coalition of African and Middle East and North Africa middle-income countries advocating for debt-for-climate swaps, more transparent and accessible concessional finance, and equitable green industrial standards. By advancing these demands in multilateral forums such as COP summits and BRICS, Egypt can position itself as a rule-shaper in the global green transition — particularly in relation to EU- and Chinese-led value chains — thereby enhancing both its international standing and the developmental returns of its climate diplomacy.

 

Forge South-South coalitions around shared development goals

Egypt should forge stronger South-South coalitions around shared development goals to enhance its strategic influence in a rapidly shifting global order. While Egypt lacks the weight to reshape international norms, coordinated action with like-minded middle powers — such as Brazil, Indonesia, and South Africa — can significantly amplify its bargaining position. By pursuing structured dialogues and aligning on key policy areas like investment screening, technology standards, and labor protections in multilateral platforms, these coalitions can exert collective leverage. Such cooperation would help shape the behavior of major powers like the United States and China, curb harmful race-to-the-bottom dynamics, and promote a more balanced and equitable system of global governance.

 

For the United States

 

Reinforce Egypt’s Role as a Regional Stabilizer

Egypt’s role as a regional stabilizer has anchored not only its middle power status, but has also been the cornerstone of the United States-Egyptian strategic partnership. As reflected throughout this paper, that role has reaped tangible benefits for both Washington and Cairo even when their respective policies have diverged on particular issues. Overall, Egypt’s middle power role has proven to be a strategic asset for U.S. interests, as reflected in Cairo’s critical mediation role in the Gaza war and during the 2026 conflict with Iran. During the latter, Egypt actively contributed to the ongoing negotiation effort as part of the regional ‘quartet’ together with Saudi Arabia, Pakistan and Turkiye, all the while preserving the tenets of its relationship with Israel during highly challenging regional circumstances. This reality underscores the rationale for Washington to bolster Cairo’s regional role. Upholding the traditional pillars of the U.S.-Egyptian relationship, most importantly, the military-to-military relationship, is critical in this regard. In addition, ensuring constant diplomatic engagement with Cairo on regional security and conflict resolution efforts would be a worthwhile investment that could pay dividends with respect to critical conflict arenas such as Sudan, Libya, Syria, and the Gulf, in addition to the Israeli-Palestinian arena, which has been the traditional focus of U.S.-Egyptian diplomacy. 

 

Don’t Neglect the Egyptian-Israeli Relationship

An often neglected dimension of the U.S.-Egyptian relationship is that it is in fact not just bilateral, but trilateral involving Israel, a reality that requires constant attention from Washington. Although the Egyptian-Israeli relationship has withstood numerous challenges ever since the conclusion of the 1979 peace treaty, it should not be taken for granted. Recent tensions over Israel’s military campaign in Gaza, especially the constant threat of forced displacement of Palestinians into the Sina, and long-standing differences over limitations on U.S. weapons sales to Egypt in accordance with Washington’s policy of preserving Israel’s qualitative military edge (QME) provide only some examples of this reality. Addressing these and other issues will require constant vigilance from Washington. Preventing the spill-over effects of the Gaza conflict into Egypt, and the Egyptian-Israeli relationship more broadly, while managing the QME issue in a way that does not undermine the US-Egyptian military relationship should be the focus of this effort.

 

Refocus on economic reform as a core element in the U.S.-Egypt bilateral relationship

Despite Egypt’s successful diplomacy, the over-militarization of its political economy model presents a long-term challenge to the sustainability of its middle power role. This model’s detrimental economic effects have been repeatedly highlighted by international financial institutions and economic analysts: the erosion of private-sector dynamism, challenges to long-term investment and export competitiveness, and the concentration of economic risk in opaque and centralized institutions, which distorts competition and crowds out private initiative. This model’s fragility is Egypt’s greatest vulnerability as it seeks to sustain its middle power position.

A serious economic course correction is thus required to enact a reform agenda focused on meaningful state divestment from non-strategic sectors and the introduction of legal safeguards to ensure fair market competition. Such measures would help build a more resilient and inclusive economic base that is less vulnerable to geopolitical shocks and elite capture. In turn, this highlights the need to reintroduce economic reform as a core element in the U.S.-Egyptian relationship. While avoiding the pitfalls of hard conditionality in its assistance packages to Egypt, Washington has the scope to leverage aspects of the relationship to encourage a more reform-oriented policy approach. This could involve providing incentives for enacting the challenging reform agenda prescribed by the IMF, while making it clear that further international rescue packages will be more challenging to put together without tangible progress towards implementation of economic reform measures. 

 

Resist the temptation to impose a binary choice on Egypt’s Great Power diplomacy

Pressuring Cairo to abandon its hedging strategy would have potentially profound consequences for Egypt’s  power diplomacy as well as the sustainability of its “State-Capitalism 3.0” model, which is a critical pillar of regime resilience. Given these stakes, forcing a binary choice could prompt a shift toward a more pro-China alignment, jeopardizing its long-standing strategic partnership with Washington. 

The consequences for U.S. interests could be profound. At the regional level, one only needs to recall the strategic impact of Egypt’s defection from the Soviet camp toward the United States during the mid-1970. It marked a historic turning point in Cold War politics, profoundly affecting the balance of U.S.-Soviet competition in the Middle East. Globally, forcing an either-or choice on Egypt could create a demonstration effect, influencing the alignment of other middle powers and how they manage their own hedging strategies amid U.S.-China rivalry. Thus far, Egypt’s approach to its great power relationships has not imposed significant costs on U.S. interests, with Cairo still firmly invested in its strategic partnership with Washington despite long-standing tensions. For the foreseeable future, a “do no harm” policy — where Washington communicates its key concerns to Cairo while allowing it to pursue its transactional diplomacy with Beijing — represents the least risk to U.S. interests.