Egypt trades sovereignty for solvency

The Arab world’s former leader now takes orders from its bankers.

For decades, Egypt was the lodestar of the Arab world—militarily, diplomatically and intellectually. Now it is little more than a supplicant. Its foreign policy is shaped not by grand strategy but by the need for cash. Petrodollars from the Gulf, not Nasser-era nostalgia, now define Cairo’s place in the region.

The decline is rooted in a deep and persistent economic rot. Years of aid and investment—some $100bn from the Gulf since 2013—have failed to fix an economy still dominated by debt and bloated state enterprises. Repeated currency devaluations, including a steep plunge in March, have offered only temporary relief. The recent $35bn sale of coastal land at Ras el-Hekma to Abu Dhabi’s sovereign fund was a stopgap measure disguised as development. It revealed a government willing to offload strategic assets to stave off default.

This dependency has redrawn the region’s power map. The Gulf states, led by Saudi Arabia and the UAE, have moved from benefactors to patrons. They now demand not just gratitude but alignment. Where Egypt once acted as a diplomatic broker, it now follows the lead of its richer neighbours. In multilateral forums, from peace efforts in Sudan to talks on Syria, the likes of Riyadh and Abu Dhabi now sit at the top table. Cairo, once courted by Washington and Moscow alike, is often overlooked.

Military overreach has made matters worse. The armed forces control sprawling chunks of the economy—from cement and pasta to construction and retail—stifling private enterprise and misallocating capital. Egypt’s economic fragility is not just accidental mismanagement; it is the result of a political economy designed to preserve the privileges of the officer class.

There is a way back, at least in theory. A credible reform agenda would curb the military’s economic role, sell off unproductive state firms and target subsidies more effectively. Private investment—domestic and foreign—will only return if it sees genuine competition and a stable macroeconomic path. The government’s recent promises to the IMF hint at this, but delivery has been patchy.

Egypt still matters. Its vast population and strategic location—at the crossroads of Africa, the Middle East and Europe—mean it cannot be ignored. But its era as the Arab world’s compass is over. In today’s Middle East, power belongs to those with capital to deploy, not just history to invoke. Egypt remains on the map. But more often than not, as a debtor, not a decider.

*Lonzo Cook is a journalist and writer. He spent two decades at CNN in a series of senior editorial and management roles including leading breaking news operations across Asia, the Middle East and Latin America. He currently works as a senior communications strategist, partnering with corporations and executives to develop integrated communication strategies to connect with audiences in our fast paced, ever changing engagement landscape.