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Last December, Egyptian security forces stormed the offices of ten local and foreign non-governmental organizations (NGOs). Forty-three NGO workers – including at least 16 Americans – will stand trial February 26 on charges that include operating without an official permit, receiving foreign funds in violation of the law and spending such funds on activities that harmed the country. Washington responded by threatening to cut $1.5 billion in military and economic assistance to Egypt if Cairo doesn’t get the issue resolved.

Now, with the U.S. and Egypt facing their biggest diplomatic crisis in years, Iran has stepped in and renewed offers to end thirty years of bad blood with Egypt, promising economic assistance and investment to compensate for any possible loss of U.S. aid. Over the past year, Egypt has sent signals it may be open to warmer relations – and given these new realities, some parties in the region are concerned that Tehran’s motives may be to take advantage of the new void.

Three decades of bad blood

Egyptian-Iranian relations were sorely strained after President Anwar Al-Sadat made peace with Israel in 1978. Tehran became more furious a year later, when Sadat granted the deposed Iranian shah exile in Egypt. Then, things went from bad to worse when Sadat’s successor, Hosni Mubarak, sided with Iraq in its eight-year war with Iran. And, seemingly, the final blow to the relationship came in 1981, with the assassination of Sadat – an event welcomed in Tehran.

Gawdat Bahgat, NESA

“The main problem, from the Egyptian perspective, was that Iran celebrated the assassination of Sadat,” says Egyptian-born Gawdat Bahgat, a Middle East expert at the Washington D.C.-based Near East South Asia Center for Strategic Studies (NESA) and author of six books on regional politics. “In Iran, they even named a street after the military officer who assassinated Sadat.” He refers to Egyptian Khaled El-Islambouli, a staunch Islamist, who was executed by Egypt and whom hardliners in Iran glorified as “an inspiration and a martyr.”

Mubarak insisted that Iran change the street’s name. Iran eventually complied, but neglected to remove a plaque commemorating Islambouli as an Islamic hero.

Spring thaw

After the fall of Hosni Mubarak in February 2011, Egypt appeared to be reconsidering its relationship with Iran. It allowed Iranian ships to pass through the Suez Canal for the first time in more than 30 years. Then, in April of last year, Egypt’s Foreign Ministry said that while Iran was no friend, Egypt now regarded the country as a regional neighbor with whom it should have relations:

Iran is not perceived as an enemy as it was under the previous regime. — Menha Bakhoum, Foreign Ministry spokeswoman, April 27, 2011.

In August 2011, Egyptian Foreign Minister Nabil Elarabi said Egypt would look to form a healthy relationship with Iran, but “not at the expense of Egypt’s relations with the Arab Gulf.”

1.5 million tourists annually

Mujtaba Amani, head of the Iranian Interests Office in Cairo, told Egypt’s Al-Ahram newspaper this week that U.S. aid to Egypt comes at a high cost.

The United States gives with one hand and takes with the other – and with the feet too.” – Mujtaba Amani, head, Iranian Interests Office, Cairo

Describing Egypt and Iran as “two eyes that are linked by one look,” Amani said Iran is ready to restore diplomatic relations with Egypt and can offer immediate aid to compensate for any cut in U.S. aid.

Amani proposed, among other things, sending tourists to rescue Egypt’s economy. “One-and-one-half million tourists annually,” Amani said, adding that they could begin arriving within a week of any agreement between the two countries.

Given Iran’s circumstances, the offer seems more rhetorical than substantive; after all, since Iran’s own economy is in shatters, it would likely take more than tourists to make up for the loss of $1.5 billion in U.S. aid.

Patrick Clawson, WINEP

But that isn’t to say it’s not an attractive offer, says Patrick Clawson, Director of Research at the Washington Institute of Near East Policy. “The Iranian representative to Egypt was very smart to raise the issue of tourism,” Clawson said, “because Iranians have very limited opportunities to go visit Western countries, and wherever Iranians actually have greater access to visas, they suddenly flood into a place.”

Beyond tourism, Amani told Al-Ahram, Iran could open car production lines in Egypt, creating new jobs, and open up various other investments. “This is in addition to the existing investments,” Amani said, “namely the Egypt-Iran Bank … a maritime navigation company and a textile and weaving company.”

In a related development, Al-Ahram has that a team of Iranian investors will shortly arrive in Cairo to discuss private sector cooperation and the possibility of restoring direct commercial flights between the two countries.

All talk, say some

So why is Iran courting Egypt so doggedly? Alireza Nader, a senior analyst at the RAND Corporation and lead co-author of Coping with a Nuclearizing Iran, says the fall of Mubarak presented Iran with a big opportunity. “From Iran’s perspective, “ Nader said, “Mubarak was basically one of the chief U.S. allies in the Middle East, in the Arab world specifically, and his overthrow, and the success of Islamic parties like the Muslim Brotherhood and the Salafists is viewed by Iranian authorities as an opportunity for Iran to expand its influence in the Middle East and Arab World.”

NESA’s Bahgat points to another advantage of rapprochement: “Iran has been trying to reach out to neighbors to prove to the U.S. that it is not isolated. Egypt is the leader of the Arab world; good relations, diplomatic relations with Egypt would end this isolation.”

Alireza Nader, RAND Corp.

Some observers, however, are not overly concerned over Iran’s recent overtures. For them, they smack mostly of opportunism.

“First of all, Iran is a Shi’a, Persian majority country,” Nader said, “and Egypt is a Sunni Arab country. And it also views itself as the heavyweight in the Middle East, so it’s going to view Iran’s advances with a lot of caution.”

Even if the two nations were to reconcile, Nader says Egypt would follow its own interests as a nation-state and would not likely ever become a base for Iranian influence. “In fact,” Nader adds, “I would say Iranian influence in Egypt is going to be very limited in the future.”

As for Iran’s ability to become a significant source of funding for Egypt, Nader says that too is unlikely, given the state of Iran’s economy under Western sanctions. “A lot of what’s coming out of Tehran on the Egypt-Iran relationship is propaganda and rhetoric,” Nader said. “It’s not really based in reality.”

Patrick Clawson says that the U.S., actually, has never had any objections to Egypt resuming diplomacy with Iran – and, in fact, he could envision it might even have a few benefits. Egypt, long a proponent of a nuclear-free Middle East, might be able to talk Iran out of its nuclear ambitions.

Cecily Hilleary

Cecily began her reporting career in the 1990s, covering US Middle East policy for Dubai-TV English. She has lived and/or worked in the Middle East, North Africa and Gulf regions, consulting and producing for several regional radio and television networks and production houses, including MBC, Al-Arabiya, the former Emirates Media Incorporated and Al-Ikhbaria. She brings to VOA and MEV a keen understanding of the region's top social, cultural and political issues.

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