**Egypt's Regional Role**

Author:  Phebe Marr
**Summary**
**About the Workshop**
**Background:**
     Egypt recognizes the gradual shift in emphasis in thepost-Cold War world from geopolitics to geoeconomics.Egypt needs to restructure its economy and its defenseposture if it is to play any substantial geostrategic role.Failure to meet this challenge could affect its role as astrong U.S. partner and a moderating force in the region.The workshop examined four aspects of Egypt's futureregional role:
- Egypt's regional aspirations and its capacity to achieve them Regional trend likely to affect this role and the U.S.-Egyptianpartnership
The military posture Egypt will require in the post-Cold War era and itswillingness to adapt to new challenges.
The nature and future direction of the U.S.-Egyptian relationship.
**The New Economic Era and its Perils**
     There was widespread consensus that economic reformwill determine Egypt's future regional role. The post-ColdWar environment has demonstrated the declining utility oflarge military force structures, one of Egypt's mainstrategic assets. Egypt needs to achieve economic growthto underpin any regional role. This challenge will gainincreased urgency if pressures mount in the U.S. to scaleback aid. Aid to Egypt is linked to Israeli aid, and toEgyptian support for the peace process, factors whichshould favor continued economic support for Egypt.       Over the past two decades, U.S. aid has helped Egyptimprove its telecommunications system, its transportation,water, and  sewage facilities, its power generation, andother industrial infrastructure, preparing the foundation fora private sector  take-off . However, without significantlyimproving labor productivity and skills; expandingmarkets; and above all creating a climate attractive toentrepreneurs and private investment, Egypt will be in apoor position to compete on international markets or toattract inflows of needed capital. 
     There was some Egyptian unease over the impendingglobal economic order, epitomized by NAFTA, EU,ASEAN and other large trading blocs from which they areexcluded. In the Middle East, the prospect of an end to theArab boycott of Israel has some Egyptians worried abouttheir ability to compete with Israel. The concern overpotential Israeli economic domination of the region may becontributing to Egyptian caution on fulfilling the economicaspects of the peace process. There is also talk amongsome Egyptians of developing an Arab economic bloc tocompete with Israel. 
**Egypt's Regional Aspirations**
     Egypt no longer aspires to  lead the Arab world ,recognizing that its influence is declining relative to others,but it can exercise influence in several different ways. Itcan set the agenda for the region, as it did in the peaceprocess. It may act as a model in handling domesticproblems, such as  Islamic militants. It can also exerciseregional influence as a core country, linking various sub-regions or  circles . 
     In the near to mid-term, Egyptians suggested a fivefold agenda. First, Egypt needs to complete the  oldagenda  the peace process. Second, it aims to build a moderate consensus  in the region, enveloping radicalelements, such as Libya, into the  mainstream. Third, itwill try to upgrade regional  capabilities, especiallycommunications and transportation links. Fourth, Egyptwill use its cultural products and advantages to promoteregional integration. Fifth, its military, which someAmericans saw as declining in importance, can be used inmulti-national settings to promote regional stability.     Some participants found this assessment too ambitious. Egypt's ability to spur regional economic integration willbe undermined by its weak economy and its need forstructural reform. Its reach in some areas particularly theGulf is limited by local constraints. It is too early to saywhether Egypt can provide a model on how to handleIslamic militants.  And its role in the peace process maydiminish if the peace process succeeds.
**Regional Constraints on Egypt's Role**          Several regional trends are likely to affect Egypt'srole.  First, the Islamic revival, while recognized ashaving indigenous roots in various countries, is nowdeveloping regional links.  Disagreements between MiddleEastern and Western governments on how to deal withthese movements is generating unease. Egyptian officialsworry that U.S. attempts at dialogue with moderate Islamicgroups will encourage militant elements and contribute topolitical instability.
     A second trend has been declining cohesion in theArab world, with regional organizations, such as the ArabLeague, unable to provide decisive leadership.  Egypt hasrecently moved in a more assertive way to fill this gap,both in the Maghreb and in the Eastern Arab world. AsEgypt attempts to exercise more independence and togenerate some inter-Arab cohesion, it may  create sometensions in its relations with the United States and Israel.Most conference participants felt the United States shouldtake these differences in stride.
      One infrequently analyzed but potentially explosivetrend is the emergence of a horizontal divide in MiddleEastern society between Western educated elites and theremainder of the indigenous population. Elites tend toaccept integration into a globalized Western culture, aswell as some of the values underlying it (human rights,democracy, a market economy). Growing segments of thepopulation, excluded from the benefits of reform, arehostile to integration  and reject many of the culturalconcomitants of the Western led order. Their rejection hasbeen legitimized by Islamic movements and slogans. BothEgypt and the West face the challenge of how to deal withthis phenomenon. Senior U.S. policy makers have closerelations with the Egyptian elite, but they must begin totake the needs and expectations of the rest of thepopulation into account and make efforts to reach them.
**The Military Dimension of Egypt's Regional Role**
     The discussion on Egypt's military, its threatperception, and its capacity to respond to regionalchallenges, revealed sharply divergent views betweenEgyptian and Western participants. There was generalagreement on one point, however. Egypt's military wasneeded to help maintain a balance of power favorable tomoderate countries and to keep the region stable. Egypt isboth willing and able to use its armed forces forpeacekeeping missions provided this is accomplished in amultilateral arrangement. 
     The most significant divergence occurred over Egypt'sthreat  perception. In the Egyptian view, the regionalmilitary imbalance between Israel and the Arabs is still athreat. They believe that Israel's dominance in conventionalweaponry, in nuclear capacity, and in  space research anddevelopment, gives it the potential for offensive action, andallows it political leverage. Some Egyptians wereconcerned about the consequences of a change in the Israeligovernment that could affect the peace process and thestability of its borders. 
     There was strong angst over Israel's nuclear program.Eventually, Egyptians would like regional transparency;mutual inspection and verification of the elimination ofWMD; a guarantee by an external power (preferably theU.S.) and eventual elimination of nuclear weapons in theregion. Egypt's   position on Israel's nuclear program hasput it in opposition to Israel and the United States on anissue of importance to the United States.
      By contrast, Western participants saw a low risk of afuture war between Israel and Egypt. They stressed thatIsrael's military doctrine calls for the use of nuclearweapons only in the case of a threat to its survival. Evenif Israel offered to negotiate over its capability, Egypt hasno comparable bargaining chips. 
     While recognizing the need to restructure their armedforces, many though not all Egyptians argued for a largeforce as a necessity in a region where large numbers areequated with power and national prestige, and whereregional competitors (Iran, Iraq, Syria) have large standingarmies. The Egyptian army also plays an important roledomestically in providing employment for large numbersof Egyptians, and in socializing those from poor and ruralareas into civic society. 
     Several Western participants argued that Egypt neededsmaller, high quality, mobile forces, which would be ableto cooperate with others to meet the challenges of a newera. Pointing to successful military reform in Asia (Korea,Taiwan), they suggested that Egypt reduce militarymanpower to free up resources for economic development.If Egypt  strove for interoperability of equipment,doctrine, and planning with U.S. and European forces inNorth Africa and the Gulf, it would improve Egypt'sability to join in regional coalitions with others.      No clear resolution of these differences emerged.Egyptians will probably continue to balance militaryefficiency with political concerns, including  the necessityof a hedge against change in the United States and inIsrael.
**The U.S.-Egyptian Relationship**
     Although Egypt and the United States have aconvergence of interests in many areas (maintainingregional stability, stemming radicalism in North Africa,furthering the peace process, and using the Egyptian armyto support regional peace) three issues have recentlygenerated tensions in U.S.-Egyptian relations. 
      The first is the peace process. The Alexandria summitbetween Egypt, Saudi Arabia and Syria (December, 1994)has generated frictions with Israel, which has accusedEgypt of attempting to slow the peace process and tobolster Syria's negotiating posture. Egyptians claimed thatIsrael was trying to reap the fruits of peace in theeconomic field before making the  necessary concessionson the ground. They also saw problems ahead on Israeliwithdrawal from the territories, the Jerusalem issue, andsecuring an Israeli-Syrian treaty.
     The second is Egypt's role in North Africa, where itis moving to establish closer relations with the ArabMaghreb Union. Fearing an Islamic victory in Algeria,Egypt is cooperating with North African regimes,including Libya, on security. The Libyan connection,however, has created difficulties with Washington.     Third is the issue of Israel's unacknowledged nucleararsenal. Egypt has announced it will not vote for anindefinite extension of the NPT without some gesture fromIsrael in the nuclear area.  Egypt's position has raisedtensions with the United States which needs Arab votes foran indefinite extension of the NPT, up for renewal inApril.  However, Egypt is seeking indications of Israel'sintent to enter serious negotiations with Egypt on WMDbefore the April vote.
     These divergences with the United States were seen asirritants to a relationship which has withstood a number ofvicissitudes over the last 15 years and grown steadily inimportance. However, if these differences are leftuntended, the relationship could unravel, with significantregional consequences for the United States. A friendly Egyptremains vital to U.S. interests. Egypt provides critical airaccess to the Gulf; the Suez Canal is  a vital  strategic waterway, and Egypt's moderate policies are needed as abalance to emergent radical forces in the region. Therelationship needs managerial attention and possibly somebuilt-in institutions, such as high level consultativecommittees, to assure continuity and on-going dialogue.
      There was considerable agreement on the need to focuson the economic side of the U.S.-Egyptian relationship,particularly on ways to encourage foreign investment andtechnology transfer to Egypt. Westerners pointed tonumerous obstacles that still confront U.S. business,including restrictive labor laws that mandate over-employment;  inadequate trade regulations and patent laws; poor credit facilities for small and medium sizedbusinesses and cumbersome tax administration. In an eraof free trade, the Egyptians stressed the need for access toU.S. and European markets, if they are to compete effectively.
**Recommendations**
- Continued high level dialogue is essential to iron out emerging differences;institutionalization ofthis dialogue in a high level joint commission could be productive. Future U.S. aid should be used to encourage privatization and export-orientedgrowth.  In addition,the United States should encourage investor-friendly legislation in Egypt and creditfacilities to small andmedium sized businesses. Cutting U.S. aid to Egypt at the time would have adecidedly negative impacton U.S. regional interests.
More CBMs are needed between Egyptian and Israeli military sectors to erodethe prevailing senseof suspicion and distrust that impedes military restructuring in Egypt andIsrael.
To underpin the relationship, the United States should encourage moreU.S.-Egyptian interactionbelow the leadership level and outreach to a broader spectrum of the Egyptianpopulations.