Why Saudi Arabia is Meddling With Egypt

Saudi Arabia's King has been gushing about Egypt's new President like an over-proud parent at a sports day.

Before the official election results had been announced, but with the final result beyond reasonable doubt, King Abdullah showered praise on Egypt's next president (and former head of the armed forces,) Abdel Fattah al-Sisi.

Sisi's victory was an "historic day and a new state for Egypt" he fawned, calling on the international community to unite for a donor conference, where they could pledge money to Egypt's third president in less than four years.

When it comes to Egypt, King Abdullah has already put his money where his mouth is. After the country's first elected Islamist president, Mohamed Morsi, was ousted in a military coup in July 2013, the Saudis showed their appreciation by opening their wallets.

As the newly empowered army cracked down violently on the Muslim Brotherhood, the West threatened to withdraw support for its leader, Abdel Fattah al-Sisi. Meanwhile, Saudi Arabia cheered the army on and offered to make up any shortfall in Western aid donations. Within a week of the coup, King Abdullah announced an aid package of $12bn (£7.1bn, €8.8bn,) with $5bn from the Saudis and the rest coming from the UAE and Kuwait.

Fast forward to June 2014 and the Gulf States have allied once more to celebrate Sisi's ascent to the presidency. Saudi Arabia and the United Arab Emirates are lining up a $20bn aid package, according to reports in the Egyptian media. The sum would dwarf the annual economic and military grants Egypt received from the US and the European Union, ($1.5bn and $1.3bn respectively) before the 2013 coup.

Following three years of political upheaval, the Egyptian economy is growing at its slowest pace in two decades and in desperate need of stimulus and reform. Amid the perpetual disorder and violence, tourists and investors have fled the country at an equally rapid pace.

In overhauling its ailing economy, which has provided the backdrop for the overthrowing of two presidents in less than three years, Egypt's new president faces a momentous task.

Sisi swept to the presidency on the power of his personality alone. Aside from vague pledges to boost Egypt's poor and attempts to re-start aid contracts from the United States, he has not offered a vision of national prosperity or economic reform.

The country's public finances are sagging under the weight of huge subsidies on energy products and bread. The interim government made some small concessions, hiking the cost of electricity for the richest Egyptians and introducing a smart card system to ration the limit the purchase of bread in suburban Cairo.

In a bid to keep that momentum going, Sisi's kept the interim Prime Minister, Ibrahim Mehleb, in post and is expected to re-appoint other key figures from the interim leadership to his government.

The other major concern for the new administration is the country's depleted foreign exchange reserves. At the end of May, the central bank held $17.3bn in foreign currency. The figure is well above the 2013 low of $13.5bn, when the Gulf States flung aid dollars at Egypt after the coup. Regardless, it remains less than the half the $36bn that Egypt had in reserve before Hosni Mubarak was toppled in 2011.

The state news agency reported that one of Sisi's first meetings after starting his new job was to meet with the central bank governor Hisham Ramez, to discuss ways to improve foreign currency reserves. While the two men addressed long run strategy, the short term deficiency is likely to be made up by the Saudis, Kuwaitis and the Emiratis.

The trio of benefactors were not always this keen to share their vast resources with Egypt. When the economy was in a seemingly terminal slump, they failed to offer Morsi the sort of aid they are putting up now.

Egypt, the Arab world's most populous nation, is seen as a regional leader in politics and society. The power struggles between the people, the army and the Muslim Brotherhood have played out for decades and the state of that battle influences the whole of the Middle East.

When a Brotherhood man won the presidency in the 2012 elections, it put the organisation at the forefront of what seemed like a wave of progressive democracy, washing over the region. Political Islam appeared to be in the ascendancy, not just in Egypt, but in other countries that had overthrown dictators, like Tunisia and Libya. The Saudis, along with its Gulf allies, were horrified – they view the Brotherhood as an existential threat.

No wonder they feel like celebrating. With Morsi and the Brotherhood ousted and criminalised, and a former military chief triumphant in the presidential vote, power is firmly back with the armed forces. The sense of relief will be palpable in the palaces of Riyadh and the royal family is willing to spend whatever it takes to keep it that way.