On January 16, Cairo’s Administrative High Court definitively annulled the sale to Saudi Arabia of the two islands of Tiran and Sanafir, located at the mouth of the Red Sea, "irrevocably" reaffirming Egypt’s sovereignty over them. The ruling puts an end, at least for now, to the already shaky alliance between Riyadh and the government of Cairo, freezing the pipeline project that was expected to transport Saudi oil to the Mediterranean. The pipeline was expected to cross the Gulf of Suez, arriving at Sharm el Sheikh, in southern Sinai, following the course of the new "Salman Bridge", which would have linked the islands to each other and to the mainland, to finally reach the Saudi terminal of Yanbu, on the country’s western coast, connecting the east-west pipeline that links the western Saudi oil terminals with the oilfields located in the eastern provinces of Dammam and Al-Qatif in the Persian Gulf. The project would have guaranteed Riyadh direct access to the European markets, thereby reducing dependence on Asian and North American markets. The Courts verdict was greeted with jubilation by those who, in Egypt, have battled in recent months against the sale of the islands to the Saudis. A protest movement that provoked harsh clashes with the police, resulting in the arrests of activists and journalists. Hundreds of people waiting outside the courtroom celebrated the news of the ruling.
The consequences of the ruling
#Al-Sisi could use its majority to vote for the agreement with #Riyadh on the sale of the two islands, despite the High Court's stop
Egyptian nationalists may be satisfied, but the annulment of the agreement widens the gap between the two countries, and is likely to put an end to the financial support that the Saudi kingdom guaranteed to President Abdel Fatah al-Sisi’s regime, since its inception. In October 2016, Riyadh had already frozen the agreement for oil supplies to Egypt, to punish the government of Cairo for endorsing Russia’s proposal to end the war in Syria, but also for the impasse over the sale of the islands in the Red Sea. Only thanks to the help of Saudi Arabia, the United Arab Emirates and Kuwait, did the government established by the military after the deposition, in the summer of 2014, of the then President Mohammed Morsi, affiliated to the Muslim Brotherhood and supported by Turkey and Qatar, manage to avoid financial collapse. Since then, the government of Riyadh, along with its allies in the Gulf, has granted loans to Egypt for as much as $12 billion: $5.7 billion from Saudi Arabia alone, $4.5 billion from the UAE and $2.7 from Kuwait. The oil price crisis drove the government of Riyadh to considerably reduce aid to all allied countries. However, in exchange for the two Red Sea islands, the Saudis would have granted aid for Egypt’s economic recovery. Therefore, although the sale of the islands appears to be unpopular, Cairo’s government in any case seems determined to overthrow the verdict of the Administrative High Court.
Cairo's next moves
Al-Sisi could still use his parliamentary majority to vote for the agreement with Riyadh. As pointed out in a statement issued by Daam Misr, the main parliamentary group loyal to the President, the final decision on the agreement with Saudi Arabia ''still falls to the people’s representatives''. In the note, the party states that the Constitution ''sanctions the separation of powers and all parties must respect it. The House of Representatives (Egypt’s unicameral parliament, editor’s note) has the right to express its opinions on the matter without regard to the other bodies, and to ratify international agreements. This is a right that it will not give up''. The parliament, in fact, ''is the only body that has the right to decide whether or not an agreement is in line with the Constitution''. In November 2016, the Egyptian Central Bank liberalized the exchange rate of the local pound, after decades of a fixed exchange rate against the dollar. A decision that resulted in an inflationary flare-up, aggravated by the suspension of Saudi oil supplies at a favorable price. The annulment of the agreement also jeopardizes the construction of a deposit for storing crude oil in the Sidi Kerir area, in the Mediterranean Sea, by Saudi giant Aramco, and the construction of a port for receiving liquefied natural gas, butane and fuel oil, the construction of which was announced by Egypt’s oil minister, Tarek al Mulla, shortly after the signing of the agreement between President al-Sisi and King Salman.
The government of Riyadh, along with its allies in the Gulf, granted loans to Egypt for as much as $12 billion: $5.7 billion from Saudi Arabia alone, $4.5 billion from the UAE and $2.7 billion from Kuwait