Why is Egypt jumping into Houthi war? First, follow the money.

Why is Egypt jumping into Houthi war? First, follow the money.

Egypt's parliament has voted, after two postponements, to authorize President Abdel-Fattah el-Sisi to take “necessary measures” to help defend Saudi Arabia against the Houthis, the Iran-aligned group that controls much of Yemen and has spent weeks firing missiles and drones at the kingdom’s airports and fossil fuel infrastructure. It took weeks of debate in the halls of power for the parliament to ultimately give Sisi the greenlight. This is unusual given that the chamber is largely pro-government and normally gives the president what he asks for. A handful of members abstained over concerns that relevant details — such as the length of the mission, the cost, how many troops would be sent — were never disclosed. Their complaints reflect deep unease in Egypt about being dragged into a foreign war. To understand why Sisi has pushed to provide military support to Saudi Arabia, despite institutional reluctance, one must follow the money. Saudi Arabia keeps roughly $10.3 billion parked at Egypt’s central bank. These deposits count toward Egypt’s foreign-currency reserves. Add accounts owned by Kuwait and Qatar and the total is about $18 billion, close to one-third of Egypt’s $57 billion of reserves. Egypt relies heavily on these deposits because it is one of the world’s biggest wheat importers. It also buys an increasing amount of fuel from abroad and owes billions in interest to foreign lenders, all in dollars, which it does not, on its own, earn enough of. There is no public indication that Riyadh tied those critical deposits to Egypt’s military support. But Cairo does not need to be asked. Its pound just hit a record low of 56 to the dollar. Debt service — interest plus repayments — takes about 64% of this year’s budget, and the interest payments alone cost more than the state spend on education, health, wages and subsidies put together. A government in this position cannot easily say “no” to one of its main financial backers. Egypt has spent decades avoiding foreign entanglements, especially in Yemen. In 1962 then-President Gamal Abdel Nasser sent troops there to back the republicans in a civil war. The republicans ultimately won, but Egypt was bogged down for years and lost thousands of soldiers. Yet staying out has proved much harder than Egypt hoped. When Iranian missiles hit the United Arab Emirates earlier this year, Abu Dhabi, which rescued Egypt’s economy in 2024 with a blockbuster $35 billion property deal on the Mediterranean coast, complained loudly that its Arab friends were doing nothing. Cairo then quietly sent a detachment of Rafale fighters, which only became public knowledge when Emirati state media showed Sisi inspecting the jets during a visit. The lesson learned from that episode is that Gulf money comes with an expectation of visible loyalty. Saudi Crown Prince Mohammad bin Salman (MBS) later flew to Cairo in September, reportedly to ask for help responding to escalating Houthi attacks on the kingdom. Egypt’s readout of the meeting was emphatic, framing Saudi security as “an integral part of Egypt’s national security.” But it never named the Houthis or pledged concrete military support. It also paired its rhetorical backing for the kingdom’s security with a call for a political settlement in Yemen. Six weeks later, Egypt’s parliament has handed Sisi the authority to do more, though he emphasizes that the mission is defensive and “does not include an attack on Yemen.” Cairo’s top diplomat, Badr Abdelatty, has also stressed that “all opportunities for reaching political solutions must be explored.” Cairo is thus trying to provide symbolic support to Riyadh without becoming a party to its war. This keeps a key backer happy but does nothing for Egypt’s other exposed pillar, the Suez canal, which is one of Egypt’s most important earners of foreign currency, and carries about 12% of world trade. The canal earned $10.2 billion in 2023, but when the Houthis began attacking Red Sea shipping in solidarity with Gaza and forced vessels to sail around Africa instead, that figure fell to about $4 billion in 2024. The canal authority is hoping for $8 billion in fiscal year 2026/27, but that target assumes the Red Sea calms down — an unlikely prospect at the moment. Since July, the Houthis have declared a blockade on Saudi shipping. In September, they seized the Yemeni ports of Mocha and the island of Mayun, giving them a grip on the Bab al-Mandeb Strait, the narrow gateway at the southern end of the Red sea through which every Suez-bound ship must pass. Cairo reportedly set up a crisis unit and opened channels to the Houthis in response. An Egyptian source told The New Arab those channels were used to press the group to avoid escalation and keep the strait open to shipping. Egypt has little leverage to do more since it formally still belongs to the Saudi-led coalition backing Yemen’s internationally-recognized government, which has prevented Cairo from developing diplomatic channels with the rebel faction. Above all of this sits the wider war between the U.S., Israel and Iran, now in its eight month. This week, envoys from Saudi Arabia, Turkey and Pakistan — the three members of the Mecca Pact, which Egypt says it is “seriously considering” joining — flew to Tehran to discuss de-escalation. No concrete commitments emerged from the talks. While Egypt may not have a front-row seat in public diplomacy with Tehran, it is quietly working the backchannels. Abdelatty recently told reporters that Egypt is in daily contact with the Iranians, the Americans and regional states to avoid "full-fledged military clashes which would have a very, very negative impact on the people of the region.” Abdelatty made these comments as President Donald Trump muses openly about resuming strikes on Iran after the November 3rd midterm elections. Benjamin Netanyahu, Israel’s prime minister, reportedly pushed for his own attacks against the backdrop of his own country’s elections, in an apparent bid to complicate his opponent’s efforts to form a government. A second round of fighting would hurt Egypt more than the first round. The country has already been hit directly: on July 29 a drone struck a floating gas terminal at the port of Damietta and set two vessels on fire. Nobody claimed responsibility, and Egyptian officials never publicly shared their own findings, but renewed fighting could mean more drones and missiles landing on Egyptian soil. That danger is heightened now that Egypt has formally committed to Saudi Arabia's defense. A senior Houthi figure warned that Cairo’s decision amounts to a “declaration of war” on Yemen, placing Egypt firmly in the line of fire. Egypt imports a growing share of its gas, and another spike in energy prices would add further pressure to a budget that is already stretched. The Suez Canal is also under increased pressure from the Houthis, who are now better placed to squeeze Red Sea shipping. Finally, there are remittances — money that Egyptians abroad send home, which help keep Egypt’s foreign-currency reserves and economy afloat. At least 1.25 million Egyptians work in Saudi Arabia alone. The Iran war has already put the Saudi and Gulf economies under strain, and one Iranian official has warned that if Iran is attacked again, “there will be no more red lines.” Iran has also drawn up plans to hit undersea cables, and its top security official has warned that U.S.-linked data centers and oil facilities across the Gulf could be targeted. Damage on that scale could bring layoffs across the Gulf, changing the math for Egypt’s economy, and stability, very quickly.