The Egyptian Transition, 2011-13: How Strategic to Europe?

This paper tackles the political and security complications of the Egyptian transition from its inception in January 2011 until the fall of the Muslim Brotherhood president, Mohamed Morsi, in July 2013, with a primary focus on how these complications are of strategic importance to Europe. It starts with inferring Egypt's role in European Union (EU) approaches to security in the Mediterranean, which were acknowledged in the 2003 European Security Strategy and then largely interpreted in the 2004 European Neighborhood Policy. It argues that the old EU democracy-stability dilemma persisted in Europe's approach to the Egyptian transition, especially during Morsi's one-year presidency. In discussing the current political and security complications of the Egyptian transition and how they constitute strategic concerns to Europe, the analysis tackles undermined social cohesion in Egypt due to processes of repolarization in Egyptian society after July 2013; the question of Egypt's porous borders with the Hamas-controlled Gaza Strip; the emergence of the Sinai Peninsula as a jihadist center; and the rising importance of economics in the EU-Egyptian relationship.

Since the outbreak of the January 25, 2011, uprising in Egypt, many analysts have worked to highlight the strategic and political weight of this pivotal Middle Eastern country to many international and regional actors, particularly the United States and the Gulf monarchies. Prominent issues related to the peace treaty with Israel, the security of the Sinai Peninsula and its implications for Israeli security, the potential role of Iran in the aftermath of the 2011 Arab uprisings, and the changing regional power equilibrium. The stance of the EU, through its multilateral institutions, or even the stances of some of its individual members in the Egyptian transition, were analyzed primarily from a democracy-promotion perspective, with marginal attention to how the many political and security facets of the Egyptian transition are significantly strategic to Europe.¹

EGYPT'S STRATEGIC IMPORTANCE

The EU worked in 2003 to identify key threats to Europe's collective security, placing significant weight on terrorism (with explicit reference to violent religious extremism), regional conflicts (above all, the nearest one in the Middle East), state failure and how it affects regional stability, and organized crime (linked to illegal migration and terrorism). The next year, the EU revamped its engagement in the southern Mediterranean under the Euro-Mediterranean Partnership, launching the European Neighborhood Policy (ENP), with the main aim of creating a ring of friends in areas that are deemed vital to its security and prosperity. This is the appropriate prism for understanding EU efforts, not only to preserve stability, but to promote democracy and help engineer sustainable development.

The relevance of Egypt in this comprehensive EU strategy is major:

First, Egypt enjoys a central strategic location with both political and economic aspects. It has broad regional political influence, military weight, and a high potential to impact Arab politics. The importance of Egypt's geostrategic significance is also clear in regard to the Palestinian-Israeli question. The EU has been eager to influence this conflict, which has gained importance in the aftermath of the Arab uprisings, the Egyptian one in particular. The European Commission noted in mid-2012 that "in 2011, the EU acted with a measure of success to reinvigorate the quartet and has continued its efforts to encourage both Israel and the Palestinian Authority to return to the negotiations table."²

Second, Egypt is the most populous country in the Middle East and North Africa (MENA), with a significant youth bulge. This is an element of domestic strength that could offer political and economic opportunities. However, it also constitutes a serious challenge when evaluated alongside the country's deteriorating economic conditions, widespread religious extremism, and poor capacity of state institutions to provide adequate public services or absorb newcomers into the labor market. A 2010 NATO Parliamentary Assembly report on the implications of the MENA youth bulge notes the security implications, particularly the rise of radical alternatives and the potential drive toward both legal and illegal migration.³ Even if Egypt does not appear frequently as one of the top sources for non-EU migrants, unlike the Maghreb countries, Europe hosts a significant number of Egyptian migrants.⁴ Besides, the youth bulge in North Africa in general, and in Egypt in particular, has been increasingly securitized by EU institutions as well as southern EU members. This also explains the eagerness of the EU, particularly post-2011, to enhance its methods of securing the Mediterranean⁵ and engaging with Egypt on mobility, migration and security, with the aim of concluding a mobility partnership. Recently, EU countries expressed concern that a potential economic collapse in Egypt could prompt a new surge in migration to Europe; the issue was a subject of discussion in the EU's Political and Security Committee in October 2013.⁶

Third, Egypt is strategically important to Europe in terms of energy, specifically regarding its proven natural-gas reserves. Despite post-uprising fuel shortages in Egypt (mainly in production), it remains one of the richest African countries in natural gas. According to 2012 estimates, Egypt has proven natural-gas reserves estimated at 2.2 trillion cubic meters. This makes it one of the three major southern Mediterranean countries in proven natural gas reserves, ranking second after Algeria (4.5 trillion cubic meters) and ahead of Libya (1.5 trillion cubic meters).⁷ In 2010, 51 percent of Egypt's liquefied-natural-gas (LNG) exports were to Europe.⁸ Egypt also plays a vital role in international energy and trade markets through the operation of the Suez Canal and the Suez-Mediterranean Pipeline, important transit routes for oil and LNG shipments from African and Gulf states to Europe and the Mediterranean Basin.

THE DEMOCRACY-STABILITY DILEMMA

When the January 2011 Egyptian uprising started, Europe was mostly hesitant in explicitly siding with the public protests. Initial EU statements did not demand the ouster of Mubarak, rather calling on the regime to cease its violence against peaceful protesters and undertake necessary reforms. Ironically, the then Italian prime minister, Silvio Berlusconi, even praised Mubarak on February 4, saying he hoped "that in Egypt there can be a transition towards a more democratic system without a break from President Mubarak, who in the West, above all in the United States, is considered the wisest of men and a precise reference point."⁹ Many in Egypt have pointed out that the EU did not utterly support Egyptian public demands until U.S. President Barak Obama made his bold announcement on February 2, 2011, in which he noted that Mubarak should leave and that Egypt's transition should begin immediately.¹⁰

The uprising in Egypt made it clear that the Arab region was experiencing a broad spillover effect with highly ambiguous consequences. The EU announced that its ENP in the southern Mediterranean should be fundamentally revised. Generally, the EU response to the uprisings was rapid; a joint communication — "Partnership for Democracy and Shared Prosperity" — was issued by the High Representative of the Union for Foreign Affairs and Security Policy and the European Commission, followed by a new release of the ENP in May 2011. Nonetheless, the new ENP has been heavily criticized as presenting nothing fundamentally new.¹¹ Besides, the assistance offered to countries in transition was judged inadequate. The EU allocated a mere €7 billion to the entire MENA region from 2011 to 2013, a figure sharply at odds with the severe economic situations of recipient countries. Also, the EU decision to postpone its actual implementation of the "more-for-more" approach to the end of 2013 (to start the future allocation of funds in 2014 and beyond) has, at best, indicated a wait-and-see attitude and, at worst, a lack of seriousness in promoting what it labeled "deep democracy."

Regarding Egypt, the complexity of political and strategic factors — added to the rise of Islamist political forces to dominate the scene and marginalize the youth forces — seemed to discourage the initial European enthusiasm about the nascent democracy in the country. After a few weeks of the uprising, the EU seemed to become more reliant on the United States, which enjoys more political leverage in Egyptian politics and holds the high diplomatic cards in the region. Actually, the course that the Egyptian transition took from the January uprising to the fall of Mohamed Morsi, on July 3, 2013, demonstrated the central role of the United States in Egypt's highly debated transition and the lack of an independent and unified European policy.

While the EU has a strong belief in the need to promote democracy and economic development in Egypt — identified in various EU documents as appropriate tools for confronting soft security threats from the southern Mediterranean — Europe's democracy-stability dilemma appears to be continuing. This was clear during the year of the Morsi presidency. From the EU perspective, it was once more facing a regime that did not seem to be progressing towards real democracy, but was reliable in terms of its foreign policy. So, the EU generally praised Egypt's security cooperation, regional conflict prevention and crisis management.

In its two important annual assessment/progress reports on the implementation of the ENP in Egypt in 2011 and 2012, the EU clearly indicates that there were "serious setbacks." These include violations of human rights, restrictions on the work and funding of NGOs, limitations on freedom of expression, interference in media, torture by the police, lack of freedom of religion, and violence against women. Even when the EU progress reports underscore that Egypt has achieved several milestones in its transition, these achievements are described as controversial in other parts of the same reports. Hence, while giving credit to Egypt's efforts in the orderly organization of elections, the end of the state of emergency, and the smooth transition from military to civilian rule, the EU correctly contrasts these efforts with the infamous constitutional declaration that Morsi issued in November 2012, granting himself near-absolute powers and rushing the adoption of a heavily criticized constitution. According to the EU's own description, these actions and the subsequent adoption of that constitution created a state of instability that further pitched the nation into political crisis.¹²

The resulting domestic polarization has been considered by the EU as a security challenge, as it contributed to undermining internal social cohesion.¹³ Equally, the EU contrasts the lifting of the state of emergency in May 2012 with the then existing laws, which allowed prosecutions and trials of civilians under the state of emergency. The culmination of the EU's passive assessment was manifested in the March 2013 resolution of the EU Parliament (a non-binding institution), threatening to withhold budget support to Egypt if it fails to take significant steps to abide by human rights, democracy and the rule of law. The parliament reminded the EU that the €5 billion support package — which the EU together with the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) promised Egypt in November 2012 — is conditional on respect for human rights, democracy and economic fairness. It also further demanded that the EU set clear conditions for its aid to Egypt, with a focus on promoting civil society and women's and minority rights.

Against this backdrop, in February 2013 the EU resumed its formal dialogue with Egypt, suspended in January 2011, under the ENP through an association committee.¹⁴ Further, the EU has actually praised Egypt's cooperative regional role in foreign and security policy. This became clear in the aforementioned progress reports, referring to Egypt's "effective" role in helping to reach a conciliatory agreement among Palestinian factions, signed in May 2011 in Cairo, and in the Shalit swap deal of October 2011; and in its fundamental role in achieving the Gaza ceasefire of November 2012. Besides, reference was made to the broader regional role of Cairo in attempting to find a political solution to the Syrian crisis through an Egyptian-led quartet on Syria with Turkey, Saudi Arabia and Iran (even if this quartet on Syria never met, due to Saudi Arabia's mistrust of Iran, the main supporter of the Assad regime in Syria).

THE MILITARY INTERVENTION

After only one year of Muslim Brotherhood rule, the Egyptian people became extremely frustrated with a leadership that not only did not deliver on the economic front, but polarized the country, undermined social cohesion, diluted the democratic transformation and acted irresponsibly in regard to national security. The youth rebel movement "Tamarod" mobilized tens of millions of Egyptians in mass demonstrations nationwide on June 30. They were eventually aided by the military, which intervened to depose Mohamed Morsi on July 3. While the majority of Egyptians were celebrating the end of Brotherhood rule amid mounting nationalism, the West was angry about what it perceived as a military coup and a retreat from the path to democracy.

Tension rose quickly as both the military and the police forces faced militant jihadists in Sinai, worked to abort angry Brotherhood attempts to incite violent demonstrations, and arrested several of their leaders. The peak came on August 14, when approximately 800 people were killed in confrontations with the security forces, who had started an operation to disperse two pro-Brotherhood sit-ins in Cairo. The new military-backed government, supported by mass public demonstrations on July 26, was convinced that dispersing the two sit-ins with force was necessary, since many of the protesters were armed with both light and heavy weapons, including RPGs.

Europe — both EU institutions and member states — was closely following the rapid course of events and struggling to exert influence. Britain and France were calling for a private UN Security Council debate on the escalating crisis; Denmark suspended two bilateral aid programs worth €30 million; and the EU announced that it would "urgently review" its aid to Egypt. Catherine Ashton flew to Cairo three times in July and October, trying to act as a mediator between the Brotherhood and other political powers, becoming the first foreign official to meet with Morsi after his deposition. Along with Ashton's diplomatic efforts, the EU's special envoy to the Middle East, Bernardino Leon, has been negotiating a peace deal between the Egyptian army and the Muslim Brotherhood.

The prevailing perception in Egypt was that the Europeans were pushed to the forefront of the political mediation scene by the Americans, particularly as anti-American feeling was mounting in the country due to Washington's support of the Brotherhood. It is symbolic but meaningful that, when the White House asked Senators John McCain and Lindsey Graham to travel to Cairo August 6-7, representatives of the Tamarod youth refused to meet with them — though they had met the preceding week with Ashton and other European diplomats. However, the European mediation efforts to include the Brotherhood in a broad conciliation plan, when the Brotherhood and other militant jihadists were inciting violence in the Sinai, Cairo and other cities, reinforced skepticism of the European role among the Egyptian military and interim government.

With the failure of European mediation following the dispersal of the Brotherhood sit-ins, an EU foreign-ministers meeting took place in Brussels to discuss the situation in Egypt. The group agreed on August 21, 2013, to suspend arms sales to Cairo but not to cut economic assistance or limit trade. According to the German foreign minister, Guido Westerwelle, the challenge was "on the one hand to send a clear political signal against violence to Cairo, while on the other hand maintaining lines of communication and possibilities for influence."¹⁵ Prior to that meeting, Germany, Italy, the Netherlands, Norway, the Czech Republic and the UK had all taken steps to restrict arms exports.

The reaction in Egypt was unexpected. Nabil Fahmy, Egypt's foreign minister in the interim government, warned against the "internationalization" of Egypt's crisis and suggested that Cairo could manage without EU help. He told UK Foreign Secretary William Hague and other European foreign ministers, "The Brotherhood and its allies were terrorizing citizens, attacking governmental institutions, hospitals, churches, places of worship [and] causing … a threat to domestic peace and security." He has also called for the country to examine "what aid is being used to pressure Egypt and whether this aid has good intentions and credibility."¹⁶

In fact, the European leverage on the new transitional regime in Egypt is minimal, especially in contrast with the huge assistance funds from the Gulf, estimated at $12 billion. These were committed only after the deposition of Morsi. Saudi Arabia has further announced that it stood ready to compensate for any cut in Egypt's aid. This adds to Egypt's recent attempts to diversify its arms sources, mainly through a rapprochement with Russia. Apart from that, Europe itself promised more aid to Egypt after 2011 than it actually delivered, and Egypt was not essentially dependent on it for arms. It is worth mentioning that the EU's budgeted financial support for Egypt amounted to €1 billion between 2007 and the end of 2013, but the Commission says that the instability in Egypt reduced the flow of aid to Egypt to just €16 million in 2012. No new programs have been approved since then. Besides, the €5 billion that the EU pledged for Egypt in November 2012 — €1 billion directly from the EU, with the rest from the EIB and the EBRD — were already frozen, since they were linked to Egypt's ability to conclude a deal with the International Monetary Fund (IMF).

When it comes to arms sales, the situation is not any better. According to SIPRI's Military Balance of 2013, Egypt's suppliers from 2004 to 2011 were as follows: 82.76 percent from the United States, 5.17 percent from Russia, 6.89 percent from China and 5.17 percent from all European countries.¹⁷ However, figures show that France, Germany and Spain have increased their arms sales to the post-revolutionary country in the past three years. Other notable exporters were Bulgaria, Italy, the Czech Republic, Slovakia, Belgium, Poland and the UK. According to official EU figures¹⁸ on arms-export licenses granted by member states in 2011, European countries have been annually selling some €300 million worth of weapons to Egypt since 2011.¹⁹

CONCERNS FOR EUROPE

Domestic Political Complications

One of the main challenges to Egypt's transition to democracy has been the stiff polarization between the various currents under the umbrella of political Islam and all the other national, liberal, leftist and youth forces, labeled during the first few months after the January 2011 uprising as "civic forces." This was immediately reflected in the first free vote on March 19, 2011, on a few amended constitutional articles.²⁰ This trend was significantly deepened during the Muslim Brotherhood rule and started to emerge again after the fall of the Brotherhood. Many analysts concluded that its various non-democratic practices aimed mainly at concentrating power, weakening state institutions and the bureaucratic apparatus, and alienating all other forces.²¹ They were also heavily criticized for the blurred relationship between the presidency, the MB Freedom and Justice Party, and the MB Supreme Guidance Office (Maktab al-Ershad), from which the opposition claimed that the state was actually run.

Further, the process of imposing a highly controversial constitution during November-December 2012,²² and the continued MB attempts to limit individual freedoms, women's rights, and the work of civil-society organizations were regarded as attempts to dilute the democratic transformation and alter the country's identity. These practices, paradoxically coupled with an inability to deliver economically, put the Brotherhood in direct confrontation, not only with other civic political forces — allied in what they called "the National Salvation Front" — but, more important, with almost all other forces and state institutions. These include the judiciary, the Al-Azhar institution, the police forces and even the more conservative salafis.

The fall of Mohamed Morsi in July 2013 after the June 30 mass demonstrations and the intervention of the military do not seem to have put an end to this division in Egyptian society. This division is not confined to the now isolated Brotherhood and all the rest. It also exists within the civic-political elites, which appear slightly divided between those who entirely support the military and security forces in their attempts to enforce order and stability and those who still adhere to idealistic revolutionary values and remain skeptical of the future role of the military.

The EU has shown a deep understanding of the security challenges that these internal divisions constitute. Long before the fall of Morsi, the EU noted in its document, "Europe's Response to the Arab Spring: The State of Play after Two Years," that "the social cohesion of some Arab countries undergoing transition risks being undermined by new forms of internal political polarization (between secular and Islamist forces, but also between and among affected groups such as women, young people, religious and racial minorities.)"²³ Certainly, Egypt is one of those countries still struggling to achieve a real democracy that does not exclude any faction. One of the key challenges to Egypt's transition after the fall of Morsi is the need to achieve national conciliation and avoid bloodshed in order to pursue a democratic and pluralistic transition. Much of the burden rests on the shoulders of the military, who are expected to play a key role even if they would prefer to step back and leave the political scene to civilian forces.

The fall of Morsi and the roadmap for Egypt's renewed transition offer a second chance for the EU in its engagement in the southern Mediterranean. However, influencing Egypt's domestic politics depends on the extent to which the EU is determined to play a role independent of U.S. influence, as well as the extent to which a consensus can be reached within EU multilateral institutions on how to react to internal developments in this pivotal Middle East country. The EU has so far shown both determination and caution. Ashton has again called for Egyptian authorities to lift the state of emergency, stressing that she hopes to continue the partnership with Egypt. She has also expressed hope in receiving an invitation for the EU to observe the referendum on the January 2014 Constitution, which indeed happened. The turnout and the percentage with which the new constitution passed are clear indicators of the fact that the overwhelming majority of Egyptians strongly adhere to the military-backed road map for the country. Hence, external powers, including the EU, that wish to promote Egypt's transition should show both understanding and respect for the people's will.

Security

Immediately after the revolution in Egypt, the Sinai Peninsula started to emerge as a center for militant Islamists, due to its proximity to Israel and its rough terrain. The gas pipeline from Egypt to Israel had been bombed 15 times during 2011 and 2012 — but not once during Morsi's rule — and there had been several terrorist attacks involving killing and kidnapping of police and military personnel. The most important of these was the infamous Rafah massacre on August 5, 2012, in which 16 Egyptian border guards were killed. There was also the kidnapping in Sinai in May 2013 of seven soldiers, who were later freed by the Egyptian military. According to military estimates, some 24 terrorist organizations currently inhabit Sinai, eight of which are directly affiliated to Hamas, with the Halal mountain in Sinai hosting at least 2500 terrorists.²⁴ With the fall of Morsi, the security situation in the peninsula worsened, though the military took all necessary steps to block the northeastern borders with the Gaza strip as well as all western points of entry. After a long hiatus, the gas pipeline from Egypt to Jordan was bombed again at the beginning of July 2013. A few days later, jihadist elements attempted to assassinate the military commander of the second army, Ahmad Wasfy.

Sinai is of security and strategic importance, not only because it borders the Gaza Strip and Israel, but also because it has started to emerge as a center for militant Islamists, who are attempting to reach it from all over the world. European states were alarmed at this security situation; German intelligence expressed high concern in August 2012 when German salafists started heading for Sinai, fearing that they might end up in networks linked to al-Qaeda.²⁵ European concerns again emerged when William Hague, during a visit to Cairo in September 2012, offered Britain's help to Morsi's government in clearing Sinai.

The situation in Sinai is further aggravated by its porous borders with Hamas-controlled Gaza, the close organizational connections between the Muslim Brotherhood in Egypt and Hamas, and the current confrontation between the Egyptian military and ex-Brotherhood regime figures. This confrontation actually started months before Morsi's ouster; the military was eager to clear Sinai of militant jihadists and destroy the tunnels, and to close the Rafah crossing point, which was open during the Brotherhood's rule. There are around 1,500 tunnels of various sizes between Sinai and Gaza. Around 470 of them are large enough for large trucks to pass. The military is said to have destroyed 80 percent of these by the end of 2013. In February 2013, the army started a campaign to flood the tunnels, a move that angered Hamas and Gaza's businessmen, who make huge profits from the "tunnels economy."²⁶ Smuggling activities (light and heavy arms, trucks, stolen cars, food stuffs, fuel, building materials, antiquities and pharaonic statues, and even KFC meals) are estimated to constitute at least 80 percent of Gaza's economy.

The situation is considered by the Egyptian military and intelligence service to be of high national-security importance. In March 2013, the military discovered five rolls of military cloth — two of them featuring khaki camouflage fabric used for army uniforms and three of the white fabric used for interior-ministry uniforms — about to be smuggled into the Gaza Strip. Earlier, following Egypt's January 2011 uprising, a machine designed to print Egyptian identity cards was stolen from the North Sinai security station and smuggled into Gaza, where fake Egyptian IDs were being printed to allow Gazans to move to Sinai and even buy land. In reaction, the Egyptian armed forces and intelligence have worked to catch Palestinians who enter Sinai with fake IDs. They also flooded the tunnels with sewage water, an action that enraged Hamas and was largely considered against the will of the then-ruling Brotherhood.

These threats are of high strategic importance to Europe and could well affect its own security against potential terrorism. It is no surprise that the EU has reacted to a similar problem of porous borders in Libya by launching an EU Border Mission in Libya (EUBAM-Libya) in May 2013. Further, the EU stressed the transnational and regional aspects of this security problem when it stated that EUBAM-Libya would coordinate its activities with the European Union Capacity Building Mission in the Sahel (EUCAP-SAHEL-Niger), and the European Union Training Mission in Mali (EUTM-Mali).²⁷ However, the EU may not have much ability to influence events in Egypt or other parts of North Africa. Broadly speaking, in the entire Levant, the role of the United States remains central. The EU would inevitably have to work alongside both the Egyptian authorities and the United States in order to tackle these critical security issues. Nevertheless, the ongoing efforts of the Egyptian army to ensure the security of Sinai should at least receive support from the EU.

Economics

If Europe does not have enough political leverage to influence the political and security aspects of Egypt's transition, it does enjoy economic leverage, and the economy is now becoming a strategic challenge.

Egypt has experienced a constant worsening of its economy over the past three years. The EU, as stated in its documents,²⁸ is aware of the direct connection between an economic downfall and the political failure of any transition. But it is crucial to emphasize (even with the limited EU assistance under the ENP, 2011-13) that, over the past two years, the EU has become more and more economically strategic to Egypt. Europe is a key source of its capital. One of Egypt's major economic problems has been the need to maintain sufficient levels of hard-currency reserves while increasing capital revenues. In this regard, four important facts regarding the Euro-Egyptian economic relationship are essential to highlight:

• Investments: the EU has been the number-one source of Foreign Direct Investment (FDI) in Egypt during the past five years. In FY 2011-12, the EU contributed 80 percent of Egypt's gross flows of FDI, with the UK, Belgium, France, Italy and Germany topping the list.²⁹

• Trade: the EU is Egypt's main trading partner, with more than 30 percent of its trade volume, and it ranks first as both its import and export partner.³⁰ The EU also proposed on December 14, 2011, to negotiate a Deep and Comprehensive Free Trade Areas (DCFTAs) agreement with the southern Mediterranean Partners, including Egypt. However, the interim Egyptian authorities were not ready to engage, given their limited mandate.³¹ Now that cooperation under the ENP has been resumed, the EU and Egypt agreed to resume the DCFTA negotiations when the EU-Egypt Task Force chaired by Ashton headed to Cairo in November 2012.³²

• Aid: the Official Development Assistance (ODA) channeled multilaterally through EU institutions, added to the economic and development assistance provided by many individual European states (mainly Germany and France) on a bilateral basis, make Europe the number-one donor of economic and development assistance funds to Egypt. These funds exceeded $1 billion in 2010, according to OECD statistics.³³

• Loans: the EU is one of the main sources of loans to the Egyptian government, especially since January 2011. Early that year, the European Council agreed to increase EIB lending to the southern Mediterranean by €1 billion during 2011-13. The EBRD also promised to work to extend its operations into the MENA region starting with Egypt. The expectation was that annual lending volumes could reach €2.5 billion per year by 2013.³⁴ After the EU task force headed to Egypt in November 2012, the president of the European Council, Herman Van Rompuy, announced that the EU's €5 billion support package to Egypt would only be granted once the IMF seals its loan agreement with Egypt.³⁵ Even with the delay in delivering these promised loans and the current halt in Egypt's negotiations with the IMF, the EU is considered one of the major potential sources of loans to the tormented Egyptian economy.

CONCLUSIONS

The EU's democracy-stability dilemma continues to persist in its relationship with Egypt. Note the passive EU assessment of Egypt's progress to democracy, which was eroded by the Brotherhood during Morsi's one-year presidency, and contrast it with the EU's positive assessment of that regime's foreign and regional policy. With the fall of the Brotherhood on July 3, Egypt's myriad political and security complications still affect Europe: the re-polarization of Egyptian society, even if not as sharp as it was before June 2013; the porous borders with Hamas-controlled Gaza; the emergence of Sinai as a jihadist center; and the economic decline. Morsi's fall and the road map for transition offer some hope for EU engagement. However, the ability of the EU to influence Egypt's domestic politics with the aim of promoting democracy and sustainable development depends on three important elements: the success of the EU in establishing itself as a credible and independent partner; the extent to which the EU is able and willing to play a role independent of U.S. influence; and the extent to which a consensus can be reached within EU multilateral institutions on how to react to internal developments in this pivotal Middle East country.