Since the 2013 coup d'état, the Egyptian Armed Forces have relied on substantial financial backing of Saudi Arabia, the UAE and Kuwait. Those Gulf states have viewed the Egyptian military as the most viable bulwark against the Muslim Brotherhood, and a tool to prevent the most populous Arab country falling into civil strife. They have poured an estimated USD 114bn over the last decade, helping to stabilise the Egyptian economy in the face of successive economic challenges including capital flight following the escalation of the Russo-Ukrainian War early last year. Now Egypt faces a substantial increase in the cost of its external financing, depleted foreign currency reserves and a currency that has lost half its value against the dollar in the past 12 months. Yet, it is no longer certain if Egypt can rely on its Gulf allies to provide the traditional blank cheque.

The key point of tension rests on the implementation of reforms that would reduce the Egyptian armed forces’ stranglehold over the economy. This objective is shared by the IMF, which has delayed the USD 3bn pledged last autumn due to the inadequate implementation of reform. While President Sisi eventually abandoned the Egyptian Pound’s dollar-peg under considerable external pressure, taking on the armed forces’ economic dominance is a step not even the Muslim Brotherhood considered. How this will end is not easy to predict, not least because it is not clear that as a former general, Mr Sisi is truly separable from the military establishment. When the president speaks of reform, does he speak as a representative of the Egyptian military upon whose support his power rests, or in opposition to their interests?

If the former it is likely reforming rhetoric will go unfulfilled, given the military is unlikely to willingly vacate their hegemonic economic position, subsequently elevating the medium-term risk of economic turmoil and a sovereign default. If the latter, the risk of an internal challenge to his power from the military will heighten considerably. The end of the blank cheque will mean tough choices for Mr Sisi and the Egyptian military.