Mohamed Morsy's young presidency in Egypt hasn't started all that smoothly. It's largely been characterized by a series of standoffs with the Egyptian military, including this week's controversial court case on the legality of an assembly tasked with drafting the country's new constitution. But Morsy is also performing a less publicized high-wire act in trying to court vital benefactors in the Persian Gulf, particularly Saudi Arabia. How this endeavor plays out could prove just as consequential for his political survival.
Since Morsy became president last month and resigned from the Muslim Brotherhood, he has worked hard to ease tensions with jittery Gulf countries. Dubai's police chief has been warning Gulf leaders since March that local Brotherhood cells "want to stir the streets" against them, but Morsy's real challenge is to reassure a visibly nervous Saudi Arabia, which lost its key ally Hosni Mubarak to Egypt's popular uprising. In an effort to secure Saudi aid, Morsy has done all the right things: pledging not to export Egypt's revolution, describing the Gulf countries' security as a "red line" that should not be crossed, and making the kingdom his first foreign destination as president last week.
So far, Morsy's overtures appear to have placated the Saudis, who have continued sending Egypt financial support. But while there are similarities between the Brotherhood's ideology and Saudi Arabia's Wahhabi brand of Islam -- both are Sunni, religiously zealous, and critical of Western influence in Muslim countries -- it's safe to say that the Saudis preferred Egypt's old order.
As a Sunni Islamist who came to power through democratic elections, Morsy challenges the autocratic system that Saudi Arabia's rulers have been fighting tooth and nail to uphold. Just last year, the Saudis doled out nearly $130 billion in aid packages to their citizens to assuage discontent. But they did not simply rely on cash to save themselves. The kingdom's leaders also preempted planned "day of rage" protests in March 2011 by sending thousands of troops to Shiite-majority provinces, locking down the capital, and unleashing loyal clergy to threaten potential protesters with violence.
Those measures brought some calm to Saudi Arabia, but not for long. Violent protests erupted last week in the Eastern Province -- home to the country's oil and most of its Shiite population -- after security forces shot and arrested prominent Shiite cleric Nimr al-Nimr for instigating "sedition." With restless Shiite citizens in the region already chafing at the state's discrimination, Saudi authorities poured gasoline on the fire when they fatally shot two men during the demonstrations. More than a week later, crowds are still taking to the streets in protest and showing no signs of letting up.
The Shiite question is just one of several reasons why the Saudis worry about the future of Egypt. Long before Morsy's election, the Saudis were nervous that Shiite Iran would exploit Egypt's transition. Although Egypt and Iran severed diplomatic relations in 1980 because of Egypt's close relationship with Shah Mohammad Reza Pahlavi and its signing of a peace treaty with Israel, the two countries have maintained economic ties. One example is the Misr Iran Development Bank, a joint venture that was founded in 1975 and survived the next 30 years of turmoil in the Egyptian-Iranian relationship. Today, U.S. Treasury officials suspect that Iran may use the bank as a means of skirting international sanctions on its nuclear program.
Saudi anxieties only deepened in February when Egypt allowed Iranian naval ships to pass through the Suez Canal -- an act Mubarak's regime prohibited. In May, Morsy said that he hoped to have "relations" with Iran during a televised interview with Egypt's CBC network, though he was careful to not specify what type of relationship he wants with Iran and to emphasize that the relationship would not come at the expense of Gulf countries' security (Iran's Fars News Agency later quoted Morsy as saying that he wanted to strengthen ties with Iran to strike a strategic "balance" in the Middle East, in a purported interview that Morsy vehemently denies giving).
In response to these growing concerns, the kingdom is doing what it always does: throwing petrodollars at the problem. In June, the Saudis gave Cairo $1.5 billion toward the state budget (the Financial Times has reported that the Egyptian government expects a budget deficit this year of 7.6 percent). The kingdom, which currently funds more than 2,300 projects in Egypt and maintains investments there that are estimated to be worth anywhere from $12 billion to $27 billion, also provided Cairo with a $750 million credit for Saudi oil imports, $230 million for a range of water and agriculture projects, and $200 million for Egyptian businesses.