At the Khartoum summit in August 1967, when the Arab League rejected negotiations with Israel, three oil-rich states—Saudi Arabia, Kuwait, and Libya—guaranteed to provide Egypt with US$260 million annually in aid “until the results of Israeli aggression have been eliminated.” Feiler tells the story of what happened next, assembling a coherent tale from scattered and not always consistent sources. He shows that Egypt and the Arab oil states did have an intense economic interaction. In the eighteen years from 1967 until the price of oil crashed in 1985, the oil-rich states provided Egypt $14 billion in aid, $5 billion in investment (most of it politically motivated), and $22 billion in workers’ remittances through official channels. At its peak in 1975-77, the aid alone averaged more than 15 percent of Egypt’s national output.
Yet aid, investment, and remittances did not put Egypt on the path to sustained growth in the 1970s; to the contrary, Egypt’s economy remained in desperate straits, and its dependence on aid only grew deeper. Feiler documents Egyptian disappointment with aid and its bitterness over bearing what it considered an undue burden in the conflict against Israel—factors which played no small part in Sadat’s decision to seek a peace treaty with Israel. These factors also led Egypt to turn to the West economically. Indeed, as the slow turn began in the late 1980s, Egyptian economic performance began to improve. The accelerating turn after the 1991 Kuwait war, rather than the Arab aid in wake of Egypt’s role in that conflict, accounted for the country’s strong economic showing in the 1990s.
Feiler also shows that for all the talk about Arab solidarity and a joint stand against Israel, the economic flows appear to have been much more motivated by the particular national interests of each oil-rich country. For instance, Saudi aid was aimed by the strongly anticommunist kingdom to reduce Soviet influence in Egypt. Over time, the flow of funds to Egypt came more and more from remittances by Egyptian workers, whose low-cost labor was so useful to the oil-rich states, which at the time, were desperately short of workers ready and able to work in modern enterprises.
A minor quibble: Arab oil donors to Egypt included both the conservative monarchies of the Gulf and two radical states, Iraq and Libya—the latter of which is not in the Gulf at all. Feiler’s analysis would have benefited from more fully integrating into his story the two radical donors, which he only sometimes includes.
