As the ongoing conflict between Israel and the Gaza Strip enters its fourth month and Egypt, facing the consequences of the war on its northern border, has intensified its efforts to negotiate a lasting ceasefire, the assassination of Hamas' Deputy Leader Saleh Al-Arouri on January 2 has put additional strain on Egypt, which is already struggling with an unprecedented economic crisis and a blow to its primary source of income, tourism, due to the surge in trip cancellations, particularly to South Sinai. Furthermore, the decline in Suez Canal revenues, caused by reduced shipping traffic as a result of recurring attacks on ships passing through the Red Sea by Iranian-backed Houthi militants, has exacerbated the country's economic difficulties. Recently, several global shipping companies have halted shipping through the Suez Canal "until further notice," citing security concerns, following a missile attack on the Maersk Hangzhou, a container ship, by Houthi militias on December 30, 2023, which marked the twenty-third attack on ships crossing the Red Sea since the start of the war on October 7, 2023. Egypt's economic woes, including an acute foreign currency shortage and a staggering foreign debt amounting to $164.73 billion by the end of June 2023, necessitate that Cairo takes all necessary measures to bring an end to the Israel-Gaza conflict and prevent it from escalating into a wider war.
The increasing calls by some far-right Israeli politicians to transfer Palestinians to Egypt's Sinai Peninsula have fueled Egypt's efforts to settle the conflict and prevent a potential confrontation with Israel over this sensitive issue. Egyptian President Abdel Fattah el-Sisi, who secured a landslide victory in the December 2023 elections against three unknown opponents, understands that endorsing the displacement of Palestinians would provoke widespread anger among Egyptians and could threaten the stability of the country. The vast majority of Egyptians are outraged by the destruction of Gaza and the images of dead children being removed from the rubble, and they have shown their support for the Palestinians. Many Egyptians also sympathize with Hamas, viewing the Palestinian militant group as a resistance movement fighting against a cruel occupation. While Sisi and Hamas do not have a friendly relationship, with the Egyptian president seeing the group as a branch of the Muslim Brotherhood, which he ousted in 2013 and now considers a terrorist organization, the Egyptian people's solidarity with the embattled Palestinians in the Gaza Strip has prompted Sisi to exercise caution. As a result, he has used one narrative with Israeli officials and another, more soothing narrative at home.
The ongoing conflict has prompted Sisi to take action, resulting in Cairo's increased efforts to establish a lasting ceasefire. Determined to reclaim its traditional position as the primary mediator between Israel and Palestine, Cairo has proposed a three-stage plan aimed at ending the conflict. The Egyptian proposal envisions an initial, brief truce of one to two weeks, which would be prolonged after each phase. This temporary cessation of hostilities would facilitate the release of hostages in exchange for Palestinians detained in Israeli prisons and enable the delivery of humanitarian aid to Gaza. Additionally, it would allow for the return of displaced Palestinians who were forced to evacuate to the south and the release of hostages in batches: first, women, children, and elderly citizens, then, female soldiers, and finally, all remaining hostages in exchange for an unspecified number of Palestinian prisoners. In the second stage of the plan, the corpses of Israeli hostages who perished while in captivity would be exchanged for the bodies of Palestinians who died in Israeli jails. The final stage of the plan would involve the withdrawal of IDF troops from the Gaza Strip, paving the way for a permanent ceasefire that would restore peace and stability to the region, as per Diaa Rashwan, head of the State Information Service, as reported by Al Sharq Al Awsat.
The proposed plan to relinquish power in a post-war Gaza Strip was initially met with skepticism from Hamas, as reported by an anonymous Egyptian security source. However, more recently, both Israel and Hamas have shown increased interest in the proposal. Hamas and Palestinian Islamic Jihad, who discussed the matter with Egyptian mediators in Cairo in late December, refuse to negotiate a prisoner exchange until there is a cessation of hostilities and the IDF has withdrawn from Gaza, as stated by a member of the Palestinian National Council residing in Cairo, Ghazi Fakhry Murrar. Hamas leaders also maintain that the Palestinian people should choose their own leaders.
While there has been no apparent shift in Hamas' stance, Al Sharq Al Awsat reported on January 1 that mediation talks were on the verge of success, as the two sides were closing in on a prisoner exchange agreement facilitated by Egypt and Qatar. The news site added that Hamas and Palestinian Islamic Jihad, the two Palestinian factions at war with Israel, were "open" to the Egyptian proposal, which would be implemented after consultation with the relevant parties. Israeli Public Radio had reportedly stated that Hamas had privately agreed to a one-month truce, despite publicly insisting on a complete cessation of hostilities to move forward with a new hostage exchange deal. However, the assassination of Arouri in a drone strike on a southern Beirut suburb on January 2 derailed the Egyptian mediation efforts, which had appeared to be making progress. According to Qatari sources quoted by Sky News Arabia on January 3, Egyptian officials informed the Israeli government of their decision to halt mediation efforts in protest of Arouri's assassination. This decision led the Israeli delegation to cut their visit short and return home without reaching an agreement.
According to Murrar, Israel's refusal to back down in its war against Hamas and its insistence on eliminating the group and dismantling its military capabilities is exacerbating the crisis. Many analysts argue that these goals are unrealistic or difficult to achieve, and Israel's targeted assassinations of Hamas and Iranian-backed Hezbollah figures are only making the situation worse. The conflict is threatening to destabilize the entire region, and Israel's war is expected to expand to new fronts with Lebanon, Syria, and possibly even Iran in the coming weeks. Egypt's mediation efforts have been left hanging in the balance, and even if Israel were willing to hold a temporary truce to release the nearly 130 hostages still held captive by Hamas, it would be more likely to opt for Qatari mediation. A political science professor who preferred to remain anonymous for fear of reprisal explained that Qatar, which hosts the largest US military facility in the Middle East at its Al Udeid Air Base, struck a deal with the United States to extend US military presence at the base for another ten years. Doha has also been hosting Hamas' leadership since 2012 and, thus, has greater leverage with the militant group.
