Date first published: 06/09/2018

Key sectors: oil & gas; energy infrastructure; tourism

Key risks: terrorism; security; business disruption

The Sinai Peninsula, once a cultural, religious or beachside destination for tourists from across the globe, is now associated with terrorism and lawlessness. Beset with daily violent clashes and terrorist attacks from affiliates of Islamic State (IS), as well as many as four Al-Qaida affiliates, a recent escalation in violent attacks by the Sinai Province (of the Islamic State) have been concentrated in Al-Arish, a strategically significant town on the northern Sinai coastline. In February this year, the Egyptian army announced a high-profile renewal of efforts to sweep the insurgency from the area. 6 months later, however, it is unclear quite what they have achieved, or how they hope to achieve it.

Ansar bait al-Maqdis (ABM), or Supporters of the Holy House, first reared their heads in the political vacuum that followed the 2011 revolutions in Egypt and across the region. They pledged allegiance to IS in November 2013, seeking financial aid and weaponry, and were subsumed under the name Sinai Province of the Islamic State or wilayat Sinai. Attacks predominantly target Egyptian security forces, Israel and Egypt-Israeli relations, with energy infrastructure a popular target, as well as religious locations and gatherings. A brutal massacre on a Sufi mosque saw 235 killed and dozens more injured in November 2017. A bomb on a Russian aircraft flying from Sharm el-Sheikh to Saint Petersburg on 31 October 2015 brought down the flight, killing all 224 passengers. The difficulty for Egyptian forces is in containing a centreless insurgency, although 2018’s renewed security operations in Al-Arish have distracted the group enough to focus their recent attacks there.

Egypt, of strategic importance to the United States for its control of the Suez Canal, its border and peace treaty with Israel and its status as the most populous Arab nation, has been without a US ambassador for over a year. Aid has been frozen over accusations relating to Egypt’s human rights record. Hope may be in sight. US-Egyptian relations have recently thawed, with USAID releasing USD$195mln of previously withheld military aid and appointing an ambassador to Cairo. With this will most likely come advice and expertise. Egypt has been facilitating peace talks in Israel, and thus security on the Israeli border is paramount to this effort. The natural gas pipeline off the coast of the peninsula originating near Al-Arish is soon to be used for Israeli gas exports to Egypt, allowing gas and asset flows to Egypt’s own Zohr gas field. Egypt’s president, Abdel Fattah el-Sisi, seems equally as positive about prospects in the war-torn peninsula, with a USD$16bln Sinai development plan announced in April 2018, including infrastructure, desalination plants and hospitals to create thousands of jobs. This may entice those who currently regard militarism as the only financial option away from IS financing and into a viable financial alternative.

However, it may not be that easy. IS still controls substantial assets and its networks have been proven to evade preventative measures. The Sinai Peninsula is in a strategic position for IS as an escape route to, and fertile recruitment channel from the African continent, as well as access to the Red Sea and Europe via the Mediterranean and porous north African borders. Thus, inroads will be increasingly made into stamping out insurgencies in the region, but in general, lawlessness and terrorism will prevail.