November 25, 1998

                 Egypt Joins Greece to Counter Israeli-Turkish Bloc --
                 At Russian Prompting?

                 On November 24, the Greek news agency reported that Greece and
                 Egypt will hold their first joint military exercise, in the
                 Eastern Mediterranean.  Scheduled from November 27 through
                 December 2, the exercise, code-named "Alexandria-98", will
                 involve two frigates from each country.  The location and timing
                 of this exercise is undoubtedly meant as a show of force against
                 the growing Turkish-Israeli alliance. This, in and of itself, is
                 a major shift in Egyptian policy.  Egypt has rejected attempts to
                 draw it into the Turkish-Israeli bloc, and has condemned Israeli
                 behavior on a number of fronts, but it has not yet joined Greece
                 in active confrontation with Turkey and Israel.  Given the
                 tangled web of Middle Eastern alliances, Egypt's move sheds
                 considerable light on the emerging Arab-Greek-Persian bloc.

                 From the Camp David accords until quite recently, Egypt has been
                 one of the U.S.'s most reliable Arab allies.  However Egypt, like
                 Syria, Saudi Arabia and Iran, has been disturbed by recent trends
                 in U.S. policy, including the tacitly U.S.-backed Israeli-Turkish
                 alliance, Washington's predominantly pro-Israeli position in the
                 Middle East peace process, and Washington's failure to develop
                 consistent responses to Iraqi provocations.  Yet despite common
                 concerns, no Arab or Persian country has been able to exercise a
                 clear leadership role and create a unified regional position.
                 Egypt, Syria and Iraq have not been on excellent terms with each
                 other, and none of these countries has the overwhelming political
                 clout needed to fill such a role. Saudi Arabia, the natural
                 choice for such a role, has not only been in the middle of a
                 succession crisis but also been crippled by low oil prices and
                 its reliance on the U.S. for the purchase of most of its oil.

                 In the midst of this power vacuum, Iran tried, initially through
                 its proxy, Syria, and later through improved relations with Saudi
                 Arabia, Egypt and the GCC, to gain the mantle of leadership by
                 calling for an Arab-Persian alignment as a counter to the
                 continuing U.S. presence in the Middle East. Iran has been
                 actively involved in discussions with Greece over military
                 cooperation and Iranian Foreign Minister Kamal Kharazi met with
                 Egyptian president Hosni Mubarak on November 23 to call for
                 better relations between the two countries.  At that time, he
                 explicitly stated the price for Iranian friendship. Egypt would
                 have to distance itself from Israel.  Said Kharazi, "We have said
                 the more Egypt distances itself from Israel, the more eager we
                 will be to normalize relations with Cairo." Nevertheless, Kharazi
                 conceded that the Egyptians had already taken considerable steps
                 over the past year to do so precisely that. Egypt and Iran also
                 held high level talks over the Turkish-Syrian crisis that last
                 month almost sparked a regional war. This Egyptian-Iranian thaw
                 has followed a similar warming of relations between Saudi Arabia
                 and Iran.  However, even if Iran garners the support of all these
                 countries, should a new regime come to power in Iraq, all bets
                 regarding the structure of this emerging alliance are off.

                 Given the fluidity of this region's politics, the one remaining
                 hope for any consolidation of Middle Eastern interests appears to
                 be through the involvement of an outside power. It is looking
                 increasingly as if Russia is asserting itself to assume this
                 role. On November 14-16, Russian Defense Minister Marshal Igor
                 Sergeyev met with officials in Syria and Egypt to discuss the
                 prospect of renewed military cooperation. On November 20, the
                 United Arab Emirate newspaper, "Al-Ittihad", reported that
                 certain Arab countries intended to underwrite the cost of an arms
                 deal with Syria. In addition, the Russians, in order to
                 facilitate further purchases of Russian arms by the Syrians, have
                 reportedly canceled some of Syria's debt. The new cooperation
                 agreement with Russia will include: first, training for Syrian
                 officers in Russia; second, doubling the number of Russian
                 experts and advisors in Syria; third, modernizing Syrian SU-30
                 fighter/attack aircraft; fourth, the purchase of advanced Russian
                 T-80 tanks, modernizing old tanks, and repairing Mig-29 fighters;
                 and, finally, the equipping of Syrian anti-aircraft units with S-
                 300 missiles, the same missiles that are the focal point of the
                 current Greek-Turkish confrontation.

                 The next day, Sergeyev met with Egyptian President Hosni Mubarak
                 and the two reportedly discussed military cooperation and other
                 technical topics. The meeting allegedly culminated in the two
                 leaders signing agreements on what Sergeyev called, "a wide
                 spectrum of modernization, repairs, and delivery of military
                 hardware, and whatever else Egypt might be interested in."
                 Despite the fact that Egypt has purchased mainly U.S.-made
                 weapons in the past 25 years, the Egyptian military still has a
                 large quantity of Soviet-manufactured anti-aircraft systems,
                 fighters and tanks. Despite the fact that the Egyptians receive
                 extraordinary amounts of foreign aid from the U.S., this offer
                 apparently struck a chord in Cairo. On November 18, Mubarak
                 called for the development of an advanced national military force
                 to protect Egypt from the "advocates of war and expansion."

                 Russia has expanded its interest to include other parts of the
                 region. On November 23, Russia announced that it intends to
                 cooperate further with Iran in the field of nuclear power. During
                 his visit to the Bushehr Nuclear power plant (which was built in
                 Iran with Russian assistance), the Russian Atomic Energy
                 Minister, Yevgeniy Admov's announced that Russia plans to further
                 assist the Iranians. Also, as mentioned above, Russian is
                 supplying S-300 missiles to the Greek Cypriot government, a
                 development that has been a key factor in sustaining the Greek-
                 Turkish conflict over Cyprus.

                 There are several reasons for Russia to pursue this strategy. The
                 first is that Russia, which is bleeding economically, is strapped
                 for cash. The two critical industries on which Russia depends for
                 hard currency are its oil industry, which cannot do much good in
                 a depressed oil market, and its arms industry. The second reason
                 Russia is attempting to reassert itself, as an equal with the
                 U.S., is strategic. The assertion of Russian influence over such
                 countries as Iran, Iraq, Syria, and, to a lesser extent, Egypt,
                 is designed to provide Moscow with a bargaining chip against
                 Washington; to defend the southern flank of the former Soviet
                 Union from U.S. influence; and, in the extreme, to threaten the
                 supply of oil to the US and its NATO allies.  It is also clearly
                 a continuation of the historic policies of the USSR to weaken the
                 unity of NATO and turn its flank.  A further indication that NATO
                 is Russia's target is the influx of arms to Greece.  This gambit
                 is designed to drive a wedge between NATO allies on the eve of a
                 scheduled meeting (on November 24) of NATO during which the
                 significance of the Greek-Turkish conflict for changes in the
                 structure of the alliance will be discussed. These Russian probes
                 into the Middle East and the Mediterranean are designed to take
                 pressure off of Russia's western front by undermining the
                 alliance's structure and halting its expansion eastward.

                 The Egyptian-Greek exercises show exactly how successful the
                 recent Russian initiatives have been, and how much the United
                 States has undermined its own alliances in the region. Iran,
                 Syria, and Greece regard themselves as at the front line opposing
                 the Israeli-Turkish alliance, and they have already taken steps
                 to solidify their relationships with each other. Now, Egypt is
                 flirting with joining this camp on the pretext of countering an
                 Israeli threat. The Russian offer of military assistance may
                 provide the Egyptians with a further inducement to cooperate with
                 the Greeks.  Though we may not know for certain if this is the
                 case, it does help explain the sudden shift in Egyptian policy
                 towards the Greeks.

                 It is certain that there has been growing dissatisfaction in
                 Egypt, Syria, Saudi Arabia, the Gulf States and Iran with the
                 U.S. policies. For quite some time, we have been closely
                 monitoring this trend. Until now, no regime in the region has
                 been able to reconcile the interests of the Greeks, the Persians,
                 and the Arabs. Russia, in an attempt to reassert its influence in
                 the region and in order to force the U.S. to deal with it as an
                 equal, is assuming a leadership role the Middle East and the
                 Eastern Mediterranean. This is an alarming outcome, especially
                 for what it portends for U.S. interests in Russia's backyard --
                 Eastern Europe, the Caucasus, and Central Asia.