As protests continue to simmer in Egypt, Iranian President Mahmoud Ahmadinejad was in Cairo on Thursday – the first Iranian leader to visit Egypt since Iran cut off relations over Egypt’s 1979 peace treaty with Israel – calling for a new alliance:

Iranian President Mahmoud Ahmadinejad tried Thursday to entice Egypt into a new alliance that could reshape the turbulent Middle East, speaking of forging “comprehensive” and “unfettered” relations after decades of distrust… “It is a divine gift to me and the people of Iran that I received the opportunity to visit Egypt,” he told the news conference, held at the residence of Iran’s chief of mission in Egypt, an opulent mansion in Cairo’s upscale Heliopolis district.

Though Ahmadinejad talked in terms of a “strategic axis”, economic considerations will be a substantial driver of any Egyptian-Iranian rapprochement.

Egypt’s economy is threatening to spiral out of control. Cairo’s hopes to get a $2-billion International Monetary Fund loan, which it desperately needs, suffered a blow recently when it was revealed that the country’s foreign currency reserves had dropped 10 percent in a single month. Germany – on which Cairo has pinned hopes of economic assistance – has conditioned aid on reforms Morsi seems unable or unwilling to make.

Iran has expressed a willingness to provide Egypt with some of that badly-needed economic assistance. The problem from Cairo’s perspective are at least two-fold.

First, Iran wants warmer ties precisely because it needs to break out of the diplomatic and economic isolation that the West is trying to impose on Tehran, in response to what is widely perceived to be its drive to acquire nuclear weapons. The exact status of Iran’s economy is unclear but at least one Western diplomat has described it as “imploding.” Iran may not have the money on hand to prop up Egypt’s economy. If it did, Ahmadinejad might not have felt moved to travel to Cairo.

Second, it’s unclear that Egypt could diplomatically afford to accept Iranian economic aid. The two countries are antagonists in the three-way Syrian proxy war that has torn the country apart for the past two years. Iran has been supporting the Damascus regime of Bashar al-Assad while Egypt, along with other Arab states, has been supporting Sunni opposition forces (both sides have clashed with Kurdish groups). Egypt would also face enormous pressure to remain aligned with Arab Gulf states, which are increasingly at odds with Iran over the latter’s interference in their internal affairs.

[Photo: Zeinab Mohamed / Flickr]