In recent months, there have been significant developments in the relations between Egypt and Iran, culminating in the first phone-call in 22 years between the presidents of the two states. Many reciprocal gestures and meetings on the ministerial and parliamentary levels preceded this call, which was described as "historic" by the Iranian Minister of Culture. Egypt, for example, supported the incorporation of Iran in the "G-15" group of developing states whose goal is to counterbalance the economic superpowers. In another gesture, Egypt voted earlier this year against a UN General Assembly resolution denouncing Iran for its violations of human rights, after abstaining in previous years. Iran, on the other hand, declared that it would propose an Egyptian for Secretary General of the Islamic parliamentary union, stating that Egypt is a great Islamic state and thus entitled to this position. Furthermore, the economic relations between the two states are constantly improving and Iranian investments in Egypt currently amount to 5% of total foreign investments. Against the backdrop of these developments, rumors that full diplomatic relations will soon be resumed spread in both Egypt and Iran.
Iranian-Egyptian relations were severed after the Ayatollah Khomeini's Islamic revolution. Egypt, fearing the Iranian ideology of "exporting the revolution," hosted the exiled Iranian Shah, Pahlavi, in Cairo. Since then, other issues were added to the Egyptian-Iranian agenda and relations went from bad to worse. Although Egypt's support for Iraq in its war against Iran was not significant, it was imprinted in the Iranian consciousness. Egypt also supported the United Arab Emirates' claim for the three islands conquered by Iran.
Egypt, in turn, was hurt by Iran's support of fundamentalist Islamic terrorism, especially when Iran served as a midway stop for the Mujahideen, who, upon returning from Afghanistan turned their attention to combating Arab regimes, including the Egyptian government. This subversive activity sponsored by Iran proved most successful in the Sudan, Egypt's neighbor, which exacerbated Egypt's antagonism to Iran.
However, it has been twenty years since relations were severed: Sadat was assassinated, Khomeini died, and the exiled Shah also passed away. "Exporting the revolution" failed and even the Islamic regime in the Sudan – the main client for Iranian ideology – is collapsing. A relatively liberal reformist trend is evolving in Iran. The reformers hope to improve ties with the Arab world and end Iran's international isolation.
Iranian conservatives on the other hand are cautious. While they are not totally opposed to improving relations with Egypt they are still bothered by the historical issues. Therefore, the conservatives want to keep all interactions formal, avoiding "normalization" and preventing the relations between the two governments from "affecting the relations between the two populations." Ironically, Egypt is encountering the same rhetoric that it itself used, along with the rest of the Arab world, in its dialogue with Israel.
Despite the reciprocal gestures of the last year, the issues in dispute still prevent the two sides from going the extra mile and declaring the resumption of full diplomatic relations.
The Middle East Peace Process
The Middle East peace process is the main obstacle to a resumption of Iranian-Egyptian relations. Although the two sides share the feeling that the political gap between them has narrowed, Egypt's refusal to officially renounce its support of the peace process and its relations with Israel has impeded further progress.
In Iran, there are disagreements about the desired level of improvement in relations with Egypt. The reformers, led by President Khatemi, support a speedy and significant improvement. They claim that Iran has full diplomatic relations with Jordan and Oman, despite their treaties with Israel, and Iran has full relations with Syria despite their negotiations with Israel. Iranian MP, Musa Qurbani, further explains: "We have made rapprochement with Iraq, although we lost many of our youth during the eight-year war. We have also renewed ties with Saudi Arabia despite the martyrdom of our Hajj pilgrims in 1995. So, what is wrong with doing the same thing in regard to Egypt?"
However, for Iranian conservatives the Egyptian case is different than that of Jordan or Oman. "Egypt was the one who took the first step and signed an agreement [with Israel]," said Iranian MP, Seyyed Mahmoud Alavi, "while Jordan and Oman only agreed to sign after Egypt did." Egypt is perceived as the violator of Arab-Islamic consensus and therefore is morally and historically responsible for the process of Arab recognition of Israel. While the Israeli-Jordanian peace treaty is seldom mentioned in the Iranian press, the Camp-David Accord still serves as a "red flag" for Iranian conservatives. The Iranian press still describes Sadat as a "traitor" and Israel as "a cancerous entity that must be eradicated from the region."
Egyptian Foreign Policy: Balancing Iran and Israel
Iranian supporters of improved relations with Egypt base their position on the cooling of Egyptian attitudes towards Israel. Spokesman for the Iranian Foreign Ministry, Hamidreza Asefi, for example, claimed that "the stance of Egyptian officials toward the Zionist regime has brought the two countries [i.e. Egypt and Iran] closer." Some Iranians even go as far as expecting Egypt to sever all relations with Israel and join the Iranian struggle against it. "Egypt's ties with Israel are a hurdle in the way of [fuller] Iran-Egypt relations," states a Tehran Times editorial, "We are confident... that Egypt will join hands with Iran to start a real Jihad for the liberation of all Islamic and Arab lands." For both reformers and conservatives in Iran, improving relations with Egypt depends on a change in Egypt's attitude towards Israel in some way or another. Many of those who are ready to solve the dispute by 'agreeing to disagree' regarding Israel still demand, at least, a declaration that as a matter of principle, "Israel is a joint enemy."
Egyptian intellectuals who participated in a bilateral symposium held in Tehran expressed concerns that there are misunderstandings on both sides regarding the other party's basic policies. The Editor of Al-Ahram's annual Strategic Report, Wahid Abd Al-Magid, wrote, after participating in the symposium: "Although Iran moderated its objection to the peace process and although Egypt is more cautious in this regard, this by no means indicates that Iran accepts the peace process with Israel or that Egypt has relinquished peace as a strategic option. It is possible that this is not clear to either side. I noticed that the Iranians exaggerate in pointing out the Egyptian reservations [about Israeli positions] on the Palestinian track and the importance of Egyptian support for the struggle of Hizbullah and the Lebanese Resistance in general before the Israeli withdrawal from South Lebanon. …Similarly, there is an exaggeration in how some Egyptian politicians and intellectuals perceive the relative flexibility Iran demonstrates, all of a sudden, on the issue of the peace process."
"If this is, indeed, the case, there is a danger that the relations between the two countries will be based on inaccurate and unrealistic foundations and will be apt to collapse, especially since the peace process is the key to the future of the region... the nature of relations should be clear to both sides so that neither exaggerates in its expectations from the other." 
The Head of Al-Ahram's Research Center and a supporter of the Egyptian peace movement, Dr. Abd Al-Muni'm Sa'id, tried to clarify to the Iranians that they should not expect a strategic change in Egypt's peace process policies. "Egypt understands that Iran's attitude towards Israel is a matter of principle," he told a Tehran daily, "but there is a difference between a state that founds it policies towards Israel on its ambitions [but does not share a border with Israel] and a state that borders it."
* Yotam Feldner is MEMRI's Director of Media Analysis.
 Al-Musawar (Egypt), March 3, 2000.
 Oktober (Egypt), July 30, 2000.
 Al-Hayat (London-Beirut), July 30, 2000.
 Al-Hayat (London-Beirut), July 30, 2000.
 Tehran Times (Iran), June 20, 1999.
 Tehran Times, June 20, 1999.
 For example, Tehran Times, July 11, 2000.
 Tehran Times, July 3, 2000.
 Tehran Times, January 29, 2000.
 See Iranian Foreign Minister, Kamal Kharrazi: "Relations between Egypt and Iran depend on the measure of Egyptian separation from Israel.... The further Egypt distances itself from Israeli expansionist policy, the warmer Tehran and Cairo's relations become." Al-Hayat, June 19, 1999.
 For example, Iranian intellectual Abu Al-Qassem Zada, who participated in a bilateral intellectuals' convention in Tehran. Al-Ahram (Egypt), July 28, 2000.
 Al-Hayat, July 25, 2000.
 Tehran Times, July 11, 2000.