For Egyptian officials, the singling out of Banque Misr UAE in American sanctions was shocking, even if there are multiple rationales through which the move could be read. The announcement of sanctions that came on Friday was the latest move in America’s new strategy to suffocate Iran. In mid August, United States President Donald Trump let it be known that he was fed up. After months of negotiations with Iran over an end to a war, a war that the US and Israel started, had failed to materialize, it was time to change tactics. This time, it wouldn’t be a new naval blockade on an existing naval blockade. It wouldn’t be more military action. This time, Trump wrote on his social media account, the pain would come in the form of the “MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY.” Essentially, the plan, dubbed “Economic D-Day,” a reference to the US invasion of Nazi-held France during World War II, would see Washington DC impose secondary sanctions on any country that “allows its financial institutions, businesses, airports or government entities to provide any type of lifeline to Iran.” Swooping in to take up the messaging of the plan, US Treasury Secretary Scott Bessent began to beat the war drum of economic sanctions. “If you insist on doing business with [Iran], then the US Treasury and U.S. government will put its full might and force against you,” Bessent said on August 20. “It’s time for our allies and the rest of the world to make a decision.” The media was awash in speculation. Turkey and the United Arab Emirates are among Iran’s largest trade partners. Would the US really consider sanctioning such key allies? And then the decisive day came. On Friday, the US treasury announced its first salvo. First to be sanctioned was Reza Mohammad Taeedi, the manager of the Iranian commercial bank Bank Melli’s Dubai branch. It made sense: an Iranian bank operating in Dubai surely must be part of a shadow banking operation. Next was Kameng Trading Limited, a Hong Kong-based exchange company that has allegedly helped launder funds for a sanctioned Iranian exchange house. Again, the proximity to China, which is known to have relations with Iran, made the move legible. But the last entity included in the sanctions notice was a surprise. The United Arab Emirates branches of Banque Misr, the Egyptian state-owned bank and the second largest in Egypt, holding assets worth US$83 billion, could see its banking access to US financial institutions revoked, the US treasury announced. Describing the five branches of what is Egypt’s second largest bank, the US treasury note called the bank “a critical node for the Iranian regime’s access to US dollars. Treasury estimates that between January 2024 and June 2026, Banque Misr UAE processed approximately $1.8 billion for 103 companies that are potentially part of Iranian shadow banking networks.” “Banque Misr UAE’s customers include apparent front companies used by Iran’s Ministry of Defense and the Islamic Revolutionary Guard Corps to evade US sanctions, as well as to launder money on behalf of Iranian Supreme Leader Mojtaba Khamenei,” the statement read. The US treasury has given Banque Misr 30 days before the sanctions take effect. In the meantime, it is accepting comments from the public, industry experts and financial institutions about the proposed sanction. While the reasons are still unknown, the decision did not materialize out of thin air. Since around 2023, Egypt has faced a new difficult reality. A $23 billion deal with Saudi Arabia inked in 2016 had expired, and while the initial deal had been greased with the handover of Tiran and Sanafir islands, Egypt and Saudi relations had taken a turn for much rockier shores. While the deal extended beyond its initial five-year timeframe, by 2023, Saudi Arabia was no longer willing to provide discounted fuel for Egypt at a time when repeated economic crises were wrecking the country and mounting debt repayments loomed, according to an Egyptian state official who spoke to Mada Masr in early 2025. To address the shortfall, Egypt had to turn to unconventional solutions at a price that could be affordable. And for Egypt, as for many countries in the region, this meant one thing: Iran. According to the same source, as well as an Egyptian official and an Egyptian political source, since at least May of 2025, Egypt has been securing shipments of petrochemical products from Iran. It was a payment for fuel from Iran, in continuation of this same payment scheme, that saw Banque Misr run afoul of the US Treasury last week. Today, Egypt finds itself in a political crosshairs. In state corridors, Egyptian officials are increasingly worried about further implications in the illicit petroproduct payment scheme and the widening out of scrutiny to other regional banks. China, whose banking system was used to conduct the latest transfers, is demanding answers from Egypt about how the US was able to trace a system that is meant to be beyond American oversight. And the US is letting its anger over increased Chinese-Egyptian cooperation be known, especially with this cooperation reaching the terrains of what the United States considers a taboo: breaking away from technological hegemony, especially when it comes to microchips, the foundational hardware piece that runs data centers and AI models. *** Last week’s sanctions followed months of tension over the bank’s operations in the UAE, two Chinese sources informed of the operations at the bank tell Mada Masr. According to a Chinese source who works at a state-affiliated research center focused on the Middle East, Banque Misr received repeated warnings about dealings with Iranian companies since February, when a payment to Iranian companies was flagged. In May, another transfer was flagged but ultimately allowed to clear, the source says. In June, the US intervention went up a notch and a transfer of $150 million was halted, the researcher says. All of these transfers were completed via SWIFT, which is a global messaging network through which cross-border financial transactions are settled. While the system does not fall directly under US purview, anti-money laundering agencies monitor SWIFT communications, allowing the US to, in turn, wield its political heft to enforce its economic prerogatives. With SWIFT closed down, Banque Misr rerouted the payment via China’s Cross-border Interbank Payment System (CIPS), dedicated exclusively to transactions in Chinese Yuan, the researcher and a Chinese official informed of the dealings say. But shortly after the transaction was sent, Banque Misr, Chinese banks involved in the clearing and the Chinese government received a warning about the transfer, according to the Chinese official. This June payment was part of a longrunning petrochemical deal, the Egyptian state official says, confirming that it was done through the Chinese banking system. The warning in June prompted the beginning of diplomatic tension between Egypt and China, both the Chinese official and the Egyptian state official say, as Beijing immediately raised concerns over how the US learned of the June transfer. “The Chinese are upset because they feel that the Americans managed to crack the system,” the Egyptian state official says. For the Chinese official who spoke to Mada Masr before the summit, how the CIPS transaction was seen by the Americans was slotted to be a subject of conversation between Chinese President Xi Jinping and President Abdel Fattah al-Sisi in Cairo this week. China began building CIPS in 2012, the same year that the US sanctioned China’s Bank of Kunlun over trade with Iran, and took it online in 2015 to internationalize yuan use. CIPS allows global banks to clear cross-border yuan transactions directly onshore, instead of through clearing banks in offshore yuan hubs. Transactions have grown significantly since Russia’s invasion of Ukraine and subsequent sanctions on Russian companies. The current year is on pace to surpass those figures, according to official data. While China is concerned over the ability of its banking system to avoid US detection, Egyptian officials have other worries. Officials in Cairo fear that the exposure of the operation could lead to the tracking of accounts used in circumventing US sanctions, and consequently, to increased US oversight of Egypt’s banking system, according to a second Egyptian official. What’s more, there are fears that the crackdown on the network of banks linked to transfers from Egypt to Iran is not done. According to the first Egyptian state official, a regional diplomat, a second Egyptian state official, an informed Lebanese lawyer and a Lebanese security source, there are ongoing inquiries happening in Lebanon’s banking sector in connection to Banque Misr and transfers to Iran. The second Egyptian state official says that the inquiry specifically concerns three of Banque Misr’s branches which have drawn suspicion for “unusual” transfers from Lebanon to the UAE branch. According to the official, Egypt is trying to get ahead of the problem in Lebanon. *** The US sanctions on Banque Misr and warnings issued to Chinese banks come at a time of growing US concern of Egypt-China proximity, a Chinese businessman operating in Egypt, the Chinese official and the first Egyptian political source say. Earlier this year, as part of US investigations under Section 301 of the Trade Act of 1974, the US Treasury Department recommended that the Egyptian government halt the supply of Chinese surveillance systems to a security agency in Cairo and investigate the deal, alleging that it contained “contaminated” Chinese technology, the Chinese businessman says. However, this recommendation was not heeded by the Egyptian authorities, who responded after six weeks through the Foreign Trade Ministry, affirming the validity of the deal and proceeding with its implementation, the businessman and the Chinese official add. The first Egyptian political source says there is also significant American anger over plans by the Chinese company Huawei to build three AI data centers in Egypt. According to Bloomberg, in its tender offer, Huawei proposed to export 1,408 of its top-end Ascend 950-series chips to Egypt for an AI training cloud, plus 600 more of either those chips or the earlier 910B model to be used for two inference clusters — needed to run AI models once they’re trained. Huawei laid out a 12-month plan to build the infrastructure, documents obtained by Bloomberg show. Even if it is small, the Huawei bid would be the first known export of Huawei’s Ascend accelerators after more than a year of attempts. That would be an early milestone in the Chinese tech titan’s efforts to challenge the US chip manufacturing giant Nvidia, which has dominated the AI chip market. While the US may want compliance from Egypt in its tech plans, for a source who worked in a leadership position with Huawei in the region, there is little competition due to the arrangements each country offers. “The Arab world is divided into two [camps] when it comes to data centers, AI, IT,” the source says. “There are the Gulf countries who basically deal with the US, and then there are the North Africa countries, including Egypt and Morocco who find it easier to work on this with the Chinese. First, because it is cheaper, and second, because they give you the entire technology, which is not something that the Americans do.” For the US, the domination of the chips market is an existential matter in the rivalry against China. In May last year, the US warned against using Huawei’s Ascend chips anywhere in the world. Just after the Banque Misr sanctions were announced, American officials communicated to Cairo that under no circumstances would they allow for a deal with Huawei to go through, a source informed of the diplomatic exchange says. While the source who worked in a leadership position with Huawei in the region says the Chinese were under the impression that the deal would be finalized during Xi’s visit, the government changed course in the days before the visit. A third Egyptian state official says the Chinese were informed before the visit that the signing was not going to happen while Xi was in Cairo. The source adds that the Chinese are not happy with the decision, and now the government is considering what to do with the project going forward. Another Huawei source informed of discussions about the deal acknowledges the anger, adding that they have been told by the government that the project has been put on hold for now. *** After the bustle of Xi’s visit dies down, what is left for Egypt is to try to wait out the Banque Misr scandal in hopes that it quiets down, the first Egyptian state official says. Egypt and the UAE’s central banks have both launched investigations into Banque Misr’s branches in the UAE. Many sources who have spoken to Mada Masr in recent days are shocked that Egypt is being singled out. While an Egyptian parliamentary source denied that the sanctions were related to the purchase of Iranian oil, he pointed to the fact that it is an open secret that many banks in the UAE facilitate the purchase of sanctioned Iranian oil. The UAE has always been a central hub for Iran’s trade and financial transactions, which has caused American frustration and even a threat of sanctions against the Gulf country years ago. The fact that the banks are operating in the UAE and that there is tension between the UAE and Egypt in several foreign policy files has led many Egyptian officials that have spoken to Mada Masr to suggest that the UAE was the one that tipped the Americans off, but so far Cairo doesn’t have a clear picture of the details of what went wrong and what the political motives behind the sanctions are. What is clear, however, is that Egypt, in a moment of what seems to be an exploration of political diversification, has found itself a target of American attempts to assert geopolitical and technological hegemony.The post What’s behind the US sanctions on Banque Misr UAE? first appeared on Mada Masr.
