Happy last week of 2025, friends. We made it through another 12 months together, and our reward is both (a) a much brighter outlook on the year ahead and (b) news of a bonkers move by Israel, which has just bid to upend the Red Sea apple cart as it became the first country to recognize Somaliland as an independent nation.

Plus ça change, plus c’est la même chose.

UP FIRST- Israel became the first UN member state to formallyrecognizeSomaliland’sindependence on Friday, a move that could alter the security architecture of the Red Sea and give Addis Ababa the legal cover it needs to proceed with its contested 50-year port lease at Berbera. Israeli leader Benjamin Netanyahu framed the recognition as an expansion of the Abraham Accords, with Somaliland’s leader, Abdirahman Mohamed Abdullahi, saying his enclave would join the framework.

For Egypt, this is the crossing of a major red line: By granting Somaliland legitimacy, Israel has effectively validated Ethiopia’s controversial 50-year port-lease agreement, which previously lacked a legal sovereign partner. This could give Ethiopia the maritime gateway it has long sought and provide Israel with a formal intelligence and military foothold at the southern mouth of the Red Sea — providing yet another field on which Israel can clash with Iran and the Houthis.

Egypt’s Foreign Ministry condemned the move in the “strongest terms” yesterday. Some 21 nations including Saudi Arabia, Turkey, and Jordan joined us in condemning Israel’s move. A joint statement warns of a “dangerous precedent” that threatens the security of the Red Sea and the Horn of Africa.

The group explicitly rejected any link between the recognition and broader regional schemes including the forced displacement of Palestinians — a signal that the Sisi administration views the move not just as a maritime threat, but as part of a larger geopolitical reshuffle. The Arab League and the African Union have also condemned Israel’s actions.

The diplomatic fallout moves to New York tomorrow. That’s when the UN Security Council will convene for an emergency session at Somalia’s request.

Will Donald Trump be the spoiler? While Prime Minister Benjamin Netanyahu framed the move as being in the “spirit of the Abraham Accords,” US President Donald Trump appeared to pour cold water on the idea. In an interview yesterday, Trump dismissed the prospect of immediate US recognition and downplayed Somaliland’s strategic offers, calling its bid to host a US military port “no big deal.”

BACKGROUND- Landlocked Ethiopia signed a memorandum of understanding with Somaliland in early 2024 seeking 20 km of coastline for a naval base and commercial port in exchange for future recognition.

The strategic context: Israel’s recognition places it at the center of a scramble for the Red Sea, with the UAE, Turkey, and Ethiopia all vying for control of strategic ports like Berbera.

Happening today

Cairo’s favorite parlor game is once again being played as wags in the capital city speculate about whether Prime Minister Mostafa Madbouly will be asked to form a new government when the next House of Representatives is seated.

Why all this chatter about a new cabinet or PM? Cabinet’s term will effectively come to an end when the current House of Representatives is dissolved next month at the end of its five-year term.

Voters are heading to the polls today in the second day of runoffs for 19 seats where earlier results were tossed due to irregularities in voting. The final election results should be certified by Sunday, 4 January.

And then what? Cabinet typically offers its resignation when a new House is elected and the president then asks a prime minister to form a government and select ministers. The newly-formed cabinet has to present its program to the House of Representatives for approval within 30 days of the government being formed.

Briefly noted

#1- The Pharaohs downed South Africa 1-0 this weekend to become the first side to make the final 16 at the African Cup of Nations. The final 16 get underway on Saturday, 3 January; the final is scheduled for Sunday, 18 January.

#2- Activist Alaa Abdel Fattah arrived in Britain on Friday after authorities lifted his travel ban. “I’m delighted that Alaa Abd el-Fattah is back in the UK and has been reunited with his loved ones, who must be feeling profound relief,” UK Prime Minister Keir Starmer wrote on X. Alaa was pardoned this past September, adding, “Alaa’s case has been a top priority for my government since we came to office. I’m grateful to President Sisi for his decision to grant the pardon.

Setting the record straight

Our friends at SODIC have issued a firm denial following local media reports that its top leadership was referred to trial in a dispute over property delivery. The company characterizes the claims as a rehash of a six-year-old case that was previously dismissed by the public prosecutor’s office, according to the statement (pdf) from the real estate company.

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Data point

61% — the growth in the number of credit cards in Egypt over just four years, with the total count standing at 6.7 mn as of June, according to the CBE’s latest data (pdf). Over the same period, the number of ATMs rose 52% to 26k, while point-of-sale machines increased 49% to 258k.

Credit card issuances target the top 10% of income earners, with the real payment revolution taking place on mobile wallets as well as parallel rail systems including EGX-listed Fawry and state-owned Instapay.

PSA-

WEATHER- It’s going to be a cool day in the capital city today, with a high of 19°C and an overnight low of 10°C — pretty much the pattern you can expect through next weekend, plus or minus a degree.

The big story abroad

Geopolitics dominated the weekend as businesses around the world downed tools for Christmas.

The big story in our part of the world has to be Israel’s surprise recognition of Somaliland (which we note above in What We’re Tracking Today). Meanwhile, the Financial Times is out with a piece noting that Saudi Arabia launched airstrikes against the UAE-backed Southern Transitional Council in Yemen’s Hadhramaut province, bringing “the quiet but consequential Riyadh-Abu Dhabi rivalry” into the open in Yemen and Sudan.

MEANWHILE- Ukraine’s Volodymyr Zelenskyy will meet Donald Trump in Florida today to close gaps on a 20-point draft deal he says is “90% ready.” The sticking points remain Donetsk territory and security assurances for Ukraine, the Wall Street Journal writes. Russia pummeled the Ukrainian capital for nearly 10 hours ahead of the meeting, the New York Times reports.

AND- Traders in Western markets will start work tomorrow hoping the Santa rally extends through the second trading day of January.

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