President Donald Trump’s proposed U.S.-Israeli plan to assert control over Gaza is more than a military or political maneuver, it signals a profound shift in the geopolitical and economic landscape of the Middle East and the Horn of Africa. Beyond security considerations, the plan seeks economic dominance, trade control, and strategic influence. At the heart of this vision is the creation of an alternative trade route connecting the Red Sea to the Mediterranean, bypassing Egypt’s Suez Canal. The implications extend far beyond the Israeli-Palestinian conflict, threatening Egypt’s economic stability, reshaping Ethiopia’s regional standing, and altering global trade dynamics in ways that could redefine 21st-century power structures.

The Suez Canal has long been Egypt’s economic lifeline, serving as a crucial passageway for global trade between Europe and Asia. Revenue from the canal provides Cairo with economic stability and diplomatic leverage. Any alternative trade corridor would severely undercut Egypt’s strategic influence, diminishing foreign currency reserves, weakening its negotiating power, and potentially fueling domestic political instability. Trump’s plan for Gaza, which envisions a new commercial link between the Red Sea and the Mediterranean, presents an existential threat to Egypt’s maritime and economic dominance. If successful, it would significantly erode Egypt’s economic significance and its position as a central gateway between Africa, the Middle East, and Europe.

Egypt’s Dilemma: Between Economic Survival and Strategic Resistance

Egypt has fiercely opposed Trump’s proposal, warning against any forced displacement of Palestinians from Gaza and the broader consequences of such an initiative. However, Cairo faces a strategic conundrum. As one of the largest recipients of U.S. foreign aid, receiving approximately $1.3 billion annually, mostly in military assistance, Egypt’s leadership is under intense pressure. Trump’s implicit threat to cut funding if Egypt resists his plan places Cairo in a precarious position. Compliance risks undermining Egypt’s influence in the Arab world, casting it as an enabler of neocolonial economic ambitions. Yet outright rejection could jeopardize critical financial and military support from Washington, leaving Egypt increasingly vulnerable in a volatile region.

Ethiopia’s Strategic Opportunity

While Egypt struggles to navigate this crisis, Ethiopia stands at a pivotal juncture. The long-standing dispute over the Grand Ethiopian Renaissance Dam (GERD) has placed Ethiopia and Egypt at odds, with Cairo viewing the dam as a direct threat to its water security. However, if Egypt is forced to divert its focus toward protecting its economic stronghold, the Suez Canal, its ability to exert pressure on Ethiopia over the Nile could be significantly weakened. With Egypt’s diplomatic resources stretched thin, Ethiopia may gain greater autonomy over its hydropower projects, advancing its energy agenda with reduced external interference.

Moreover, the shifting geopolitical landscape offers Ethiopia a chance to enhance its global standing. If U.S. priorities shift from the Horn of Africa toward Gaza, Ethiopia can position itself as a critical regional power. Strengthening alliances with global actors such as China and Russia, while maintaining strategic engagement with the United States, could provide Ethiopia with increased leverage in trade, security, and foreign investment negotiations. By presenting itself as a stabilizing force in the region, Ethiopia could attract greater international backing, positioning itself as an indispensable partner in regional economic and political affairs.

A Broader Geopolitical Realignment

The implications of Trump’s Gaza plan extend beyond Egypt and Ethiopia, signaling a potential realignment of power across the Middle East and the Horn of Africa. A new trade route bypassing the Suez

Canal would disrupt existing economic and strategic relationships, shifting dominance toward U.S. and Israeli interests. Arab nations, including Jordan and several Gulf states, have already expressed strong opposition to the plan, recognizing its potential to upend regional power balances. If Washington and Tel Aviv successfully implement their vision, they will gain unprecedented control over a critical global trade corridor, reinforcing their grip on international commerce.

Beyond trade, the proposal reflects a broader strategic shift in U.S. foreign policy. By prioritizing Gaza, Washington signals a reduced focus on the Horn of Africa, where China and Russia have steadily expanded their influence. Establishing a new commercial corridor would not only enhance U.S. and Israeli economic clout but also serve as a counterweight to Beijing’s growing foothold in global trade infrastructure. Control over this key passageway would consolidate American and Israeli dominance, reshaping international trade routes while marginalizing alternative economic players.

The High Stakes for Egypt and Ethiopia

For Egypt, the risks could not be higher. A diminished Suez Canal would translate into a weakened economy, heightened political instability, and increased domestic unrest. Already grappling with economic pressures, the Egyptian government faces the challenge of maintaining financial stability while resisting external pressures that threaten its sovereignty. Failure to navigate this crisis effectively could erode Egypt’s standing as a regional power, relegating it to a secondary role in Middle Eastern politics.

Conversely, Ethiopia stands to gain significant strategic advantages. With Egypt distracted by economic survival, Ethiopia can consolidate its influence in the Horn of Africa, pushing forward its development agenda with fewer geopolitical obstacles. If it navigates the shifting landscape with calculated diplomacy, Ethiopia could emerge as a stronger regional force, with enhanced economic and political leverage.

A Defining Moment in Global Power Politics

The battle for Gaza is far more than a territorial dispute, it is a struggle for economic supremacy, geopolitical influence, and the reshaping of global power structures. If Trump’s plan moves forward, it will trigger a cascade of changes, redefining regional alliances and economic hierarchies. Egypt, once a dominant force in Middle Eastern politics, faces one of its greatest modern challenges. Meanwhile, Ethiopia has a rare opportunity to assert its regional influence, advancing its strategic interests in a rapidly evolving geopolitical environment. As the United States and Israel push forward with their vision, the world watches closely. The decisions made in the coming months will not only determine the future of Gaza but will also have far-reaching consequences for global trade, security, and diplomatic relations. The outcome will shape not just the Middle East but the entire economic and political landscape of a region standing at a crossroads.

By Jalene Tesfaye,the Deputy Director at Horn Review