From a new ICG report on Sudan and its neighbors:
Sudan is of utmost strategic importance for Egypt, which maintains a large presence in Khartoum, including a sizeable and active embassy that is often better informed about the host country’s dynamics than any other foreign presence. Cairo’s foreign ministry operates a department dedicated specifically to Sudan policy. It is one of only two such separate departments in the ministry and is reportedly a gateway to career advancement and prominent positions within the government. The intelligence bureau also plays a prominent role on Sudan policy and has the ear of the president.
. . .
Having long felt sidelined in peace initiatives concerning its own backyard, Egypt tried to re-assert its role in Sudan negotiations in early 2010. Intelligence Director Omar Sulieman invited NCP presidential advisor Nafie Ali Nafie and the SPLM’s Pagan Amum to Cairo in late February for a relatively quiet workshop on “the foundations and guarantees for unity in Sudan”. The SPLM participated, as it wanted to be seen giving unity a chance and realises the importance of engaging Egypt, but it also sought to use the forum to persuade Cairo to accept the South’s right to self-determination. The talks focused exclusively on unity but deadlocked after Nafie Ali Nafie refused to discuss Sharia (Islamic law), long a point of contention between the two parties. Soon afterwards, Suleiman and Aboul-Ghait went to Khartoum to invite Bashir and Kiir to Cairo, again to encourage agreement on unity. Egyptian officials said another invitation may be extended to the parties now that the April elections have been held. These efforts all signal an attempt to again assert their role in the resolution of Sudan’s problems.
While Egypt remains opposed to secession, a new prag- matism is evident, as it has simultaneously begun to position itself for the likely eventuality. A number of recent events illustrate a degree of evolution – albeit erratic – in its position. A consulate was opened in Juba in 2005, and President Mubarak visited in November 2008 to discuss cooperation with the GoSS and development support to the South. This was a major event, the first visit by a head of state in more than 40 years. Mubarak spent very little time in Khartoum before heading to Juba, a fact that reg- istered in the South, where his aforementioned public commitment to the referendum was also a welcome development.
A lot more there, including that on the crucial issue of Egypt guaranteeing its allocation of Nile water, South Sudan officials have said they will work within the current allocation for Sudan and pressures from the Egyptians to use Egyptian contractors in any hydroelectric projects developed in South Sudan. Of course, considering the South's relationship with Ethiopia and other upstream countries that are interested in renegotiating water allocation on the Nile, there is cause for worry in Cairo.