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U.S. Prepares to Continue Egypt Military Aid Amid Dispute

The Obama administration is preparing to decide this week to release $1.5 billion in annual aid to Egypt that has been in question since the country’s decision to prosecute U.S. and Egyptian pro-democracy workers.

The anticipated approval has angered human rights groups and lawmakers who say that releasing the aid will undermine Egypt’s nascent democratic groups and embolden political forces that have tried to crush them. Congress requires Secretary of State Hillary Clinton to certify that Egypt is promoting freedoms and rights before it will release aid. Clinton can sidestep the restriction by using a waiver to release all or a portion of the funds on national security grounds.

“Now is not the time for giving Egypt’s current rulers, who are mostly holdovers from the Mubarak era dictatorship, the U.S. government’s seal of approval,” Neil Hicks, international policy adviser at Human Rights First, a New York-based nonprofit group, said in a statement.

The aid decision highlights the balancing act between the Obama administration’s rhetoric on the democratic hopes sweeping the Middle East and the reality of U.S. security and energy concerns. Egypt, which is home to 25 percent of the Arab world’s population, forged the cold Arab-Israeli peace and controls the Suez Canal, passageway for 8 percent of the world’s shipping traffic, including oil shipments to Europe and the U.S.

Maintain Strong Relationship

“Our goal, as we go forward with this process that the secretary has to make a decision on, is to satisfy the intent of the legislation while maintaining the strongest possible foundations for the U.S.-Egyptian relationship going forward,” Victoria Nuland, a State Department spokeswoman, said March 16.

Senator Patrick Leahy, the Vermont Democrat who heads the Appropriations subcommittee that oversees the State Department’s budget, was the force behind the new conditions that have held up release of $1.3 billion in military aid to Egypt in the fiscal year that began in October.

“Under current circumstances in Egypt, I believe a waiver would be a mistake,” Leahy said in a March 16 statement. The aid conditions are meant to put the U.S. “squarely on the side of the Egyptian people” seeking democracy, freedom and the rule of law, and “to clearly define the terms of our future with the Egyptian military.”

Leahy said a waiver gives the U.S. the flexibility to hold back portions of the funding. “If the law is waived, I hope this flexibility will be used to release no more taxpayer funds from the Treasury than is demonstrably necessary, withholding the rest pending further progress in the transition to democracy,” Leahy said.

Criminal Charges

The Egyptian government is pressing criminal charges against 43 pro-democracy workers from four non-governmental organizations for illegally accepting foreign funds and operating without a license. Thirteen of them, including the son of U.S. Transportation Secretary Ray LaHood, were allowed to leave Egypt this month after a standoff that underscored the uncertainty of U.S.-Egypt ties after protests forced President Hosni Mubarak from office last year.

U.S. House Minority Leader Nancy Pelosi, in Cairo on an official visit March 16, described the clash as a “bump in the road” and said ties between the two countries remain strong. The California Democrat said the head of Egypt’s ruling military council, Field Marshall Mohamed Hussein Tantawi, assured her that the transition to civilian authority will take place as scheduled in June, once a new president is elected.

‘Great Disappointment’

An official familiar with White House deliberations on the matter said that while there’s great disappointment about Egypt’s efforts to block democracy and human rights groups from operating in the country, there’s also a desire to help the country through its remaining months of transition and to build a successful partnership with the incoming government.

That challenge, the official said, has been exacerbated by Egypt’s extreme financial difficulties. The country’s upheaval has scared away investors and tourists, draining the nation’s foreign-exchange reserves. Egyptian officials are scheduled to begin talks with an International Monetary Fund mission today in Cairo about Egypt’s request for a $3.2 billion loan to help carry the economy through the political transition.

A cutoff of U.S. military aid would interrupt funding of a 24-year-old agreement by General Dynamics Corp. (GD) with Egypt to produce M1A1 tanks jointly outside Cairo, according to Peter Keating, a spokesman for the Falls Church, Virginia-based company. Honeywell International Inc. (HON) and Allison Transmission Holdings Inc. are subcontractors. Lockheed Martin Corp. (LMT) of Bethesda, Maryland is building 20 F-16 fighters for Egypt with delivery scheduled this year, according to Laura Siebert, a company spokeswoman. Congress also approved $250 million in economic aid for the current fiscal year.

Keeping Influence

Egypt’s democratic development, its stability, security and economic prosperity are all of concern to the U.S., Nuland said March 16. “So those are a lot of things that have to be kept strong and kept in balance as we move forward with this,” she said. Moreover, aid has given the U.S. influence with the Egyptian military that can ultimately help the country’s democratic development, Nuland said.

“It enabled us to have influence at a time when the Egyptian military had to decide whether it was going to fire on its own people or whether it was going to support change,” Nuland said.

The administration is briefing members of Congress before making an announcement that may come this week, she said.

Jeffrey Martini, a project associate at Rand Corp., a policy group, pointed to the gap he and other analysts see between the Obama administration’s words and the prospect of aid continuing.

‘Enduring Cooperation’

In November, Clinton addressed the National Democratic Institute, one of the Washington-based pro-democracy groups targeted in Egypt, and stressed the U.S. commitment to support the Arab push for freedoms, rights and democracy.

“As the fall of Hosni Mubarak in Egypt made clear, the enduring cooperation we seek will be difficult to sustain without democratic legitimacy and public consent,” Clinton said, discussing the tension between ideals and realities. “We cannot have one set of politics to advance security in the here- and-now and another to promote democracy in a long run that never quite arrives.”

If that speech was supposed to signal a new emphasis on promoting and protecting rights in the Middle East, Martini said, “frankly, I don’t see it.”

“If the $1.5 billion goes through, what kind of message does that send to the Egyptian people,” Martini said. “In Egypt, there’s a lot of bluster about conditionality, but at the end of the day it looks like business as usual.”

In her remarks to NDI, Clinton said there would be conflicts to resolve. “As a country with many complex interests, we’ll always have to walk and chew gum at the same time,” she said.

To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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