Kerry in Egypt Pushes for Political Talks, Economic Action

Photographer: Sean Gallup/Getty Images

John Kerry, U.S. Secretary of State, has been hinting at a major shift on Syria policy by the U.S., which to date has directed only medical supplies and non-lethal equipment such as radios to the opposition and humanitarian aid to non-governmental organizations. Close

John Kerry, U.S. Secretary of State, has been hinting at a major shift on Syria policy... Read More

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Photographer: Sean Gallup/Getty Images

John Kerry, U.S. Secretary of State, has been hinting at a major shift on Syria policy by the U.S., which to date has directed only medical supplies and non-lethal equipment such as radios to the opposition and humanitarian aid to non-governmental organizations.

U.S. Secretary of State John Kerry urged Egyptian officials and opposition politicians to overcome their differences for the sake of the country’s faltering economy.

“It is paramount, essential, urgent that the Egyptian economy get stronger, get back on its feet,” Kerry said at a gathering of business leaders in Cairo yesterday. He urged Egyptians “to come together to meet the economic challenge at this particular moment.”

Kerry, making his first visit to Egypt as secretary of state, urged Egyptians to respect democratic rights, engage with each other and compromise in order to restore the economy. Kerry’s goal is to encourage Egyptians to tackle changes required for a $4.8 billion International Monetary Fund loan.

Kerry and Egyptian President Mohamed Mursi today met for more than two hours, twice as long as had been scheduled, according to a U.S. official who wasn’t authorized to speak on the record. They discussed Middle East peace, the conflict in Syria, Iran, and Egypt’s economy, the official said.

Kerry also raised the importance of building human rights and the rule of law, urging the reform of Egypt’s courts, security services and changes to a law that allows police to monitor non-governmental organizations, according to the official. Preventing sexual violence, a long-standing problem in Egypt that has grown more severe at political demonstrations, was also discussed, the official said.

Egyptian Economy

“There must be a willingness on all sides to compromise on the issues that matter most to all Egyptians,” Kerry said in an appearance with Foreign Minister Mohamed Amr yesterday. The foreign minister told Kerry that he expects the U.S. “to stand by Egypt in this period, especially in the economic issues.”

Egypt, a signatory to the 1978 Camp David peace accord with Israel, has enough currency reserves to cover three months’ of imports, including food and fuel. Political tensions, driven in part by the adoption of an Islamist-backed constitution, have deepened the crisis. The turmoil is jeopardizing $1.5 billion a year in U.S. aid, about 80 percent of which goes to the military, and may destabilize the U.S. ally.

Kerry began making his case yesterday, meeting NGOs, political parties, members of the government and the intelligence service. Today he will also meet with Defense Minister Abdelfatah Al-Seesi, the U.S. official said.

In his meetings with political leaders, Kerry conveyed the need to take steps necessary for the IMF loan, including increasing tax revenue, reducing energy subsidies, and making clear to the parliament what the approval process entails, the official said.

Kerry told the business group that “to attract capital, to bring money back here that will invest, to give business the confidence to move forward, there has to be security and there has to be a sense of political and economic viability.”

In his appearance with Amr, Kerry said the U.S. is “not here to interfere” and that it wasn’t choosing sides in a political fight. “We come here as friends for the Egyptian people, not for one government or one person or one party or ideology, but for the Egyptian people,” he said.

Opposition Criticism

Opposition parties have criticized the U.S. for continuing to work with Mursi’s government even as it has restricted rights, including limiting protests and some free speech rights. A March 1 report by the Center for American Progress, a Washington policy group, said the efforts by Mursi to concentrate power in the executive branch has “crippled Egypt’s overall ability to deal with its policy agenda” and “caused considerable damage to Egypt’s unity.”

Kerry said his meetings with opposition leaders, some of whom have threatened to boycott next month’s parliamentary election, were “very, very spirited.” He directly tied the health of the democracy to the economy, saying “a vibrant democracy stimulates business” and stressing the U.S. belief that it is essential that the Egyptian constitution include protections for freedom of speech, religious diversity and minorities.

Opposition Criticism

Some opposition members refused to attend meetings with Kerry, in part out of anger at U.S. work with Mursi, who was leader of the Islamist Muslim Brotherhood before becoming president.

About a dozen protesters from “the revolutionary movements” gathered outside the Foreign Ministry to denounce Kerry’s visit, the state-run Middle East News Agency reported.

The protesters condemned what they called “the alliance between the Brotherhood and the United States,” MENA said. A number of groups have called for demonstrating against what they say is “U.S. pressure” on the Egyptian opposition to take part in next month’s elections and in talks called for by Mursi, MENA reported.

Egypt can’t emerge from its economic crisis without reaching an accord with the IMF, Planning and International Cooperation Minister Ashraf El-Arabi told reporters Feb. 21 in Cairo.

Egyptians are facing an official 13 percent jobless rate and 6.3 percent consumer-price inflation. That gives Egypt the sixth-worst misery rate -- inflation plus the unemployment rate -- among 59 nations tracked by Bloomberg.

Youth unemployment rates in North Africa and the Middle East are projected to remain above 25 percent for the next five years, and may rise higher in some nations, according to a November 2012 report by the International Labor Organization.

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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