Obama Canceling Egypt Exercise Shows Limits of U.S. Sway

Photographer: Hassan Ammar/AP Photo

Members of the Egyptian Army walk among the smoldering remains of the largest protest camp of supporters of ousted President Mohammed Morsi, that was cleared by security forces, in the district of Nasr City, Cairo, Egypt, on Aug. 15, 2013. Close

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Photographer: Hassan Ammar/AP Photo

Members of the Egyptian Army walk among the smoldering remains of the largest protest camp of supporters of ousted President Mohammed Morsi, that was cleared by security forces, in the district of Nasr City, Cairo, Egypt, on Aug. 15, 2013.

President Barack Obama’s cancellation of the Pentagon’s scheduled military exercise with Egypt was a rebuke that underscored the limits of U.S. influence with the nation’s generals, who benefit from $1.3 billion a year in American military aid.

Yesterday’s assault by security forces in Cairo, in which more than 500 people died, came after days of diplomatic efforts by the U.S. and allies to persuade the interim government -- and the generals who wield the real power -- to show restraint toward mass demonstrations and seek a peaceful resolution with supporters of ousted Islamist President Mohamed Mursi.

Instead, the Egyptian government has taken a “dangerous path” with the violent suppression of opposition, Obama said today from his family’s vacation rental home in Chilmark, Massachusetts, on Martha’s Vineyard. In addition to canceling the high-profile military exercise that was scheduled to begin next month, Obama said his national security team will consider further steps “as necessary,” a comment that puts military aid in question.

“While we want to sustain our relationship with Egypt, our traditional cooperation cannot continue as usual when civilians are being killed in the streets and rights are being rolled back,” Obama said.

Photographer: Mohammed Abdel Moneim/AFP/Getty Images

A woman bends to help a wounded youth during clashes that broke out as Egyptian security forces moved in to disperse supporters of Egypt's ousted president Mohamed Mursi in a huge protest camp near Rabaa al-Adawiya mosque in eastern Cairo on Aug. 14, 2013. Close

A woman bends to help a wounded youth during clashes that broke out as Egyptian... Read More

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Photographer: Mohammed Abdel Moneim/AFP/Getty Images

A woman bends to help a wounded youth during clashes that broke out as Egyptian security forces moved in to disperse supporters of Egypt's ousted president Mohamed Mursi in a huge protest camp near Rabaa al-Adawiya mosque in eastern Cairo on Aug. 14, 2013.

Obama’s action was directed at Egypt’s top military leaders, who exert control through the unelected interim government that replaced Mursi’s Islamist-dominated government, the first elected in Egyptian history.

Hagel’s Call

His message was reinforced by Defense Secretary Chuck Hagel in a phone call today to Egyptian Defense Minister Abdelfatah al-Seesi.

“I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward,” Hagel said in a statement. “The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.”

Hagel has been the main U.S. interlocutor with al-Seesi, the general who commands Egypt’s military, throughout the crisis.

Dominant Force

“The military was always and remains through this presidency the dominant political and economic force in the country,” Ian Bremmer, the New York-based president of the Eurasia Group, said in an interview today on “Bloomberg Surveillance.”

“The military has lost a lot of its international support,” he said. “Many Europeans are already calling for suspension of aid without preconditions.”

At least 525 people died, including police, and more than 3,700 were injured in yesterday’s violence, according to official tallies. The Muslim Brotherhood, which backs Mursi and led the protests, said the death toll was many times higher.

The U.K., France and Australia have called for an urgent meeting of the United Nations Security Council on Egypt, according to postings on Twitter Inc.’s service by those countries’ UN missions.

The Bright Star exercises, scheduled in Egypt every two years, are an outgrowth of the 1979 Camp David peace accord between Egypt and Israel. Last held in 2009, the exercises were canceled in 2011 due to political turmoil following the revolution that toppled former President Hosni Mubarak. In addition to the U.S. and Egypt, participants have included France, Germany, Greece, Italy, Jordan, Kuwait, Pakistan, Turkey and the U.K., according to the State Department’s website.

F-16s, Tanks

While there is no decision about curtailing military aid, Egypt’s crackdown makes it harder for Obama’s administration to justify to Congress continuing assistance at current levels, a U.S. official, who asked not to be identified discussing internal deliberations, said yesterday. The aid is used to buy systems such as F-16 fighter jets and M1A1 Abrams battle tanks. Egypt also receives about $250 million a year in economic assistance.

The Egyptian decision to use force against its Islamists shows the U.S. “has lost much of the influence over the decisions of Egypt’s military and political elite” compared with years ago, said Jeffrey Martini, a Middle East analyst in Washington with Rand Corp., a policy research organization.

Coup Provision

“This is because the share of U.S. aid relative to Egyptian GDP has fallen 10-fold” over the past 20 years, he said by e-mail. “The checkbook diplomacy of the Arab Gulf states also diminishes U.S. leverage. And finally, Egyptians know the U.S. has strategic interests at stake -- military access and regional stability -- we are unlikely to jeopardize.”

Egypt’s action came after the Obama administration, citing U.S. national security interests in the Middle East, shielded the country from a military aid cutoff by declining to declare that Mursi’s July ouster constituted a coup d’etat. U.S. law requires aid to be withheld from a nation following a coup.

After Mursi’s ouster, the Obama administration did decide to delay the delivery of four Lockheed Martin Corp. (LMT) F-16s to Egypt, citing the “fluid situation.” Eight more are planned for delivery to the nation by January, if the schedule isn’t altered.

Democratic Senator Tim Kaine of Virginia, chairman of the Senate Foreign Relations Subcommittee on Near Eastern and South and Central Asian Affairs, called Obama’s cancellation of Bright Star an “appropriate” action.

McKeon, Leahy

Republican Representative Howard P. “Buck” McKeon of California, chairman of the House Armed Services Committee, said in an e-mailed statement that “our strong and supportive relationship with Egypt continues to be in America’s national security interest, but only so long as the Egyptian military respects civilian rule and continues the transition.”

Democratic Senator Patrick Leahy of Vermont, who is chairman of the appropriations subcommittee responsible for foreign aid, called for cutting off assistance to Egypt.

“While suspending joint military exercises as the president has done is an important step, our law is clear: aid to the Egyptian military should cease unless they restore democracy,” he said in a statement.

‘Skirting’ Issues

Republican Senator Rand Paul of Kentucky, who last month lost a Senate vote on his plan to cut off aid to Egypt and redirect the money to bridge repairs in the U.S., called on Obama to “stop skirting the issue.”

“The law is very clear when a coup d’état takes place, foreign aid must stop, regardless of the circumstances,” Paul said in a statement today.

The advocacy group Human Rights First praised Obama today for his condemnation of Egypt’s crackdown and urged him to immediately suspend military aid pending an “inclusive process of reconciliation leading to the restoration of a civilian-led government with control over the military and security forces.”

“Failure of U.S. policy in Egypt will have broader implications for U.S. relations with countries in the rest of the Arab world, many of which are now struggling with their own transitions,” Neil Hicks, the international policy adviser for the New York-based human rights group, said in a statement.

Richard Haass, president of the Council on Foreign Relations in New York, supported the president on maintaining aid for the time being. His action “puts generals on notice” that time is running out absent restraint and reform, he said in a post on Twitter.

Frequent Calls

American diplomacy has included frequent calls by Hagel to al-Seesi. U.S. Deputy Secretary of State William Burns joined with European Union officials for talks with al-Seesi and Prime Minister Hazem El Beblawi in Cairo earlier this month, urging restraint and political reconciliation in pursuit of a new constitution and elections.

Even with its influence limited, the U.S. administration has sought to maintain communications with military leaders, many of whom -- including al-Seesi -- were trained in the U.S.

Obama alluded in his remarks today to limits on the U.S. ability to shape events in Egypt.

“America cannot determine the future of Egypt,” he said. “That’s a task for the Egyptian people.”

“We want Egypt to succeed,” he said. “We want a peaceful, democratic, prosperous Egypt. That’s our interest. But to achieve that, the Egyptians are going to have to do the work.”

Egypt’s stock exchange and banks were closed today, for the first time other than on public holidays since the January 2011 uprising. Egypt’s 2020 Eurobonds extended losses today, pushing the yield up 22 basis points to 9 percent as of 5:55 p.m. in Cairo. The benchmark stock index fell 1.7 percent yesterday, the most worldwide.

To contact the reporter on this story: Terry Atlas in Washington at tatlas@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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