March 4 (Bloomberg) -- U.S. Secretary of State John Kerry, during his first trip to Egypt in the role, said yesterday that the U.S. government will release $250 million of a pledged $1 billion in aid to the country in response to commitments by President Mohamed Mursi to make economic and political changes.
The announcement followed a meeting in Cairo yesterday with Mursi and is part of “a good-faith effort to spur reform and help the Egyptian people at this difficult time,” Kerry said in a statement.
Kerry’s 24-hour visit was meant to help Egypt break out of political and economic paralysis as it heads toward April elections that the secular opposition plans to boycott. The standoff has complicated Egypt’s attempts to enact changes required for a $4.8 billion International Monetary Fund loan.
Kerry urged Egyptians to hold transparent elections and respect rights and freedoms, particularly of women and religious minorities.
“Over the past couple of days in Egypt, I have listened to a broad cross-section of political leaders, business leaders and representatives of non-governmental organizations,” Kerry said. “The people I met shared their deep concern about the political course of their country, the need to strengthen human rights protections, justice and the rule of law, and their fundamental anxiety about the economic future of Egypt,” he said.
Kerry also announced a decision to expand a program that allows Egyptian companies to export products from qualifying zones to the U.S. tariff-free. The zones are mostly along the border with Israel and the goods must include 10 percent Israeli content, said a U.S. official traveling with Kerry who spoke on condition of anonymity.
The official said that in Kerry’s talks, business leaders, NGOs and government officials all recognized that Egypt’s political crisis, its economic woes, and the challenge of qualifying for the IMF loan were linked.
Kerry said he “encouraged President Mursi to implement the homegrown reforms that will help his country secure an IMF agreement” and that Mursi “said that he plans to move quickly to do so.”
Kerry came to Egypt with the authority to release the first $190 million in “budget support funds.” That money is part of a $1 billion package of support pledged by President Barack Obama in May of 2011. The aid was split into two pieces. The $190 million was part of an initial $450 million tranche that had been held up by U.S. Congress out of concern over Egypt’s political developments, according to the U.S. official.
The administration hopes to provide Egypt with the balance of the $450 million and another tranche of $550 million if it qualifies for the IMF loan, the official said.
Kerry also announced $60 million toward the start of the Egyptian-American Enterprise Fund, which will fuel “key engines of democratic change in Egypt” by assisting Egyptian entrepreneurs and “its young people.” The fund will rise to $300 million in coming years “as we work with our Congress on funding this and other programs,” Kerry said.
Kerry is now on the next stop of his Middle East trip, Saudi Arabia. He travels to Abu Dhabi and Qatar before returning to the U.S. later this week.
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