U.S. $1 Billion Debt Relief Plan for Egypt Not New Funds
The Obama administration is going forward with a plan announced last year to provide Egypt with a $1 billion aid package, including debt relief, to help the country’s economy, U.S. officials said today.
The delay in disbursing the funds has been due to the time needed for Egypt’s new government to establish itself, according to Patrick Ventrell, the State Department’s acting deputy spokesman.
“As Egypt and other countries go through these transitions, getting these countries back on their feet economically is very important to their stability, their security, their forward progress, also on the political side,” he told reporters at the State Department.
Egyptian President Mohamed Mursi’s victory and the rise of the Muslim Brotherhood party has presented a dilemma for the U.S., which has been wary of helping an Islamist group with militant elements versus taking the risk that others, such as Iran, might step in to fill any void left by the U.S.
Egypt is a strategic ally to the U.S., which uses the Suez Canal, a crucial gateway for the oil shipments, for transit of its nuclear submarines to the Persian Gulf. Egypt also grants the U.S. military over-flight rights and is Israel’s partner in the Camp David peace accords.
The Obama administration is ready to act on a first phase of direct assistance, and the full $1 billion will become available over time in consultation with Congress, according to a White House official, who spoke on condition of anonymity to discuss sensitive negotiations. The official offered no details.
The U.S. is coordinating aid efforts with other major industrialized nations and the International Monetary Fund. Egypt hopes to reach an agreement on a $4.8 billion International Monetary Fund loan by December, Prime Minister Hisham Qandil said August 22, having raised its request from $3.2 billion.
Qandil said today that the requested $4.8 billion IMF loan would help the country cut its borrowing costs as the government targets economic growth of 5 percent this fiscal year.
The State Department said today that Deputy Secretary of State Tom Nides will lead a trade delegation of more than 100 U.S. business executives, representing more than 50 companies, to Cairo starting Sept. 8.
The U.S.-Egypt Business Council, part of the U.S. Chamber of Commerce, asked participating executives to be “able to discuss their substantive, ongoing or potential, plans for investment and trade with Egypt,” according to the group’s website.
The delegation is being led by Lionel Johnson, U.S. Chamber vice president for Turkey, Middle East and North Africa Affairs; G. Steven Farris, council chairman and chairman and chief executive officer of the Apache Corporation (APA); and Gamal Moharam, chairman of the American Chamber of Commerce in Egypt, according to a Chamber of Commerce statement.
Ventrell said the U.S. aid under discussion doesn’t represent “new money” to be sought from Congress. He said Egypt faces a $12 billion financing debt.
“Clearly Egypt needs to get its feet back on the ground economically,” Ventrell said. “Economic recovery is something at the top of their agenda.”
Secretary of State Hillary Clinton laid out details of the $1 billion package in a visit to Egypt in July. At the time, officials said the money could be used for short-term funding and for a debt swap that would back job-creation efforts. During the visit, she also discussed a U.S.-Egypt Enterprise Fund capitalized at $60 million in its first year that will invest in small- and medium-sized businesses to create jobs.
On the July visit, during which Clinton met Mursi for the first time, she also announced $250 million in loan guarantees for small businesses, the trade visit that Nides is leading and the Obama administration’s plans to support the country’s pursuit of loans from groups such as the IMF.
The U.S. is also looking at ways to provide direct financial aid, Ventrell said.
Republican Senator Bob Corker of Tennessee, a member of the Senate Foreign Relations Committee who met with Egyptian officials last week, said today that the U.S. talks focus on using “existing funds” to aid Egypt’s transition to democracy, “which is in the interests of the U.S. and other countries in the region.”
“While the story is still being written on what Egypt’s new government will ultimately look like and many risks remain, our priority should be on helping them now to minimize the risk that they will move away from moderation in the future,” Corker said in an e-mailed statement.
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