U.S. Move to Give Egypt $450 Million in Aid Meets Resistance
By STEVEN LEE MYERS
Published: September 28, 2012
The Obama administration notified Congress on Friday that it would provide Egypt’s
new government an emergency cash infusion of $450 million, but the aid
immediately encountered resistance from a prominent lawmaker wary of
foreign aid and Egypt’s new course under the leadership of the Muslim
Brotherhood.
The aid is part of the $1 billion in assistance that the Obama
administration has pledged to Egypt to bolster its transition to
democracy after the overthrow last year of the former president, Hosni Mubarak.
Its fate, however, was clouded by concerns over the new government’s
policies and, more recently, the protests that damaged the American
Embassy in Cairo.
The United States Agency for International Development notified Congress
of the cash infusion on Friday morning during the pre-election recess,
promptly igniting a smoldering debate over foreign aid and the
administration’s handling of crises in the Islamic world.
An influential Republican lawmaker, Representative Kay Granger of Texas,
immediately announced that she would use her position as chairwoman of
the House appropriations subcommittee overseeing foreign aid to block
the distribution of the money. She said the American relationship with
Egypt “has never been under more scrutiny” than it is in the wake of the
election of President Mohamed Morsi, a former leader of the Muslim Brotherhood.
“I am not convinced of the urgent need for this assistance and I cannot
support it at this time,” Ms. Granger said in a statement that her
office issued even before the administration announced the package.
Secretary of State Hillary Rodham Clinton,
speaking at a meeting of the Group of 8 nations in New York, said on
Friday that the world needed to do more to support the governments that
have emerged from the Arab Spring uprisings, including those in Egypt,
Libya and Tunisia.
“The recent riots and protests throughout the region have brought the
challenge of transition into sharp relief,” Mrs. Clinton said, without
mentioning the assistance to Egypt specifically. “Extremists are clearly
determined to hijack these wars and revolutions to further their
agendas and ideology, so our partnership must empower those who would
see their nations emerge as true democracies.”
The debate comes as the issue of foreign aid in general made an unexpected appearance in the presidential campaign.
In a speech in New York on Tuesday, Mr. Obama’s Republican challenger,
Mitt Romney, called for revamping assistance to focus more on
investments in the private sector than on direct aid — a shift
administration officials have said is under way.
While Mr. Romney did not address aid to Egypt directly, he cited Mr.
Morsi’s membership in the Muslim Brotherhood as one of the alarming
developments in the Middle East, along with the war in Syria, Iran’s
pursuit of nuclear weapons and the killing of the American ambassador to
Libya.
“A temporary aid package can jolt an economy,” he said. “It can fund
some projects. It can pay some bills. It can employ some people some of
the time. But it can’t sustain an economy — not for long. It can’t pull
the whole cart, because at some point the money runs out.”
The $1 billion in aid, announced by Mr. Obama in May 2011, was initially
intended to relieve Egypt’s debts to the United States, though
negotiations stalled during the country’s turbulent transition from
military rule to the election of Mr. Morsi this summer.
In recent weeks, negotiations over the assistance picked up pace, and
the administration decided to provide $450 million instead, including
$190 million immediately, because the country’s economic crisis has
become acute, with an estimated budget shortfall of $12 billion.
The assistance outlined in letters to Congress on Friday would be
contingent on Egypt’s setting in motion economic and budgetary changes
that the International Monetary Fund is now negotiating as part of a
$4.8 billion loan.
The administration has also thrown its support behind that loan, and
officials said they hoped it would be completed before the end of the
year. A $260 million infusion would come when the much larger loan is
completed, according to officials familiar with the package. By law, all
assistance to Egypt is contingent on the country’s meeting certain
requirements, including adherence to basic democratic values and the
Camp David peace treaty with Israel.
The protests over an anti-Muslim video and the storming of the American
Embassy in Cairo on Sept. 11 came even as senior White House and State
Department officials led a large business delegation to promote economic
assistance and trade in Egypt.
Mr. Morsi’s slow response to the protests raised concerns in Washington,
although administration officials later cited improved cooperation over
the embassy’s security.
The $1 billion in assistance has been cobbled together from funds
already appropriated by Congress, but the administration is required to
notify lawmakers of its intention to release any of the funds. Ms.
Granger presumably can put a hold on that release and pursue legislation
to reverse the appropriation.
Mrs. Clinton lobbied lawmakers last week during closed-door briefings
that focused on the tumult across the region, including the attack at
the American diplomatic mission in Libya that killed Ambassador J.
Christopher Stevens and three other Americans.
In addition to the $1 billion in assistance, the administration is
working with Egypt to provide $375 million in financing and loan
guarantees for American financiers who invest in Egypt and a $60 million
investment fund for Egyptian businesses. All of that comes on top of
$1.3 billion in military aid that the United States provides Egypt each
year.
A senior State Department official said that the administration would
consult with members of Congress in the days ahead “to make the case
that this budget support is firmly in U.S. interests in seeing peace,
stability and democracy in Egypt and the wider neighborhood.”
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