U.S. Military Aid Cut Might Not Just Affect Egypt
By: Roqaya Zamzam
The decision to partially cut U.S. military aid to Egypt for the first time stirred controversy over the effects on both countries on the political and economic levels.
The US decided last month to partially suspend military equipment and economic aid given to Egypt. The Foreign Assistance Act mandates that the US cuts aid to any country that isn’t practicing democracy or that has encountered a military coup.
“If they suspend the aid, they lose the last bargaining chip they have in the region,” said Samer Atalla, economics Professor at AUC.
Holger Albrecht, assistant Professor in the AUC department of political science, does not believe support for Egypt is politically crucial for the US.
“There is always talk about strategic interest that America has in the Middle East, but I can’t find any strategic interests found in the Middle East that don’t allow for any alternative thinking,” said Albrecht.
Albrecht also believes that even if the aid is provided to maintain peaceful relations with Israel, it’s time for change.
“[The US] might rethink and reformulate their entire foreign policy [towards] a [relatively] big region [because of] relations to one particular country,” he said, explaining that Israelis should be able to “look after themselves” without the US tailoring its foreign policy towards many countries in the Middle East just to support Israel.
Economic benefits of US military aid
Atalla said that the U.S. military aid does not benefit the Egyptian economy; however, Albrecht argues that it boosts it by generating more aid from other countries.
“The [military] aid goes to the U.S. military for supplying weapons for Egypt, so it is not a great booster for [Egypt’s] economy,” said Atalla, adding that the money goes back to U.S. suppliers who deliver their military products to Egypt.
Mohamed Waked, a political activist who holds a Ph.D. in mediating aid in Egypt, told the Caravan that the military aid does not allow Egypt to buy any equipment from countries other than the US and some of its allies, and that the US provides Egypt with a list of weapons they can buy using the aid.
Atalla said that on one hand, Egypt benefits from the aid in terms of the received weapons. But on the other hand, it is rather the U.S. economy that is “enriched” because American businessmen find a flow of money when they produce weapons.
However, Albrecht said that good relations with the US benefit Egypt economically because they allow the country to get funds elsewhere and thus reform the Egyptian economy.
“These funds are [as] significant as a deal with the IMF [International Monetary Fund] would be,” said Albrecht, adding, “They resemble a possible deal with the IMF or other governments in the European Union and single member states.”
Consequences of cutting military aid
Due to the fact that it will be left with overdue bills to U.S. defense contractors, the U.S. government might lose money if the aid is, in fact, cut.
According to U.S. officials, stopping the military aid would result in breaking the contracts regarding weapons delivery to Egypt. As a result, the U.S. government would be responsible for paying overdue bills for the weapons that were produced but not delivered.
According to The Jerusalem Post, analysts have estimated that the U.S. government may endure up to $3 billion bills when aid stops.
However, Albrecht said that the US is capable of enduring the penalties, because it is a stronger player and would easily be able to reformulate its interests.
“The U.S. government will find a way to get rid of the materials. They were meant to be delivered as [goods] to some friendly countries and Egypt from their perspective wasn’t that friendly,” said Albrecht. “They have the right to reconsider supporting it,” he added.
Albrecht believes that Egypt’s economy might suffer if it turns to another country for support to the Egyptian military.
“Most of the material the military is using is western in origin, so searching for an alternative would hurt a little bit,” said Albrecht, referring to the maintenance of the spare parts of the equipment that already exists in Egypt.
Albrecht added that if Egypt changes its military supporter, the training for the use of already existent equipment will “all go to waste” and 30 years of agreements will have to be changed.
US economic aid to Egypt
The economic aid is systematically cut off from Egypt and is intended to finance hospitals, government workers and to promote democracy through funding civil society.
Waked said that the economic aid is of less importance because it is allocated according to the US’s priorities.
“They don’t give [Egypt] the aid in cash, but they create programs and NGOs to develop democracy and other principles,” said Waked.
“It’s all based on programs they set for [Egypt] with details on how everything should be operated and spent,” Waked added.
Attalla explained that even if given in cash, the amount of aid would be insignificant because of its percentage within the country’s Gross Domestic Product (GDP).
The U.S. economic aid is worth less than 0.5 percent of Egypt’s GDP.
According to the World Bank, Egypt’s GDP is $257 billion as per 2012 ($252 billion in 2011). The US invested projects as part of USAID, worth $82 million: $30.5 million for democracy and governance, $11.2 million for economic development, $24.7 million for education and social services and $15.6 for health, according to the USAID to Egypt official website.
GROWING Anti-US sentiment
A movement named “Stop the U.S. Aid” sprung in Cairo demanding the suspension of the U.S. aid and the independence from its alleged control.
The movement, which started after the June 30 uprising, which led to the removal of President Mohamed Morsi, reached 700 thousand signatures and gained support from different public figures as well as many political parties including Al-Tayar Al-Shaabi (The Popular Current) and Al-Karama Party (The Pride Party), according to Mohamed Farouq, the movement’s political liaison officer.
Farouq told the Caravan, “We want to stop depending on anyone to grow and develop. The signatures will be given to the next democratically elected president of Egypt.”
He added, “We think that both former Presidents Hosni Mubarak and Mohamed Morsi failed to independently rule the country without America’s interference. Supplying the aid allows the US to intervene in our policies, which is unacceptable.”
Waked said that Egypt should not depend on U.S. aid, but rather benefit from its own resources. “Realizing our potentials could help us discard the aid,” he said.
Albrecht agreed that Egypt should try to stand on its own feet instead of depending on foreign money, adding that aid does not come without interests from the supporting country.
Even though calls for reconciliation remain unanswered, Waked said that mutual benefits for Egypt and the US will eventually solve the issue.
Albrecht believes that US-Egyptian relations might not be as strong as they were when Mubarak was in power.
“The [Egyptian] government will not offer support to this particular relation [with the US] as unconditional as Mubarak has done. This is because the Egyptian government will have to speak to their people who are anti-America at the moment,” said Albrecht.
At the United Nations General Assembly meeting held in New York on Sept. 24, President Obama said, “[The US] has not proceeded with the delivery of certain military systems, and [their support] depends upon Egypt’s progress in pursuing a democratic path.”
However, Obama added that the US would continue to support Egypt and its people in areas such as education and other areas that would lead to the establishment of democracy – referring to economic aid.
The U.S. Department of State deputy spokesperson Marie Harf was quoted as saying on their official website, “We do think that it’s important to continue our engagement with the Egyptian Government because we do have interests there, we have national security interests there that we want to keep promoting.”
Aid origins
Egypt started to receive aid from the US when interests in the region grew and the resources in Middle Eastern countries were discovered, according to Bruce Rutherford, author of the book ‘Egypt after Mubarak.’
The US believed that Egypt was one of the important countries in the area especially since it had borders with Israel, wrote Rutherford.
Rutherford wrote that the US offered funding to Egypt to open a way for peace with Israel. He used as evidence the fact that the US increased the aid to Egypt by $1.5 billion as military assistance after the 1978 Camp David Accords. The accords led to the 1979 peace treaty between Egypt and Israel.
The U.S. economic aid (as opposed to military aid) started in 1975 with $370 million. In 1978, it rose to $943 million and then to $1.1 billion after the peace agreement Egypt had with Israel, wrote Rutherford.
Rutherford added that in 2000, the US began cutting the economic aid (not the military aid) at a rate of five percent each year in hopes of reducing the economic assistance by 50 percent in 10 years. By 2006, the economic aid had fallen to $490 million. Reuters reported last month that§ the US decided to withhold $260 million in cash assistance.
