The U.S. government has long feared that suspending or conditioning aid would erode its influence. But on the very few occasions that the United States has used aid to Egypt as leverage — to compel the release of an imprisoned dissident in 2002, to prevent the escalation of violence against protesters in February 2011
and to ensure that American non-governmental organization (NGO) workers facing trumped-up charges would be allowed to leave Egypt in 2012 — it has been effective.
Despite these few successes, the Obama administration has remained unwilling to adhere to its principles by applying real pressure at critical moments — including most recently before the July 3 coup and prior to the unrestrained use of violence by security forces on Aug. 14. Such reluctance can be partly explained by the rigid structure of the aid package.
If the United States is to repair its badly damaged relationship with Egypt, it must overhaul its failed policy approach. Decades of unprincipled support for undemocratic actors has resulted in a total loss of credibility. Changing this will take years, but it should start immediately. And changing the nature and structure of U.S. assistance could be an important first step in that process.
The close relationship with the Egyptian military has become a tightly tangled knot when it comes to Egypt’s aid. Egypt is one of only two recipients of foreign military financing provided the courtesy of “cash-flow financing.” (The other is Israel.) This means the Egyptian government does not have to pay in advance for its expensive U.S.-contracted weapons systems; instead it can make financial commitments covered by future grants. Egypt essentially has a credit card to finance military purchases far in excess of the balance in its account.
In addition, Egypt receives early disbursal of its military aid at the beginning of the fiscal year, and it is also allowed to use the interest accrued on these deposits to purchase additional equipment.
It’s time to change how we give aid to Egypt. First, take away the credit card. Given the instability in the country, the United States should require payment in advance of sales and rescind Egypt’s cash-flow financing benefit. This would ensure that Egypt only buys what it can pay for and would enable the United States to more easily adapt to unexpected developments in Egypt. Next, end early disbursal of Egypt’s aid, so that the United States can maintain leverage and flexibility throughout the fiscal year. In this year’s foreign assistance bill, Senate appropriators have made a move in this direction, dividing Egypt’s military aid into four tranches to be delivered only when specified benchmarks are met.
As the United States makes the aid structure more flexible, the administration should have a detailed and thorough discussion with its Egyptian interlocutors about shifting U.S.-funded military assistance from prestige items. Administration officials have acknowledged that suspending delivery of such items does not “put at risk our own security or Egypt’s security or some of our common interests.” Instead of another 100 tanks or fleet of F-16s, security assistance should be focused on counterterrorism and border control with the right equipment and training.
Finally, the administration should engage its Egyptian counterparts in a serious discussion of rebalancing the level of military financing granted to Egypt each year in relation to economic assistance, given the country’s dire economic circumstances. Although Gulf donors have recently infused Egypt’s budget with much-needed cash, this only provides temporary relief and will not encourage reform essential to Egypt’s long-term economic health. The United States should fill this role, providing support for sustainable economic development, institutional reform and independent civil society. `
The administration has described this aid suspension as sending “a pretty clear message” as to what the United States cares about in Egypt. The administration is right to think that substantive actions regarding aid do send a strong signal about U.S. priorities. But the U.S.-Egypt relationship is in desperate need of a serious transformation, and the administration’s steps that follow this suspension will define U.S. priorities in the long term. Only through a shift to consistent, principled policy can American credibility among Egyptians begin to be restored or U.S. leverage in the country regained.