September 28, 2011

FOR MONTHS Western leaders have proclaimed that the Arab Spring offers an historic, and fragile, opportunity to transform the Middle East for the better. They are right: If the core demands of the mass protests in Egypt, Tunisia, Libya and elsewhere — for liberal democracy and and economic modernization — can be met, one of the world’s most troubled and volatile regions could be stabilized. This is a goal worth a big investment, and notwithstanding their fiscal troubles, rich countries have made ambitious promises. At a Group of Eight meeting in New York last week, French Foreign Minister Alain Juppe said that some $80 billion in aid has been pledged to Egypt, Tunisia, Jordan and Morocco over the next two years.

The problem, as so often with international aid, is that the money is not being delivered. Egypt, for example, has been offered more than $17.5 billion, according to its minister for solidarity and social justice — but almost none of it has materialized, and “lots of it is propaganda,” he recently told the New York Times. As a practical matter, the transitional military-backed government in Cairo is starved for funds even as it faces strikes by teachers, doctors and other government workers demanding huge pay raises — not to mention the restless generation of young people who drove the revolution, some 40 percent of whom are unemployed.

Egypt needs money for long-term investment, but also quick cash. Though the economy has not collapsed — it registered growth of just under 2 percent for the year ending in July — the key tourism industry is still depressed and foreign investment has fallen by two-thirds. The interim government has already spent about a third of the country’s reserves and driven up domestic interest rates with its borrowing. With a crucial period of political campaigning, elections and constitution-writing about to begin, a drop in employment or government spending would play into the hands of Islamic parties and anti-Western populists.

Part of the cash flow problem, to be sure, is the fault of the stumbling Supreme Military Council, which rejected $3 billion in financing that its civilian cabinet negotiated with the International Monetary Fund, as well as $1 billion from the World Bank. The generals have also feuded with the Obama administration over allocation of $140 million in funds freed up by the State Department. Following the practice of the former authoritarian regime, it has threatened to prosecute civil society groups that receive U.S. or other foreign funding without government approval — even while seeking the continuation of $1.3 billion in annual American military aid.

These stances are unacceptable. But the generals have promised to be out of office in a few months, and what matters is that the elected civilian government that replaces them does not inherit an empty treasury or an economic crisis. That’s why U.S. and other multilateral aid should be delivered now — and why Congress’s hesi­ta­tion in approving new funds is shortsighted. Administration proposals for debt relief for Cairo as well as a new fund to support private enterprise are facing resistance from House Republicans, who question whether Egypt will soon be ruled by Islamists and whether it will rupture its relations with Israel. Those are indeed dangers — but they will be more likely if an Egypt deprived of Western aid is unable to pay workers’ salaries or create jobs for young people in the coming months.