Untangling the fate of U.S. aid to Egypt

Amr Nabil/AP - Opponents of Egypt's ousted President Mohammed Morsi sit under banners criticizing U.S President Barak Obama and U.S Ambassador to Egypt Anne Patterson as Egyptians mark the end of Ramadan with a three day holiday, in Tahrir Square in Cairo, Egypt, on Aug. 8.

The Obama administration is in the midst of a case-by-case review of aid programs for Egypt to determine whether any should be suspended in light of the actions of the military-backed government. So says the administration, which insists that the review does not equal a hold or a suspension of aid — yet.

The White House on Tuesday denied the latest of several news reports about a temporary holdup of some aid.


Egypt arrested the spiritual leader of the Muslim Brotherhood, Mohamed Badie. He was shown on pro-military channel, On TV.

Egypt arrested the spiritual leader of the Muslim Brotherhood, Mohamed Badie. He was shown on pro-military channel, On TV.

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“That review that the president ordered in early July has not concluded,” White House deputy press secretary Josh Earnest told reporters. “Published reports to the contrary that suggest that assistance to Egypt has been cut off are not accurate. “

The State Department delivered the same message.

“We have not made a policy decision to suspend our aid to Egypt, period,” spokeswoman Marie Harf said. “We have not made a decision to suspend all of our assistance to Egypt, or to slow our assistance. Any reports to the contrary are simply false.”

Despite such statements, confusion over the issue has persisted. Why? Because the structure of U.S. aid programs is confusing and involves a poorly understood law — and because the Obama administration is being cautious in its public response to the crisis in Egypt.

“Providing foreign assistance is not like a spigot,” Earnest said. “You don’t turn it off and on or turn it up and down like a faucet.”

Officials say the administration has already delivered the majority of the $1.3 billion in annual military aid to Egypt for the current fiscal year. A small amount could still be yanked because of the July 3 ouster of Egyptian President Mohamed Morsi or the bloody crackdown last week by the military-backed interim government. Those are the funds that are in question.

The choices before the administration include withholding some money, shifting it to other programs or doing nothing. Separately, the administration and Congress will have to decide what to do about next year’s allotment.

It is the current delay in making funding decisions that some observers are calling a suspension of aid. Sen. Patrick J. Leahy (D-Vt.), the chief backer of the U.S. law forbidding military aid to nations that have undergone a coup, says the delay is tantamount to a suspension. If the money isn’t flowing, his office said, it’s suspended.

Harf said Tuesday that although about $585 million in military aid has not been spent, that doesn’t mean it’s on hold. She and Earnest did some semantic back-flips on this point but stuck to the premise that no decision has been made.

Part of the review — which is assessing both economic and military aid programs for Egypt — looks at how various programs align with the “coup law,” and part is a separate evaluation of U.S. policy, officials said.

The Obama administration has decided to make no legal determination about a coup, because doing so would trigger the ban and end the slim leverage the White House still has in Cairo. But some aid could still be withheld or shifted in protest of the government crackdown on Morsi’s supporters or as an incentive to the Egyptian government to keep its promise to quickly move toward elections.

The vast majority of U.S. aid to Egypt goes to the military, a legacy of the country’s military-backed former government, long ties to the Pentagon and U.S. defense contractors, and three-decade-old cold peace and military cooperation with Israel.

Some of the other, smaller pot of economic development money could be “reprogrammed” and spent for health, education and development projects that benefit Egyptians without directly benefiting their government. This appears to be a likely outcome for some nonmilitary aid, called economic support funds, which has been held up since before the coup.

Secretary of State John F. Kerry pledged $250­ million in economic aid to Egypt during his only visit there as secretary, in February. The money was supposed to be a reward for economic reforms promised by Morsi, many of which were never carried out.

American officials have struggled to spend nonmilitary aid in Egypt since 2011 because of disagreements with Cairo over U.S.-funded pro-democracy initiatives, for which past Egyptian governments have had little tolerance.

The U.S. Agency for International Development, which oversees nonmilitary aid to Egypt, has been unable to spend $125 million of the money that Congress allocated for development programs in the country last year. If unspent, those funds would expire at the end of the fiscal year and be delivered back to the U.S. Treasury.

USAID hopes to avert that, a U.S. official familiar with the situation said. USAID is reviewing legal options to temporarily prevent those funds from expiring, which could enable the agency to spend them at a later date.

Although most USAID staff workers and their expatriate project managers were evacuated from Egypt in recent weeks, some agency programs remain operational, run by local staffers. These programs address issues such as water quality, childhood malnutrition and job creation.

Ernesto Londoño contributed to this report.

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