U.S. aid to Egypt stalled

Correction: A previous version of this article said anti-American protests outside U.S. government buildings in Egypt stretched into a seventh day Monday. The protests stretched from Tuesday until Saturday last week. This version has been corrected. 

Anti-American protests that started in Cairo and spread across the Muslim world have stalled negotiations to provide crucial U.S. economic assistance to Egypt, U.S. officials said Monday.

The violent demonstrations sparked by an anti-Islam video, and Egypt’s initially clumsy response, have temporarily halted talks about a proposed $1 billion in debt relief and how to speed millions in other aid to Egypt, according to several U.S. officials who spoke on the condition of anonymity because they were not authorized to speak to the news media.

No new aid is likely to be approved for Egypt until after the U.S. presidential election, and talks aimed at breaking a logjam on spending funds already approved are on hold, the officials said. Several U.S. officials said that the delays are expected to be temporary and that there is no major reevaluation of U.S. aid to Egypt.

“Folks are going to wait and see how things materialize both with the protests and on Capitol Hill,” a congressional aide said.

The roughly $1.5 billion in annual U.S. aid to Egypt represents crucial economic assistance to a nation the United States has long considered an essential Arab partner — despite recent concerns about the new government dominated by the Muslim Brotherhood. In addition to that assistance, President Obama has proposed $1 billion in debt relief for Egypt, which owes Washington about $3 billion.

In the aftermath of the overthrow of Egyptian President Hosni Mubarak last year, Congress attached conditions to U.S. aid, including a requirement that the State Department certify that Egypt is abiding by its peace treaty with Israel. Now some lawmakers are talking about adding more conditions.

The House Foreign Affairs Committee called a hearing this week to examine U.S. relations with Egypt, but it was canceled Monday after the State Department declined to provide witnesses, committee spokesman Steve Sutton said.

A senior congressional staffer suggested that the course of events in the next couple of weeks will determine the long-term fate of U.S. assistance to Egypt. Other U.S. officials cast the delay as a natural reaction to the violence and a test of Egyptian President Mohamed Morsi’s resolve, but they stressed that the United States is unlikely to set stringent conditions on aid or debt relief.

“We are continuing to work with the Hill on the support that we think is important to support those very forces of moderation, change, democracy, openness in Egypt that are very important for defeating extremism of the kind that we saw,” State Department spokeswoman Victoria Nuland said Monday.

Nuland said Secretary of State Hillary Rodham Clinton would talk to Congress soon about U.S. aid and other issues affected by the protests.

Anti-American protests near the U.S. Embassy in Egypt stretched from Tuesday until Saturday last week, with many demonstrators calling for the U.S. ambassador to be tossed out of the country.

Just days before protests erupted outside the fortress-like embassy compound, American and Egyptian officials had been in the final stages of negotiating the details of assistance that could be worth hundreds of millions of dollars.

A delegation of 120 U.S. business leaders was in Cairo at the time of the protest as part of a related State Department effort to drum up foreign investment, which Egypt needs badly to help its economy recover.

U.S. and Egyptian officials had hoped to resolve much of the debt relief plan by the end of this month, but U.S. and other officials said those discussions are now likely to drag on through the fall. Any new congressional action on Egypt will have to wait, too, because Congress adjourns next week until after the Nov. 6 election.

American assistance to Egypt had already been in some jeopardy as a result of the country’s crackdown on U.S.-funded pro-democracy groups in February. The prosecutions of some individuals are still being pursued, although the anti-American cabinet minister who pushed the issue left the government.

The concerns are heard on both sides. Near Tahrir Square — where protesters clashed violently with Egyptian security forces last week as they tried to fight their way to the nearby U.S. Embassy — few people seemed to regard American aid with enthusiasm.

“U.S. aid came to the old regime, and there were a lot of suspicions,” said Ahmed Imam, 38, who runs a shop that sells satellite dishes. “Nothing is for free. This has to be repaid somehow.”

Top advisers to Morsi say they are seeking money wherever they can get it. They promise economic liberalizations of the type often advocated by the International Monetary Fund — from whom they are seeking a $4.8 billion loan to help close a roughly $10 billion funding gap — but they say they want to overhaul Egypt’s economy because it needs it, not because international partners are telling them to do so.

“Having a democratic election is something great,” Egyptian Prime Minister Hesham Kandil told the U.S. business delegation two days before the protests started. “But that needs to be accompanied by economic growth and development.”

Before the protests, a steady stream of American officials had been in and out of Cairo, including Sen. Bob Corker (R-Tenn.), a member of the Senate Foreign Relations Committee; Undersecretary of State Robert Hormats; Deputy Secretary of State Thomas R. Nides; and Obama adviser Michael Froman.

When Corker visited in August, he praised the Egyptian government and spoke in favor of extending aid. Now, he says, he is newly concerned.

“While I believe engagement is our best policy in Egypt and understand the fine line President Morsi is walking in his new position, the initial reaction by him and a very seasoned military with years of involvement with our country is unacceptable,” Corker said in an e-mail Monday. “The timing of this will and should affect our negotiations as we go forward in our relationship with this new government.”

And when Nides was in Cairo before the protests, he said in an interview that the Egyptian government clearly wanted U.S. help and was willing to cooperate to get it. But he included caveats that seem newly relevant.

“We don’t hand people money if they don’t either want it or if they want it for different reasons” from the United States, Nides said.

Birnbaum reported from Cairo.

Anne Gearan is The Washington Post's diplomatic correspondent.
Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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