The Export-Import Bank, under heavy pressure from the State Department and the National Security Council, has reversed its earlier opposition to helping Egypt to build a nuclear power plant and has offered the Egyptian government $250 million to finance the purchase of U.S.-made equipment for the project.
The bank had refused on two earlier occasions, in August 1983 and June of last year, to approve the loan request on the grounds that Egypt's traditional policy of subsidizing energy prices at artificially low levels would prevent the proposed plant, to be located at El Dabaa west of Cairo, from becoming economically viable. The total cost of the project is estimated at between $2 billion and $3 billion.
However, administration officials said the bank's directors switched positions last month after Secretary of State George P. Shultz and President Reagan's national security adviser, Robert C. McFarlane, argued strongly that American aid is of major importance to the U.S. strategy of keeping Egyptian President Hosni Mubarak as a close ally in the Middle East.
The bank is a government-funded, independent agency whose functions include helping to promote U.S. exports by providing financing to foreign governments for the purchase of American goods. A bank spokesman said yesterday that the latest decision was prompted primarily by Egyptian promises to reform its energy pricing policies. He denied that the reversal resulted from executive branch pressures.
The spokesman and other bank officials conceded, however, that "we got quite a bit of advice from a number of agencies that want the United States to participate in this project." They said that in addition to State and the NSC, the proposed loan was backed strongly by the Commerce Department, which wants to increase U.S. exports, and the Energy Department, which is anxious for U.S. firms to keep up with the latest developments in nuclear plant technology.
If Egypt accepts the proferred loan, it probably would use the credits to buy systems necessary to building and running a nuclear reactor from Westinghouse, which thus far has been the only American firm to bid on the project. However, the officials said, the Egyptians also have offers from a French-Italian consortium and a West German firm and are not expected to make a decision for several weeks.
Well-informed sources said those administration agencies involved with foreign policy were especially anxious to have the loan approved because they hope it will help cushion Egyptian disappointment over anticipated U.S. unwillingness to provide as much foreign aid as Mubarak hopes to get from this country next year.
The Egyptian president, who will visit here in March, is expected to ask for a combined economic and military aid package for the 1986 fiscal year of about $3.2 billion, a nearly 50 percent increase from the $2.2 billion it is scheduled to receive this year. U.S. officials say there will be some increase, but they add that the administration's drive to cut the federal deficit through budgetary austerity and doubts about Egypt's ability to absorb such a sizable increase mean that the eventual U.S. aid offer will be considerably less than what Mubarak wants.
The idea for the El Dabaa nuclear plant goes back to the Nixon administration, when U.S. officials agreed that Egypt, a country with limited, rapidly depleting oil reserves and little potential for hydroelectric power, eventually would need a new source of energy production. However, planning for the project was stalled for years by Egyptian bureaucratic delays and, more recently, by the Export-Import Bank's initial reluctance to help out.
Egypt has concluded an agreement with the United States imposing strict controls over future uses of any nuclear reactor. But the agreement applies only if U.S. equipment and technology is used.