The U.S. faces a dilemma in Egypt: Does it adhere to its own laws by cutting aid to the country, which amounts to hundreds of millions of dollars annually? Or does it keep the aid, which is crucial both for Egypt's precarious economy and for the U.S.'s close relationship with the Egyptian military, built on the 1979 Camp David peace treaty with Israel?
An analysis of past cases suggests that, while the U.S. often does follow this law, it tends to ignore or bypass it when it sees key national security interests at stake – which may well apply in Egypt.
To be clear, the law only applies to coups that unseat democratically elected leaders. A coup against a dictator, for example the 2011 ouster of previous Egyptian President Hosni Mubarak, would not necessarily trigger it. Neither would Ivory Coast President Laurent Gbagbo's 2011 refusal to relinquish power after losing reelection. That determination is made by the State Department's legal advisor, who typically takes a few weeks to do it. The law also says that aid can only be reinstated if "subsequent to the termination of assistance a democratically elected government has taken office."
Though previous administrations have been able to secure special waivers to disregard the Section 508 provision, these waivers are not built into the law. The president has to seek specific permission from Congress, which it is far from certain to grant.
Ultimately, the Obama administration will most likely base its decision on whatever it sees as the immediate pragmatic merits of continuing or withholding aid. It seems most likely, with Egypt's instability so rooted in its economic malaise and the country a close partner in regional security issues, that the U.S. will not cut aid or will make only a symbolic cut. But it helps to examine past cases when the U.S. has faced this dilemma. The record shows that the U.S. typically follows the law, but usually retains humanitarian aid and will often bypass the law entirely in the Middle East or where it believes national security may be at stake.
Here is a list of military coups against democratically elected governments. In each case, I've indicated the degree to which the U.S. followed the law requiring it to cut aid. Perhaps the most revealing case is Algeria, where the U.S. at first decided to cut aid but later reinstated it after 2001, when it suddenly saw the country's secular military government as an ally in the fight against terrorism.
Central African Republic, 2012: Obama cut some aid
Although this is not a case where the Foreign Assistance Act restriction obviously applies – the government that was deposed by a rebellion was not exactly the most democratic – the Obama administration cut some aid to it.
Mali, 2012: Obama cut half of aid
The military coup came as rebels seized the country's north, which quickly became a haven run in part by al Qaeda-allied extremists. The Obama administration immediately froze about half of U.S. aid to the country. The "government-to-government" aid was cut, humanitarian aid, on which many Malians rely, continued. This seems to be a case where the U.S. followed the law closely. Although the coup leader quickly stepped down, the military is thought to retain power.
Honduras, 2009: Obama cut some aid, but not at first
After a military coup ousted President Manuel Zelaya, the Obama administration at first did some rhetorical backflips to avoid calling it a coup and triggering the aid cut-off. After negotiations to reinstate Zelaya failed, the U.S. began reducing aid piece-by-piece in an attempt to pressure the military government to move back toward democracy. This followed the spirit of the law – tying aid to democracy and using it as a coercive tool to deter coups – but did not appear to follow its letter.
Thailand, 2006: Bush cut military aid
The George W. Bush administration punished the Thai military by freezing some $24 million in military aid but maintained humanitarian aid programs as well as economic aid.
Pakistan, 1999: Clinton cut aid but Bush reinstated using special waiver
When the Pakistani military installed General Pervez Musharraf in 1999, it immediately triggered the law imposing sanctions and requiring aid to be cut. President Bill Clinton waived some of the provisions within weeks, but it was not until the September 11, 2001, attacks that President George W. Bush sought and received a special law from Congress allowing him to bypass the law entirely and reinstate all aid. The Bush administration saw Pakistan as a crucial ally in the burgeoning war in Afghanistan and what it referred to as the global war on terror, democracy or not.
Algeria, 1991: Bush senior cut aid, his son reinstated it
In what was perhaps the Arab world's first free election, Algerians broadly supported Islamist candidates. The military, long hostile to Islamism, cancelled the elections and seized power, triggering a years-long civil war. The George H.W. Bush administration cancelled all aid, pursuant to the Foreign Assistance Act. A decade later, after the September 2001 attacks, the George W. Bush administration fostered ties with the Algerian military government, which it saw as an ally in the fight against terrorism. Bush reinstated aid, particularly military aid, which increased throughout much of his administration. The Obama administration has continued this.