Can US Aid Buy Leverage in Egypt?

By WJ Dorman, Honorary Fellow of Edinburgh PIR

In the aftermath of the Morsi government overthrow in July, critics have accused the Obama administration of timidity and indecision. Citing broad public support in Egypt for the military takeover, the administration refused to declare it a ‘coup’ and made only token response to the massacre of the ex-government’s Muslim Brotherhood supporters in August. Critics argue that Washington should halt the $1.3 billion in annual military assistance as a warning against a return to the authoritarianism of the Mubarak era. More sceptical analysts, by contrast, doubt that such admonitions are practical or likely to be effective.

The history of US-Egypt relations is probably on the side of the sceptics. Attempts by the Eisenhower, Kennedy and Johnson administrations to use aid to secure more pro-American policies from the Nasser government in a ‘carrot and stick’ fashion were unsuccessful, leading to its cut-off by the mid-1960s. As William Burns, now the Obama administration’s deputy secretary of state, argues in his Economic Aid and American Policy Towards Egypt, 1955-1981: foreign assistance works best as a reinforcement to “shared political objectives” (p. 208). It does not substitute for their absence.

In the US National Archives, I came across a declassified 1974 letter from the American diplomat Hermann Eilts to the State Department’s Egypt desk, discussing the impending resumption of aid in the context of Sadat’s rapprochement with Washington. Eilts and his superiors agreed that their predecessors mishandled the relationship, and he argued for a modest programme of roughly $80 million per annum “as a means of maintaining a political climate in which we can more effectively pursue our policy goals.” He was sceptical that external assistance could do much for Egypt’s “economic situation” and doubted the US would get much gratitude for whatever it provided.

Unfortunately Washington did not follow his advice for a narrowly focused and pragmatic aid effort. In the interest of shoring up the Sadat government and its all-important peace agreement with Israel, the US embarked upon a much larger programme which at its height provided well over $2 billion per year in military and economic assistance. Its Agency for International Development struggled to spend the approximately $815 million allocated annually for development projects, but such largesse gave Washington little leverage in demanding economic reform (despite considerable Egyptian efforts to create the impression thereof) or even in highly visible foreign policy crises such as the 1985 Achille Lauro incident.

So what is US aid actually good for? It works best behind the scenes, reinforcing the political logic of the Egypt-Israel peace agreement and their close security cooperation. Egypt remains one of Washington’s important regional allies and was a key proxy in the US counter-terrorism campaigns of the 1990s and 2000s. But beyond security and diplomatic cooperation, US influence is limited. With respect to the domestic balance of power, it is probably non-existent.

If the aid relationship enabled Washington to argue for restraint during the original 2011 Tahrir protests, the Egyptian military also had its own reasons for forbearance: the degree of popular mobilization, realization that President Mubarak had lost his grip on power and desire to see off his son and heir apparent Gamal. By contrast, in July/August 2013 there appears to have been broad public support for the military takeover.

Perhaps most importantly, the ‘deep state’ and ancien regime forces which returned to centre stage in July have a new emerging strong man: General Abdel Fattah al-Sissi. In such circumstances, it is unsurprising that the Obama administration has chosen the path of least resistance.

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