GOP senator holds up $60M in economic aid to Egypt

10/22/2013

WASHINGTON — President Obama’s first package of post-coup economic aid to Egypt is hitting a roadblock in Congress, where a key Republican senator is holding up the transfer of $60 million to a program to spur private investment in Egypt’s flailing economy, according to U.S. officials and congressional aides.

The Obama administration decided earlier this month to suspend much of America’s annual $1.6 billion in mostly military support to its once ironclad Middle East ally, citing the ruling army’s continued crackdown on political opponents since ousting Mohammed Morsi, the popularly elected, Muslim Brotherhood-backed president, in July. But the administration pledged at the same time to maintain the strategic relationship, and recently sought congressional approval for a chunk of assistance.

The money would go to support the Egyptian-American Enterprise Fund, which was established during the height of the Arab Spring when Egyptian protesters toppled long-time leader Hosni Mubarak in 2011. Instead of traditional government-to-government aid, the fund offers low-cost capital to investors to spur private sector growth and more competitive markets in an Egyptian economy rocked by a tourism crash and a sharp decline in foreign investment over the last two-and-a-half years.

But even money with ostensibly capitalist aims is running into problems with U.S. lawmakers, many of whom have criticized the Obama administration for not halting all aid to Egypt since the military takeover as demanded by a U.S. coup law, and for lacking a clear strategy to stabilize the Arab world’s most populous country.

Standing in the way on this occasion is South Carolina Sen. Lindsey Graham, the top Republican on the Senate Appropriations subcommittee that oversees foreign assistance. Graham joined fellow GOP Sen. John McCain on a trip to Cairo in August, where they held contentious meetings with Egypt’s top military brass after demanding reconciliation with Morsi’s Islamist supporters and a faster timetable for the restoration of democracy.

“Senator Graham has placed a hold on these funds and until he sees Egypt moving toward democracy, he will continue to restrict funding,” Kevin Bishop, a spokesman for the senator, said in a statement. “Additionally he believes American taxpayers deserve a much clearer explanation of what exactly is President Obama’s policy toward Egypt.”

In a further sign of lawmakers’ displeasure with Egypt, three Republican senators sent a letter to Secretary of State John Kerry today, pressing him to speak out against the violence in Egypt and emphasize the need for the interim government to protect minorities and Coptic Christians.

The senators — Bob Corker and Lamar Alexander of Tennessee, and Roy Blunt of Missouri — cited recent reports of targeted attacks on Coptic churches and other individuals.

“Egypt’s Christian minority and their ability to worship are in danger. The situation warrants a clear U.S. response,” the three senators said.

Earlier this month, U.S. officials said they were withholding aid, including 10 Apache helicopters at a cost of more than $500 million, M1A1 tank kits and Harpoon anti-ship missiles. The U.S. also is withholding $260 million in cash assistance to the government until “credible progress” is made toward an inclusive government set up through free and fair elections. The U.S. had already suspended the delivery of four F-16 fighter jets and canceled biennial U.S.-Egyptian military exercises.

The State Department stressed that the long-standing U.S. partnership with Egypt would continue and U.S. officials made it clear that the decisions are not permanent, adding that there is no intent by the Obama administration to end any specific programs.

The U.S. will continue to provide support for health and education and counterterrorism, spare military parts, military training and education, border security and security assistance in the Sinai Peninsula where near-daily attacks against security forces and soldiers have increasingly resembled a full-fledged insurgency.

U.S. aid to the Egyptians has a long history. Since the late 1970s, the country has been the second-largest recipient — after Israel — of U.S. bilateral foreign assistance, largely as a way to sustain the 1979 Egypt-Israeli peace treaty.

The United States gave Egypt $71.6 billion in assistance between 1948 and 2011, according to a Congressional Research Service report issued in June. That included $1.3 billion a year in military aid since 1987. The rest was economic assistance, some going to the government, some to other groups.