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What Egypt’s FY18 Aid Package Means for Egypt-U.S. Relations

Adjustments to Egypt’s foreign assistance package from the U.S. confirm its concern over Egyptian relations with North Korea and suggest Egypt’s diminishing role as a key regional U.S. ally.

U.S. President Donald Trump signed on March 23 the legislation that determines Egypt’s foreign assistance package for fiscal year 2018, marking the end to a tumultuous year in the government’s budget appropriations process. While budget discussions stalled in Congress amid partisan negotiations and two government shutdowns, Egypt observers held their breath for an appropriations bill that would clarify the United States’ position on Egypt in light of mixed signals from the Trump administration on issues such as human rights. While the FY2018 Omnibus Appropriations Act makes few adjustments to Egypt’s foreign assistance package when compared with last year, it presents an opportunity to evaluate developments within U.S. interests in Egypt and changing bilateral relations overall. These changes confirm U.S. concern over Egyptian relations with North Korea, while more long-term trends in assistance suggest that Egypt’s role as a key U.S. ally in the Middle East is diminishing as Saudi Arabia’s is rising. Changes within the bill are ultimately minimal, though, and do not constitute an aid package that is an effective tool in addressing the security and development measures Egypt needs when it comes to its long-term stability.

The $1.3 trillion appropriations act stipulates U.S. government federal spending through the end of September 2018. The appropriations process begins with the executive branch, which typically makes its budget request in the winter or early spring of the previous calendar year. Congressional deliberations then take place in the House of Representatives and the Senate, with the aim of a finalized bill reaching the president’s desk by September, the end of the fiscal year.[1] The U.S. assistance package to Egypt primarily comprises foreign military financing (FMF), which allows countries to obtain weapons, defense equipment, and training for security needs, as well as economic support funds (ESF), which are aimed at addressing economic and political stability and are provided to local partners such as civil society organizations for development and good governance projects.

The FY18 omnibus raises ESF from $112 million to $112.5 million. Meanwhile, FMF is kept at the usual $1.3 billion, but nearly a quarter of that is contingent upon Egypt’s compliance with democracy and human rights conditions, compared to 15 percent last year. These conditions were first introduced in the 2012 fiscal year and may be waived (as they have often been) in the interest of national security. However, in August last year, the Trump administration began to raise human rights concerns, electing to withhold/reprogram a total of $290 million of Egypt’s aid—a surprise to many Egypt observers, given comments by the president and his adviser Jared Kushner praising and defending Egyptian President Abdel-Fattah El Sisi. Yet reports emerged in August that the Trump administration’s moves had also been a reaction to Egypt’s ties with North Korea. Despite a call with Sisi on July 5 during which Trump had requested that Egypt “stop hosting North Korean guest workers, and stop providing economic or military benefits to North Korea,” the State Department downplayed North Korea concerns as a factor in the aid decision. In October, reports said that a North Korean ship carrying arms bound for Egypt had been intercepted in 2016 and was the subject of a United Nations investigation.

Deep in the more than 2,000-page spending bill passed by Trump on Friday is the usual mention of the democracy and human rights conditions. There is, however, a new adjustment within the national security waiver adding that, in the event that Egypt does not meet democracy and human rights guidelines, the U.S. secretary of state’s report on Egypt’s failure to do so must publicly address its compliance with U.N. Security Council Resolution 2270, a motion that imposed sanctions on North Korea, and other resolutions. The final bill’s democracy and human rights conditions are close to the 25 percent outlined by the Senate in the appropriations bill it passed in September. The jump to 25 percent in the Senate’s bill is a reflection of members’ mounting, bipartisan criticism over the past year about the effectiveness of Egypt’s foreign assistance package, security forces’ human rights abuses, and the crackdown on Egyptian civil society.

Trump’s arrival in the Oval Office was expected to begin what Egyptian and American officials saw as a reboot in relations that had become strained under former president Barack Obama. The resumption of joint military exercises, the maintenance of Egypt’s FMF allocation in the Trump’s FY18 proposed budget, and less public criticism on human rights issues seemed to substantiate this. However, when Trump hosted Sisi in Washington in April, the U.S. did not grant Egypt’s other key requests—removing FMF restrictions set by the Obama administration, releasing directly to the government a backlog of some $400 million in ESF, designating the Muslim Brotherhood as a terrorist organization, and extraditing Egyptians wanted by the government. Meanwhile, Saudi Arabia secured the reciprocal visits Sisi eyed for himself at the outset of Trump’s presidency, as well as billions in arms agreements despite the humanitarian crisis in Yemen and support for Crown Prince Muhammad bin Salman’s war on “corruption.” The U.S. seems to have entered with Saudi Arabia, a quid pro quo similar to what it had with Egypt—accepting surface-level reforms while overlooking authoritarian measures, and securing cooperation agreements within economic development and security.

Trends in U.S. assistance to Egypt are also evidence of changing U.S. priorities in the region. In the Obama administration’s first budget request in FY2008, nonmilitary assistance (economic development and governance) comprised 26 percent of Egypt’s total allocation; this number has gradually fallen, reaching six percent in the Trump administration’s first budget request. Moreover, Egypt’s view of its relationship with the U.S. may be seen by American officials as transactional, as one Defense Department official described it. The official added that although there has been progress in training, the Egyptians believe, in his view, that they are entitled to military assistance as a byproduct of their commitment to avoiding war with Israel, though this is now in Egypt’s interest as well, particularly considering recent, unprecedented Egyptian-Israeli counter-terror cooperation in border security.

Allocating roughly the same amounts of aid to Egypt, with only a slight bump in democracy and human rights conditions, does little to acknowledge both its changing role in the region and effectiveness of FMF and ESF’s stated security and economic development aims. Foreign assistance to Egypt needs to be altered heavily to send the military the training and equipment it needs to fight the insurgency in Sinai, to ensure that ESF is distributed to development partners on the ground, and to make the receipt of this aid contingent, without waiver, upon repealing the NGO Law and halting the NGO trial, among other explicit conditions tied to the Egyptian government’s crackdown on civil society. Until then, for those Egypt-observers who thought FY18 might be the year that Egypt’s assistance would get a long overdue facelift, this aid package, rooted in parameters of the past and aloof to dynamics on the ground, is a message: don’t hold your breath.