By U.S. Department of State [Public domain], via Wikimedia Commons

Conditionality, Constraint, and Leverage – U.S. Aid to Egypt Stays Murky

03/06/2014 . By David Johnson

Congress, having received some positive coverage after actually managing to pass the 2014 Consolidated Appropriations Act (CAA), also disappointed some by failing to maintain earlier draft language providing for some quite specific (and restrictive) guidelines regarding United States aid to Egypt. Amid ongoing rumors of a multi-billion-dollar arms deal between Russia and Egypt (and, by extension, Saudi Arabia and the United Arab Emirates), the question of where Egypt will be purchasing new “big” weapons this year (which, it has been argued, it may not even need) persists.

The CAA (PDF) allows the United States to make available assistance to Egypt, including favorably-offered foreign military financing and economic support, so long as two relatively basic conditions can be certified. For Egypt to receive up to $975 million, the Secretary of State need only certify that the Egyptian government “has held a constitutional referendum and is taking steps to support a democratic transition in Egypt.” Up to another $577 million is conditioned simply on a certification that Egypt “has held parliamentary and presidential elections and that a newly elected Government of Egypt is taking steps to govern democratically.” The total amount of aid is in line with past aid allocations for Egypt, which have generally totaled around $1.5 billion.

What is not similar to past aid offers is the absence of national interest waivers, which provide an “out” for the U.S. government to provide aid to Egypt (and other countries) even when specified conditions are not met. The idea behind these waivers is that key national interests of the United States (e.g., promoting regional security) can be deemed so important that the U.S. government continues aid delivery despite the failure of the Egyptian government to fulfill the conditions governing aid delivery. No national interest waiver option exists for the conditions specified by the CAA, though the conditions themselves are so broad that none really seems necessary. In addition, while the language of “up to” introduces the possibility that considerably lower amounts of aid could ultimately be offered after future interactions with the Egyptian government, this tactic is arguably giving away too much under the banner of offering “flexibility.” Stronger, more specific language that clearly communicates what the United States would want to see in order to provide aid would have been desirable.

Such language had, in fact, existed in the relevant Senate appropriations bill (S. 1372). Certainly, the conditions that would have governed aid delivery under this bill do not seem to be unreasonable—specifically, aid would have been offered in four tranches according to the following scheme:

By U.S. Department of State [Public domain], via Wikimedia Commons
By U.S. Department of State [Public domain], via Wikimedia Commons

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These conditions would not have been particularly high bars to cross in themselves, but they would clearly have presented possible difficulties for certification based upon the ongoing actions of the Egyptian government. Even so, 75% of the aid would have been unconditioned or extendable via national interest waivers, so only the final tranche even makes a somewhat specific, concrete attempt to tie aid to developments that the United States would like to see emerge in Egypt. The CAA, though, lacks even qualified terms like “credible elections”—technically, Egypt need only hold parliamentary and presidential elections (credible or otherwise) and “take steps to govern democratically” (however you might wish to define “democratically”) to receive the second of the two installments provided for by the CAA. The CAA fails even to mention human rights or civil society, let alone something so specific as “not prosecuting political cases in military courts.”

For its part, the relevant House bill (H.R. 2855) also included relatively detailed and specific language regarding the conditions that would have to be met for Egypt to receive aid.  Egypt would have had to show “a commitment to pluralistic, inclusive democracy,” including by holding “free and fair elections…protecting freedom of expression, association, assembly, religion, and due process of law…[and] respecting the rights of civil society organizations to operate without harassment or interference.” No clauses concerning national interest waivers were included for these certification requirements, thus avoiding the more elaborate tranche-based system set in the Senate bill.  Clearly, again, Egypt would likely not be found in compliance with all of these requirements. While an administration inclined to offer aid could simply certify that Egypt had met the necessary conditions, the optics of providing such certification when it clearly is not merited would be less than desirable.

As mentioned, the abandonment of these more specific aid conditions for the very broad conditions of the CAA was presumably effected to provide “flexibility” in the pursuit of encouraging broadly-desired developments regarding rights, liberties, and general governance in Egypt. Even if not intended, of course, the language functions in the same way—administration officials will technically have the ability to offer, albeit in a less transparent way, various amounts of aid conditioned on certain developments in Egypt. Those who find themselves indignant at the idea of the United States only giving aid to Egypt if it takes actions that the United States wants to see happen should pause to remind themselves that aid from any other country to Egypt will also inevitably be conditioned on certain actions taken by Egypt—there just may not be a complete picture regarding what those necessary actions are. The proposed appropriations bills made comparatively clear to everyone what the United States needed to see in order to give aid to Egypt—for better or worse, that clarity was abandoned in the CAA.

Of course, it remains an open question just how much leverage U.S. aid, in particular the oft-discussed military aid, provides the United States in trying to encourage certain developments in Egypt. Whether any such leverage exists, or whether aid simply provides the equally nebulous concept of “access,” has been a focus of debate in the past.

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Military aid to Egypt represents one the largest ongoing foreign commitments that the United States maintains, and the perception that it should provide considerable leverage to effect changes in behavior is relatively widespread. Many analysts have castigated the White House for not taking any real steps to suspend the flow of military aid to Egypt (the delaying last year of a shipment of F-16s and various other materiel notwithstanding). The point that they most commonly suggest is that for the United States to actually have leverage, it must be clear that it is willing to suspend the aid (or even that the aid must be initially suspended and only reintroduced after certain conditions are met). If the Egyptian authorities do not believe that the United States will ever truly stop the aid, then aid does not actually provide any leverage at all—the Egyptians would always be willing to call the United States’ bluff. Analysts in this vein also often suggest that military aid is the sole (or at least the primary) source of leverage that the United States has, and the question regarding its suspension is: “if not now, when?”

Of course, if military aid is indeed the sole (or even just primary) source of leverage held by the United States, the counterpart to “if not now, when?” is “if now, what then?” By definition, playing the only card you hold leaves you empty-handed. While the Egyptian authorities have engaged in a significant number of objectionable activities, notably including the disproportionate and excessively broad use of force employed in breaking up the protest camps formed after Morsi’s ouster, the question that the White House faces is: “if we suspend military aid now, and that aid is all we have to work with, then where are we left?” It is not hard to imagine future scenarios wherein the United States would want a point of leverage. The White House is clearly not in an enviable position in this context: they bear responsibility for managing the U.S.-Egypt relationship in a manner in keeping with American interests and values, but if they decide to suspend military aid to Egypt, then they may leave themselves with little or nothing to work with going forward. In this sense, the aid gives little leverage at all, as the fear of lacking leverage in the future is preventing the use of it now.

Some argue that, even if there were willingness to suspend aid, it would still provide no leverage, as Egypt could simply secure compensatory funding from other sources. Notably, Saudi Arabia declared last year that it stood ready to make up any aid to Egypt that the West puts a stop on. It is important here to distinguish between the relatively small amount of economic aid that the United States gives to Egypt and the military aid (and favorable terms surrounding it) that it provides. The terms concerning the spending of the military aid, which is never actually “given” so much as “made available,” allow the execution of multi-year, high-dollar contracts for military hardware from U.S. manufacturers—general economic support given to Egypt by another country could not actually make up for this kind of aid. In this sense, the military aid is irreplaceable and should thus be a source of leverage. The fact that the aid constitutes the source of spare parts for maintaining past purchases also has been placed on the side of the aid giving considerable leverage.

Of course, Egypt would certainly prefer to retain access to U.S. military manufacturers for a range of reasons, but the point at which it would truly need such access would be after the expiration of the interim government and, for lack of a better phrase, the normalization of the Egyptian political environment. Such normalization—at least in terms of process—may not include the developments surrounding rights and liberties that the United States would presumably want to see, though, which introduces a new consideration: if the United States tries to exercise leverage by withholding aid, could Egypt just avoid the issue by going elsewhere?

Reports of an arms deal between Russia and Egypt, financed by Egypt’s (current) Gulf benefactors Saudi Arabia and the United Arab Emirates, have emerged at various points over the last several months, and Defense Minister (and presumed presidential contender) Abdel-Fattah al-Sisi’s recent visit to Russia has only accelerated such speculation. Talk of such deals has placed them at between $2 and $4 billion, thus making any such agreement considerably larger than any single-year quantity of U.S. aid. However, even if such a deal comes to pass, it is challenging to see it as a true substitute for U.S. military aid, let alone the start of a reorientation of Egypt à la Sadat in 1972 (as those more given to hyperbole might suggest).  Any hope of maintaining such purchases—assuming that any are indeed made—would rely on (at least) two big assumptions. In particular, Russia would need to maintain a generally positive disposition towards Egypt for years to come—which would presumably be based on certain conditions that the Russians would like to see—and Egypt would have to keep its Gulf-based sponsors happy enough to continue to finance the deals (setting aside the idea of Egypt being able to spend billions of its own each year on foreign military purchases any time soon).

Even if these conditions are met, such an endeavor may best be facilitated by contract negotiations that allow for current obligation of anticipated future aid, a practice used by Egypt to conclude large, multi-year contracts with U.S. companies. Such preferment may be hard to come by when negotiating deals with one country’s manufacturers that rely on the prospect of payments by multiple third-party treasuries. Thus, to the extent that U.S. military aid is effectively irreplaceable, it could provide a source of leverage in negotiations, but only if the United States is clear about both the prospect of suspending aid and the developments that need to occur to maintain it.

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Although the conditions in the proposed House and Senate bills covering both military financing and economic support were not the most dramatic changes imaginable, they did represent a shift in the details surrounding provision of aid to Egypt. These conditions structured the aid as a tool to encourage changes in a much more concrete way than does the CAA. If similar language had remained in the CAA, we may finally have seen, in an open fashion, how much leverage the United States derives from its aid—particularly, its military aid—to Egypt. Instead, we are left with the vaguest of conditions that provide flexibility by setting only a ceiling for aid, terms for which are likely to be negotiated and adjusted behind closed doors.

Ultimately, the United States missed another opportunity to be publically clear about its stance towards developments in Egypt, and the policy community lost an opportunity to see how much leverage U.S. aid provides. Unfortunately, this continues a trend that has seen the United States remain relatively unclear in its responses towards events in Egypt under the Supreme Council of the Armed Forces, under Morsi, and now under Mansour (and, functionally, Sisi). We can only hope that the White House is willing and able to use the flexibility it now has to multiply what some regard as its only card into a full house of options to encourage positive change in Egypt.