an analysis of the agricultural, economic, military and...
TRANSCRIPT
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An Analysis of the Agricultural, Economic, Military and
Democratic Contributions of USAID in Egypt
Frida Alim
Student ID 900118015
February 15, 2012
2
Introduction:
This paper seeks to highlight the shortcomings of USAID’s programs and policy
and how these factors contributed to the post-revolution political and economic
environment in Egypt. The paper will proceed by looking at the inception of USAID and
its decentralization economic policies, which will include a brief synopsis of its
agricultural policies in Egypt. Following will be a discussion USAID financial and
material aid to the military. Finally, the paper will address the goals, programs, and
results of the USAID Democracy and Governance program, instituted in 1992.
Ultimately, the paper aims to show that USAID’s vested interest in stability in Egypt and
the maintenance of its treaty with Israel has come at the expense of pursuing the creation
of a pluralistic political system while its aims of privitzation and decentralization have
largely furthered bureacracy and strengthened an elite core on the Egyptian political and
economic scene.
Background of USAID in Egypt:
Since 1975, The United States has provided an excess of $28 billion in economic
and development assistsance to Egypt. A vast majority of this aid has gone towards the
Egyptian military as a way of preserving and incentivizing cooperation in Egyptian-
Israeli relations following the 1975 Camp David Accords. Approximately $1.3 billion has
gone towards USAID programs for strengthening the agricultural sector.1 Other
assistance has included upkeep of the Suez Canal, physical infrastructure, agricultural
productivity, education and health. However, of the non-military aid, much has been
1 Sharp, Jeremy. “Egypt in Transition.” Congressional Research Service. July 17, 2011. Pg. 6
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divided between debt-relief, the Commodity Import Program (which subsidized the
importation of American products), and the payment of American contractors. Indeed,
some of this money never left the United States, either going directly into arms
production, or being used to decrease Egyptian debt to the United States. From the
inception of the Commodity Import Program, it has absorbed a quarter of American
assistance at $6.7 billion. By 2000, this program had helped finance the purchase of
American goods from over 1,800 American suppliers through 1,400 private companies in
Egypt.
USAID programs in the 1980s began to more vigorously pursue the goal of
market privatization, along with pressure from the World Bank and International
Monetary Fund. The original intent was to create “a globally competitive economy
benefiting Egyptians equitably.” The 1990s saw further efforts at privatization of public
companies. By 2001, 125 companies had been majority privatized, at a total sales proceed
of 15 billion pounds.
In the 1990s, and particularly after the fall of the Soviet Union, the United States
began to incorporate democracy into its international assistance programs. Of the $2
billion of annual aid to Egypt, however, only $2 million went to democracy efforts per
year. To date, a total of $410 million has been awarded to non-government organizations,
both foreign and Egyptian. Aid has also come in the form of training of judges,
prosecutors and court administartors in the field of civil law.2
2 “USAID Egypt History.” http://egypt.usaid.gov/en/aboutus/Pages/usaidegypthistory.aspx
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In the educational sector, almost 2,000 schools have been created since 1975,
most in rural areas. The educational component of USAID aims to increase attendance
and reduce drop-out rates among female students, among other goals.
Egyptian Agriculture:
USAID did a great deal in the 1970s to change food consumption and production
through US and Egyptian subsidies on certain products. Timothy Mitchell, in his analysis
of development of Egypt by international organizations, highlights the vision of Egypt
that underpinned development efforts in Egypt. USAIDs’s 1976 report on Egypt
emphasizes the generations of poverty that existed in the Nile valley. By many
international organizations, Egypt was painted as vast stretches of unused land with a
fertile and highly populated area concentrated along the Nile. International organizations
conveniently ignored hundreds of years of economic and political changes in Egyptian
agricultural, and instead emphasized the need for international intervention in Egyptian
agricultural affairs. It was under this banner that the USAID Mechanization Project
proceeded from 1979 to 1987, with the goal of changing what was perceived as
traditional agricultural practices with American mechanization. USAID signed a $38
million contract with Louis Berger International of East Orange, New Jersey to fulfill this
mission of modernization. While the goal was to increase production, the program only
furthered labor shortage by replacing field workers with technology. In the meantime,
studies came to show that mechanization, as opposition to traditional farming techniques,
did not necessary show higher yields. The real problem in agriculture was instead the
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concentrated of land in the hands of a few farmers. Instead, the program contributed to
the wealth of farm owners, while displacing jobs in the agricultural field.3
While Egyptian diets were traditionall legumes and maize-based, subsidies
shifted the domestic production focus to increase the production of cereals. USAID was a
driving force behind this change with the assertion that an increase in meat consumption
necessitated more domestic meat production. This rise in meat consumption, however,
was due to an analysis of the average caloric intake across Egypt. This rise in intake
could actually be attributed to the growth of wealth among the upper class, in addition to
a growing number of tourist and resident foreigners—groups which formed the chief
consumers of meat and other animal products. Until this point, the agricultural rate grew
at a pace that exceeded the population growth. Expansion of the meat industry, however,
necessitated extra importation of cereals needed to feed livestock.
During the period bewteen 1966 and 1988, domestic production of grains was
augmented by 77%, while consumption of those grains increased by 148% due
overwhelmingly to an increase in meat production. USAID then financed the purchase of
$3 billion worth of grain imports from the United States to Egypt, with a reduced interest
rate, making Egypt the world’s largest importer of subsidized grains. While Egypt had a
surplus revenue of $300 million in 1970 in the agricultural sector, it had plunged into a
total external debt of $51 billion by 1989.
While the World Bank argued that these large changes in Egypt’s agriculture
indicate that “effective demand has been modified by a change in income distribution,”
Mitchell argues that these changes were created by more influential, wealthier portions of
3 Mitchell, Timothy. “Rule of Experts: Egypt, Techno-Politics, Modernity.” November 2002.
University of California, Press. Pg. 225
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the population amongst whose consumption of food monetarily had proportiontely
grown. Between 1970 and 1980, importation of grain and pulses increased by eight
times.4
Egypt then had to take loans simply to make timely payments of earlier loans.
The American government intervened, however, using the Egyptian support of the 1990-
1991 war against Iraq to wipe out Egypt’s $7 billion military debt and relax the $28
billion of long-term bilateral debt, which was eventually partially slashed and
rescheduled. One condition of these economic leniencies was an increase in the
production of export crops. To do this, sources and land would have to be diverted from
the production of staple foods. To sustain the Egyptian people, the importation of staples
to Egyptian consumers was subsidized, while production of those staples domestically
was taxed.
Ultimately, $13 billion of Egypt’s debt was written off. And at present, Egypt
holds the largest single markets for American wheat and corn, in addition to significant
importations of agriculture-related commodities.
Financial Aid the Egyptian Economy:
Changes made by USAID to the Egyptian economy through agriculture were
followed by economic reform agreements, pushed for by USAID, the World Bank and
the International Monetary Fund in 1991. The organizations pushed for structural
adjustment program, emphasizing privatization of the markets in Egypt. The need for
economic reform was prefaced by a brief economic boom in the 1980s, due in large part
4 Mitchell, Timothy. “Rule of Experts: Egypt, Techno-Politics, Modernity.” November 2002.
University of California, Press. Pg. 227
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to “windfall profits” from the oil boom years. The over-dependence of the Egyptian
economy upon the international demand for oil crippled the economy when the oil-boom
ended in the mid-80s. By surviving on a balance of payments, Egypt was able to maintain
a GDP growth of 6-7 percent from 1983 to 1985. By 1990, however, Egypt’s debt
reached $49 billion.
A further break-down of financial aid to Egypt shows that it can be retraced to
the Untied States. Almost all of the $15 billion awarded to Egypt from the beginning of
USAID’s activities in Egypt in 1974 to 1989 can be retraced to American corporations.
Approximtaely $7.7 was funneled to the Public Law sector, Food Aid Program and the
Commodity Import Program, allowing for grain, agricultural commodities and equipment
among other U.S. imports. Another $1 billion was paid as cash-credit, therefore
remaining in the U.S. to pay part of Egypt’s miltiary debt. And by the year 1983, the U.S.
had developed a well-established network of subsidies and effectively its own monopoly
in certain agricultural sectors in Egypt.
When Egypt began to fall behind in military debt repayments around 1983, the
U.S. should have ceased all aid except food aid, as dictated by law. This, however, would
have posed a threat to American subsidies and the income from Egypt, and the
government instead converted military loans to grants, and then forwarded those grants as
progress payments to itself to repay “earlier Egyptian arms purchases.”5 Additionally,
USAID set aside about $100 million from Egypt’s economic development funds to be
used as more Cash Transfers as interest payment on Egypt’s military debt. This practice
was technically illegal, as discovered by Congress, but at the time such movement of
5 Mitchell, Timothy. “Rule of Experts: Egypt, Techno-Politics, Modernity.” November 2002.
University of California, Press. Pg. 225
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money was untraceable. It was not until 1987 that the practice was again questioned, but
the government argued that such action was legal in that military debts became an
economic question once debt was established (rather than military), and that the same
practice was undertaken to control Israel’s annual military dues by diverting money from
its economic assistance funds.6 The practice was halted for a year, but after the Iraqi
invasion of Kuwait, Egypt slipped further into debt, and this debt, this time a total of $7.1
billion, was again written off with congressional support. By this point, $8.7 billion,
approximately 58% of all US economic assistance, had found its way back to the United
States for the purchase of goods.
Much of USAID’s monetary and reform policies have centered around the
privatization of the Egyptian economy. In relation to Israel, Egypt receives a minor
proportion of its aid as free money.
Since 1992, the United States has used the USAID Cash Transfer Program as an
incentive for domestic economic reform. In addition to the roughly $1.8 billion awarded
in this program, Egypt has received $70 million annuallly to support implementation of
program related activities. Of the monetary grants awarded to Egypt, up to 75 percent can
be spent on the purchase of US commodities, while up to 25 percent can be used to repay
Egypt’s debt to the United States.
As a gesture in support of economic reform, USAID provided $10 million to start
up the Egyptian Center for Economic Studies (ECES), which gathered industry leaders,
with the president’s son, Gamal Mubarak, as its helm. Five members of this group,
including Gamal Mubarak, now sit in jail with charges of squandering funds during the
6 Mitchell, Timothy. “Rule of Experts: Egypt, Techno-Politics, Modernity.” November 2002.
University of California, Press. Pg. 227
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process of privatization of public resources, land and government-run companies. In fact,
Gamal Mubarak and his lawyer, Taher Helmy, become domestic proponents of the
international economic effort of structural reform and privatization, the Washington
Consensus, in 1991. Using ECES as a mouthpiece, Helmy and Mubarak published
several policy papers on which many of the new privatization laws were based. The
center now estimates that, due to corruption, privatization deals have yielded only $10
billion of a possible $90 billion total since 1991. While USAID has never publicly
complained of the operation of ECES, Wikileaks revealed cables in which American
officials indicated that such privatization measures can yield corruption. One unidentified
diplomat stated, “The privatization and economic opening of recent years have created
new opportunities for ‘vertical corruption’ at upper levels of government affecting state
resources.”7
In 2003, privatization of nine companies yielded $18 million, and an additional
59 companies yielded $2.9 billion by 2006. Domestic production grew by 7 percent, but
certain members of the government stood to benefit more than the general population.
For example, Ahmed Ezz, a founding member of ECES, a member of the NDP and a
prominant parliament member, built the state-owned Alexandria National Iron and Steel,
which become the largest steel producer in the Middle East. When the company began
facing bankruptcy in 1998, Ezz began buying shares, eventually aquiring more than half
of the state run companies. Prosecutors now allege that he made an excess of $1 billion in
inappropriate profits. Additionally, certain laws written by the ECES and eventually
drafted, seemed to favor Ezz. One such law cut the corporation tax rate to 20 percent,
7 Grimaldi, James. “In Egypt, Corruption Cases Had an American Root.” Washington Post.
October 20, 2011.
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only further expanding Ezz’s steel empire. Another competition law was introduced that
seemed to defend Ezz’s business from accusations of monopolizing the market. The
allocation of aid to ECES is an example in which American attempts at supporting
privatization in Egypt served to strengthen governmental bureaucracy.
Military Aid:
Recent constitutional amendments in 2011 highlight a longstanding problem in
the Egyptian political landscape; the lack of governmental transparency. In the
constitutional amendments, SCAF reasserts the complete autonomy of the military
institution, and bars parliamentary oversight of the military’s budget.8 Instead, the
military budget is to appear as a single number in the state’s budget. There are, however,
cases in which the public can peak into the vast economic power contained by the
military. One such case is the economic-military agreement between the US and Egypt,
which is annually published by Congress. Egypt receives approximately $1.33 billion in
Foreign Military Financing (FMF) per year and, accordingly, the Obama Administration
recently requested $1.3 billion for the 2012 fiscal year. The primary reason for this aid is
to uphold the March 1979 Egyptian-Israeli peace treaty and to help maintain Egypt as a
“moderating influence” in the region. The funds are only to be used if the Secretary of
State certifies that Egypt is meeting its obligations under the treaty. Military Aid to Egypt
provides an insightful entry-point into the financial assets of the Egyptian military, which
domestically SCAF tries to keep from the public eye. Even so, military aid receives
8 Sharp, Jeremy. “Egypt in Transition.” Congressional Research Service. July 17, 2011. Pg. 6
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comparatively little attention in the literature of USAID and the World Bank, relative to
the extent of money involved in the military relationship.
Military aid is divided into three main areas; acquisitons, equipment upgrades,
and support/maintenance contracts. Of the $1.3 billion, approximately 30% goes towards
the purchase of new weapons systems from the United States as part of a defense
modernization plan. However, Egyptian military officials complain that FMF has not
risen to match the rising cost of weaponry, resulting in a decrease in net assistance.9
In a joint press conference between Secretary of Defense Robert Gates and former
Egyptian President Hosni Mubarak in 2009, he remarked that “multiple American
presidents and administrations have benefited from [Mubarak’s] wise counsel.” He also
noted that while the US administration supports human rights, the position towards
military funding is that the “foreign military financing that’s in the budget should be
without conditions.”10
The only notable condition is upkeep of the Camp David Accords
and keeping the Sinai Peninsula secure. In fact the economic-military relationship has
sustained a great deal of corruption, not only in abuse of funding, but also in the use of
weapons imported from USAID on protesters duing the 2011 revolution.
In 1986, the Egyptian Military settled a contract with General Motors to
manufacture passenger cars. USAID gave $200 million from its budget in subsidies to
General Motors. While the project was later abandoned for both political and economic
reasons, the army instead began assembling Jeep Cherokees from the Chrystler
corporation (241). By entering into such agreements, the United States was legitimating
domestic economic activity that strengthened the bureaucracy inherent in the military
9 Sharp, Jeremy. “Egypt in Transition.” Congressional Research Service. July 17, 2011. Pg. 12.
10 Rieff, David. “The Failure of US Aid in Egypt.” The New Republic. February 4, 2011.
12
institution. The army would receive state subsidies, but money would go directly into its
own accounts rather than towards the state.
In the 1990s, the Pentagon announced that it would provide tens of millions of
dollars to help establish a 650-bed international medical center outside of Cairo,
specifically for treatment of Egyptian soldiers. While the Pentagon maintained that the
Egyptian military paid for its creation, the American military aid program contributed
$162.8 million for equipment, operations and maintenance. Once this hospital was built,
however, it was found that the hospital was being used for commercial purposes. The
hospital was treating civilian patients and offered a “lavishly furnished Royal Suite” for
international patients. Even so, the Pentagon continued its $46 million contract to the
Florida company TeKontrol to train hospital staff members for 12 months. When notified
of these abuses, the Pentagon commented that termination of the contract “could
potentially impact the desires of the Egyptian ministry of Defense,” to win international
accreditation for the hospital and therefore upheld the contract.11
Even so, only a small portion of military aid is handed over directly to the
Egyptian military. Instead, a large portion goes to directly to American companies chosen
to manufacture military weaponry. This aid is denoted as “Foreign Military Sales.” Under
this banner, the companies manufacture ships, tanks, planes, ammunition and guns for
Egypt.
In the 2011 Egyptian revolution, the extent of military aid from the United States
became apparent when it was discovered that the tear gas being used on protestors was
11
Rohde, David. “Egyptian Army’s Business Side Blurs Lines of U.S. Military Aid.” The New
York Times. March 4, 2011.
http://www.nytimes.com/2011/03/06/world/middleeast/06military.html?pagewanted=all
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manufactured from Combined Systems International of Jamestown, Pennsylvania. In fact
there seems to be no accountability for the use of American arms on peaceful protests.12
Instead, miltiary aid is contingent upon the peace treaty with Israel, tying the United
States to a very limited relationship with Egypt, that comes at the expense of domestic
human rights.
USAID Democracy and Governance:
Democracy efforts in Egypt began in the early 1990s, in the context of an
economic and social crisis. The fiscal crisis eventually resulted in intervention by the
International Monetory Fund and the World Bank. At the same time, Egypt faced the
intensification of activity and violence from extreme Islamist groups.
In 1998, USAID published its Conceptual Framework for Democracy and
Handbook of Democracy and Governance Indicators, which stipulated USAID’s aims in
general terms, but allows for insight into its goals. The document notes early on that
“countries that are experiencing economic growth and are actively engaged in trading
relationships are less likely to engage in acts of war,” highlighting a key pillar of
USAID’s brand of democracy promotion—one that is linked to economic reform and
economic incentivization.13
The framework outlines four target areas for democracy; rule
of law, elections and political processes, civil society, and governance. The Handbook
also quotes President Clinton’s National Security Strategy of Engagement and
12 Rieff, David. “The Failure of US Aid in Egypt.” The New Republic. February 4, 2011. 13 “Democracy and Governance: A Conceptual Framework.” Center for Democracy and
Governance. USAID. November 1998.
14
Enlargement which emphasizes that countries wth “the strongest security concerns,” are
important targets for democratic and economic promotion.
As the United States began its work with democratization in Egypt, the Muslim
Brotherhood would have been a logical partner as it had been an established actor
operating in civil society. It was, however, illegal in the political context and any aid of
the Muslim Brotherhood would likely have been seen as a method of undermining the
regime. While its members were allowed to run as indepedent candidates in elections,
they were a clear threat to the Mubarak administration, and USAID effectively discluded
a strong political force from democratization.
Instead, USAID began to focus on supporting NGOs with the professed hope of
introducing civilian voices into the political system. In 1998, USAID established the
NGO Service Centre with the purpose to increase participation in public decision-making
in Egypt. It would provide technical assistance and small subgrants to NGOs operating in
Egypt. Projects under the service center could not begin until 2000, when Law 152 came
into effect in Egypt. In order to receive funding, NGOs would have to be registered with
the state. Law 152 “excluded from registration any NGOS with political or trade union-
like activities, which are exclusively restricted to political parties or unions.” Ultimately,
the Ministry of Social Affairs (MOSA) and the Central Accounting Office would oversee
grant allotment, and only those organizations registered with MOSA were eligible for
funding. If MOSA determined that the organization was wasting funds or overspending,
MOSA reserved the right to freeze the activities of the organization.14
14
Amer, Pakinam. US Funding of Local Civil Society Draws Criticism.” Egypt Independent.
February, 2010.
15
USAID also led the Media Development program that began in May of
2006, which was slated as a five-year program to improve “professionalism,
sustainability and economic performce of the Egyptian media sector.” The list of partners
with which the program would work, however, consisted largely of state media outlets,
including state-funded Al-Ahram and The Supreme Press Council. Notably absent from
the list of publications are Al-Masry Al-Youm (or Egypt Independent) and Al-Dostor;
both liberal publications that have come to be seen as reliable sources of information in
recent years. The program overview emphasizes the economic viability and performance
of local media. The overview also states a target as “improving the enabling environment
for a professional, objective and ecenomically viable media in Egypt by providing
technical assistance as requested by the Government of Egypt.” 15
Furthermore, the
activities of the MDP are overseen by a Steering Committee, with members from USAID
and the Egyptian Ministry of International Cooperation, assuring government control
over activities dealing with media.
In recent years, the Obama Administration had reduced funding of
American-based NGOs operating in Egypt, and increased funding of state-approved and
unregistered organizations, perhaps in an effort to ease tensions between the Mubarak
administration and USAID efforts. Ultimately, the 2009 Audit of USAID’s Democracy
and Governance Activities highlighted the Egyptian government’s “lack of cooperation”
as a reason for the failure of USAID’s democracy efforts to produce any positive change
15 “MDP Program Review.” Media Development Program Official Website. http://www.mdp-
egypt.com/about.php
16
in the last two years, and ultimately for Egypt’s poor ratings in NGO indexes of media
freedom, corruption, and democracy. 16
Externally, aid from USAID has been refused by organizations based on a
will to remain independent of what may be perceived as foreign influence. For example,
the movement Kefaya, which has been an important force in recent uprisings and
protests, refused funding from US democracy-promotion efforts.17
The movement iself
was highly critical of American foreign policy in the Middle East and by refusing funding
was able to remain an authentic Egyptian movement. On the other hand, the liberal
Egyptian movement April 6th received funding from the American organization Freedom
House and was publicly criticized for taking such aid.
Current Challenges to USAID Democracy Programs:
The complacency that USAID has shown in cooperating with the Mubarak
administration’s closed political system is now revealing some serious disadvantages to
American relations with Egypt. While USAID had the opportunity to pressure the
previous administration into a more pluralistic political climate, the door was closed on
moderate political forces. Instead, the work done by the Muslim Brotherhood in society
during its years of exclusion from politics made it one of the strongest domestic forces in
time for the 2011 parliamentary elections, with few known opposition parties with the
same wide societal base. Similarly, the Salafist party Al-Nour, with millions in foreign
financing, has also had notable success in the recent parliamentary election.
16
USAID, Audit of USAID/Egypt’s Democracy and Governance Activities (Audit Report No. 6-
213-10-001-P), October 27, 2009. 17
Snider, Erin. “The Arab Spring: U.S. Democracy Promotion in Egypt.” Middle East Policy
Council. February 2012.
17
Several factors, both internal and external, have dampened USAID’s
attempts at democratization. The first has been the extreme restrictions placed on
programs by the Mubarak administration, and the resulting complacency USAID has
shown. This is due in part to an unwillingness to put any contingenies upon military aid,
apart from upkeep of the Camp David Accords. Another issue that has arisen particularly
after American-led wars in Afghanistan and Iraq, has been a domestic skepticism towards
any American aid.
Internally, the organization has suffered from issues of oversight and has yet to
come up with an effective way to determine the success of its programs. In the 1990s, the
Bush administration and congress pushed legislation through Congress called the
Government Performance Results ACT (GPRA) which called for regular evaluations of
tax-payer funded programs. These evaluations were to provide results that were in
“objective, quanitifiable and measurable form.” The document identified different fields
in which measures of success should be indicated. For example, the report calls for the
“number of targeted issues which are receiving public attention.” Such stipulations seem
to indicate that success can be quanitfied, even in an area that largely targets behavioral
and societal changes in a way more suited for narrative18
reporting, as some NGOs have
argued. Such quantifiers are used in the USAID audit of Democracy and Governance in
2009, in which indicators are numeral. For example, “number of U.S. Government-
assisted courts with improved case management,” or “number of laws or amendments
promoting decentralization drafted with U.S. Government assistance.” Other indicators
included in the past record the amount of contacts developed or meetings held with
18 McMahon, Edward. “Assessing USAID’s Assistance for Democratic Development: Quantity
Versus Quality?” American Political Science Association. August 30, 2001.
18
officials in the host country. In some cases, however, even one meeting with a
cooperative official can yield results that make the program a success.
In other cases, such quantification is a helpful indicator of succcess or failure.
For example, one grantee was given $192,000 to ensure the distribution of 2,000
identification and voting cards in a village in the Qalioubiya Governate. Ultimately, only
330 cards (17 percent) were issued in time for the April 2007 election.19
Ultimately, USAID’s 2009 audit reports limited achievements in democracy and
governance programs. It reports on one of USAID’s larger projects, which provided
training for specialists worknig in mediation offices in the Ministry of Justice and the
training of family court judges. Results, however, indicate that there may be limited
communication between USAID and the Egyptian govenrment, as approximately half of
recipients of mediation training were “employed by other ministries and may not use the
training as intended,” while of the approximately 15 to 20 percent of trained family court
judges were moved to other courts. Other shortcomings were notable when USAID
grantees in Egypt failed to reach their goals.
Externally, USAID is now facing criticism and intervention from the Supreme
Council of the Allied Forces. In 2011, the United States approved $65 million for
democracy assistance in Egypt after the revolution. Approximetly 80 percent of the funds
would go to US contractors to assist Egyptian political parties and civil society. Such
gestures have been criticized by SCAF as “foreign interference” and argue that
democracy “is a matter of national sovereignty.”
19
“Audit of USAID/Egypt’s Democracy and Governance Activities.” USAID Office of Inspector
General. October 27, 2009.
19
Current State of Affairs:
Following the 2011 revolution, U.S. policy was concerned with the establishment
of stability in Egypt, communicating with new political forces, and the implementation of
a timeline that would allow for the mobilization of secular reformers and young
revolutionaries before the elections. The Obama Administration pledged approximately
$150 milllion in existing Economic Support Funds to be put towards economic recovery
and democracy promotion, in addition to $80 million for insurance purposes with
Egyptian financial institutions.20
The administration also promised $1 billion in U.S.-
backed loan guarantees, and $1 billion in bilateral debt relief. By August 2011,
approximately 85% of the funds used towards democracy efforts had gone into U.S.
organizations working in Egypt, including the National Democratic Institute (NDI) and
the International Republican Institute (IRI), which receives a combined $9 million
annually from USAID and the State Departments’s Bureau of Democracy, Human
Rights, and Labor.21
While the overall aid been criticized as a small amount in the
context of Egypt’s economic crisis, the US has also been working towards international
support for Egypt, and both the International Monetary Fund and World Bank have
pledged money to Egypt contingent upon ecenomic reform conditions.
In March of 2011, USAID began advertising available funds for non-
governmental groups in Egypt. As a result, hundreds of individuals lined up at USAID to
apply for grants. Over the course of the next few months, USAID allocated millions of
dollars to various organizations. While in the past USAID had agreed to the
20 Egypt in Transition. Congressional Research Service. July 17, 2011. Pg. 6 21
“IRI Refutes Continued Misrepresentations About Its Work in Egypt.” January 2, 2012.
International Republican Institute. http://www.iri.org/news-events-press-center/news/iri-refutes-
continued-misrepresentations-about-its-work-egypt
20
administration of funds to pre-approved organizations through MOSA and the Central
Auditing Office, USAID began to by-pass government approval. SCAF ruling generals
have similarly called such moves part of a “foreign agenda.”
In February 2012, 43 employees of international groups, including 16 Americans,
were referred to trial and placed under a travel ban. Among those under the travel ban are
members of NDI and IRI. NDI, which is now facing accusations of operating as an NGO
without a license, has in fact been operating in Egypt since 1995, when it supported
Egypt’s first elections oversight program.22
In 2010 it helped expose voting irregularities
and low voter turnout in the parliamentary election. In fact, both NDI and IRI applied for
registration in 2005, but never received official permits.23
On its website, IRI claims that
the Ministry of Foreign Affairs confirmed the completion of their application, yet never
received a permit. Nonetheless, their operation was tolerated until recently.
In August, USAID came to an agreement with Abdel Aziz Hegazi, president of
the General Federation of NGOs, in which responsibility for the distribution of funds
would be given to the Ministry of International Cooperation. Sherif Ghanim, president
of the Egyptian NGO Support Center has criticized the agreement as enabling corruption
and bribes, and blamed the government’s beaurocratic measures for aid complications.24
Yet on December 29 2011, seventeen NGO offices were stormed by Egyptian
authorities, many of their documents and computers confiscated. A fact-finding
committee was established and eventually leaked to Al-Shorouk newspaper. The greatest
22
“The National Democratic Institute: Egypt.” http://www.ndi.org/egypt 23
Morsy, Ahmed. “Egypt’s Paradox.” The Atlantic Council. January 4, 2012.
http://www.acus.org/egyptsource/egypts-paradox-foreign-funded-military-attacks-foreign-
funded-ngos 24 Al-Qadi, Yasmin. “USAID Caves Into Egyptian Goverment Demands Over Aid
Disbursement.” August 15, 2011.
21
recipients of foreign funds were found to be Egyptian Salafi organizations, which had
recieved almost $50 million from Gulf donors.
Further adding to the controversy, International Cooperation Minister Fayza
Abouelnaga issued testimony against USAID in October, saying that the funding was a
way to contribute to unrest in Egypt and reflects a “determined will to abort any chance
for Egypt to rise as a modern and democratic state with a strong economy.”25
SCAF has also lashed out different groups, for example criticizing April 6th and
Kefaya for accepting funds from USAID, while those organizations have denied the
allegations. Despite recent high-level meetings between Egyptian and American officials,
the domestic rhetoric of SCAF seems bent upon cultivating a public image of foreign
infiltration—one that works through civil society organizations, both foreign and
Egyptian. This has been used as a pretext to scare aid works and impede the activity of
NGOs operating in Egypt. Reporters without Borders now ranks Egypt as 166th in its
2011 Pess Freedom Index, down by 39 places since the fall of the Mubarak
administration.26
This latest diplomatic crisis has resulted in threats from Congress and the
President to cut Egypt’s $1.5 billion annual aid package. The result of this crisis will be
particularly interesting given commentary by previous Chairman of the Joint Chiefs of
Staff, stating that military aid is “without conditions.”
25
“Minister’s Remarks on US Intent to Sow Chaos Stoke Tensions.” Egypt Independent.
February 2, 2012. http://www.egyptindependent.com/node/659331 26
Topol, Sara. “The Assault on Egypt’s Free Press.” New York Times. February 15, 2012.
22
Conclusion:
Since its inception in 1974, USAID has fostered a relationship with Egypt based
on economic dependence. The extensive changes instituted in the agricultural market
were contributing factors to the accumulation of Egyptian debt through a market analysis
that completely misunderstood or misinterpreted demand by Egyptian consumers and
instead resulted in billions of dollars in revenues to the American agricultural market.
Attempts at decentralization both politically and economically, have largely furthered
bureaucracy at both local and higher levels of governance. For the sake of upholding the
Egypt-Israeli treaty, the United States has overlooked abuse of funds and misuse of
weaponry in peaceful protests. Furthermore, political groups that have previously
operated without USAID, and that have indeed criticized USAID, are now prominent
political forces. It remains to be seen whether the incoming administration, after the
upcoming presidential elections, will be friendlier towards relations with the United
States, and the shape such relations will take.