U.S. Puts Mideast Influence on Line With Egypt Aid Cut – Bloomberg

The Obama administration’s decision to suspend military aid to Egypt, in an effort to prod the country toward democracy, risks undermining U.S. influence in the Middle East and Egypt’s peace with Israel.

“This is really going to be a pretty significant irritant in the relationship and will further diminish our shrinking role in the region,” David Schenker, director of the Arab politics program at the Washington Institute for Near East Policy, said in a telephone interview.

The U.S. will suspend deliveries of F-16 fighter jets and other large military equipment, and withhold $260 million of cash aid to the Egyptian government “pending credible progress toward an inclusive, democratically elected civilian government through free and fair elections,” State Department spokeswoman Jen Psaki said yesterday in a statement.

President Barack Obama said in August that the U.S. would reassess assistance to Egypt after the military wrested power from former President Mohamed Mursi and cracked down on pro-Mursi demonstrators. The army-backed government installed after Mursi’s overthrow has said it expects to hold elections in the first quarter of next year.

“We want this government to succeed, but we want it also to be the kind of government that Americans will feel comfortable supporting and giving aid to,” Secretary of State John Kerry said at a news conference today in Kuala Lumpur.

Suez Line

U.S. aid to Egypt’s army has been a central part of U.S. Middle East policy since the Camp David peace negotiations in 1978, where the U.S. encouraged Egypt to break away from its Arab allies by signing a separate peace with Israel. The ties include perks such as priority access for U.S. military vessels to the Suez Canal and overflight rights.

“We’ll see, next time, when a U.S. aircraft carrier wants to go through the Suez Canal, whether it goes to the front of the line,” Schenker said. Egyptians “do a lot of things that are very helpful to us and they can be less helpful.”

Omar Ashour, a lecturer at Exeter University in Exeter, England, described the move as a “calculated risk” that will “pressure the army into limiting the level of repression.”

“In terms of promoting democracy, it’s a good move,” Ashour said in a phone interview.

U.S. law requires suspension of aid to countries where the government is deposed in a coup d’etat. The administration hasn’t labeled Mursi’s overthrow a coup.

Fighters, Helicopters

The U.S. had already said in July that it was holding back delivery of four Lockheed Martin Corp. (LMT) F-16s. Another four were scheduled for delivery in December. The U.S. also has been holding up the delivery of 10 AH-64 Apache helicopters made by Boeing Co. (BA) Military sales also include four kits a month to build M1A1 battle tanks from General Dynamics Corp. (GD)

Marina Ottaway, a senior fellow at the Woodrow Wilson International Center for Scholars in Washington, said the administration action may be an attempt to head off deeper cuts by Congress. “There are certainly voices in Congress advocating for an end to aid,” Ottaway said in a phone interview.

Vermont Democratic Senator Patrick Leahy, who leads the appropriations subcommittee with oversight of foreign aid, said Obama’s action didn’t go far enough under the U.S. law that prohibits assistance after a military coup.

‘Both Ways’

“The administration is trying to have it both ways, by suspending some aid but continuing other aid,” Leahy said in a statement. “The message is muddled.”

The administration had asked Congress for $1.3 billion of military assistance for Egypt in 2014 and $250 million for economic and development aid.

The U.S. will continue its assistance in areas that are important to regional security, such as the Sinai and the peace process with Israel, Kerry said.

Despite that, Schenker said the change may make it more difficult for the Egyptian military to cooperate with Israel.

“It could potentially become more politically difficult in the absence of U.S. assistance to the military to maintain this very close working relationship with the Israelis,” Schenker said.

Since the military stepped in to oust Mursi, more than 1,000 people have been killed or injured in clashes between authorities and demonstrators and thousands more have been jailed without charges. The Muslim Brotherhood, which backed Mursi’s election victory, has been outlawed and many of its leaders — including Mursi — are in custody.

Stocks Gain

“This has become less a question of how the U.S. can influence the Egyptian military-backed government than one of whether the U.S. can afford to be seen as backing the actions of that government,” Michele Dunne, director of the Rafik Hariri Center at the Atlantic Council, a Washington policy group, said in an e-mail.

The U.S. aid doesn’t have much impact on Egypt’s economy or external finances, Fitch Ratings said today. The country’s benchmark stock index extended gains today, adding 2.2 percent, the most in a month, as investors ignored the U.S. decision.

The money that has helped to stabilize the Egyptian currency since Mursi’s ouster comes from Saudi Arabia and other Gulf countries that have supported the army intervention against the Muslim Brotherhood. They have pledged more than $12 billion in aid.

“The Saudis can very easily step in and provide, maybe not the weapons they want, but certainly the budgetary support the military needs to procure the weapons they want,” Schenker said.

Complex Relationship

Saudi Crown Prince Salman Bin Abdul-Aziz yesterday released a statement pledging the kingdom’s support, saying “Egypt is in safe hands and has historically been able to handle their problems.”

Such support couldn’t replace the military relationship with the U.S., said Ashour, the Exeter lecturer. “It’s not just a matter of financing, it’s a matter of consistency, logistical support,” he said. “The relationship is far too complex to find an alternative.”

Aaron David Miller, a vice president at the Wilson Center and a Middle East adviser to several administrations, said military aid hasn’t been increasing U.S. influence in Egypt.

“The fact is, we have no significant influence over the military with aid or without it,” Miller said in an e-mail. “It’s truly a no-win situation.”

To contact the reporters on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net; Caroline Alexander in London at calexander1@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

U.S. Puts Mideast Influence on Line With Egypt Aid Cut – Bloomberg}

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