CAIRO // Egyptian diplomats are negotiating the terms of a possible endowment fund for US economic aid that, if passed by the US Congress this year, could give Egypt access to hundreds of millions of American aid dollars with little to no legislative oversight.
Leaked documents published last week on the website of Foreign Policy, a Washington-based magazine, revealed details of an ongoing discussion between the two governments for an unprecedented endowment that would allow Egypt to draw American economic aid for the next several years without being subject to shifting winds in Washington or the political and human rights conditions that complicated relations between the two countries under the administration of George W Bush, the former US president.
While the terms of such an endowment appear to be far from final, any such deal could afford Egypt far more control over the terms of its aid than any other US aid recipient. The proposal for what many here are already calling "Mubarak's trust fund", after Egypt's long-serving president, Hosni Mubarak, has furthered the view among pro-democracy activists that the Obama administration is willing to ignore Egypt's poor record on human rights and democratic governance in order to ensure its continued co-operation as one of America's strongest political partners in the Arab world.
"My personal impression was that the Egyptian government portrayed the [Egyptian-American] relationship as worse than it was and that the Obama administration basically fell for it," said Stephen McInerney, the director of advocacy for the Project on Middle East Democracy, which published a report last month on US pro-democracy funding to the Middle East. "If the bilateral relationship was worse than it was, then that would have demonstrated itself on certain strategic issues. There was no threat there."
Last year, the Obama administration surprised Egyptian pro-democracy advocates with a decision to halt funding for non-governmental organisations that were not approved by the Egyptian government. Many analysts saw that decision as a misdirected effort to improve Egyptian-American relations, which had been damaged by Mr Bush's insistence that Egypt meet certain democratic reforms. The Bush administration cut economic aid to Egypt by half in its last budget request for the 2008 fiscal year.
"I think from the Egyptian government point of view, the point is to prevent the US from supporting human rights and democracy non-governmental organisations in Egypt," said Elliott Abrams, a senior fellow for Middle East studies at the Council on Foreign Relations and a former director for democracy, human rights, and international operations at the National Security Council under the Bush administration. "I think that's what this is all about. The arguments that we have had with Egypt over the past few years have been on that subject. This is precisely why Congress should not agree."
The Egyptian ministry of international co-operation first proposed the endowment in 2006, but the US Congress did not seem to seriously consider it until December, when legislators inserted language into the 2009 fiscal budget that made US$50 million (Dh184m) "available" for the establishment of an "Economic Support Fund" to "further the shared interests of the United States and Egypt". The amount of annual funding under negotiation is more or less consistent with the $100 million to $250 million in economic aid Washington has given Cairo each year for nearly 30 years.
But that sum is dwarfed by the $1.3 billion in annual military aid - a level of assistance that has remained "sacrosanct" since Egypt became the first Arab state to sign a peace treaty with Israel in 1979, said Brian Katulis, a senior fellow at the Center for American Progress. Despite that the military funding alone has made Egypt the largest recipient of American largesse after Israel, the Egyptian government may be worried that congress will eventually roll back its economic aid. That is exactly what happened to Israel in 2007, when legislators cut its economic aid while increasing its annual military aid by 25 per cent to about $3 billion.
"The Egyptian calculation, rightly so, has been that there probably wouldn't be enough political support in Washington to extend the aid relationship with Cairo beyond the next 10 years," said Ashraf Swelam, a former diplomat and the director general of Egypt's International Economic Forum, a Cairo-based non-governmental organisation. "Especially since every congressional election in Washington brings in a new generation of congressmen and senators, who don't attach much significance to the role Egypt played in opening the door for peace between Israel and its neighbours."
Egypt wants to keep the money - however small the amount - flowing, said Mr Swelam, and apparently so do some American diplomats and legislators. But according to the two documents leaked to Foreign Policy, both the United States and Egypt have dramatically different ideas about what such an endowment might look like. For their part, the Egyptians proposed a $4 billion fund over the course of 10 years. Half of that money would come from annual payments from the US budget. The Egyptian government would finance the other half from its own budget and by redirecting its debt payments meant to service its American loans.
The draft US counter-proposal, which has not been formally submitted to the Egyptian government, reveals a profoundly different approach. While the US government agreed that an "'evergreen' fund best suits our goals", the counterproposal includes no provisions for debt relief. Meanwhile, US diplomats asked that the endowment be located in the United States with mostly private citizens from both countries serving on its board.
"I think the gap between these two programmes will be a hard one to bridge," Mr Swelam said. mbradley@thenational.ae
