TSG IntelBrief: Suspending Aid to Egypt: What it Won’t Change
October 11, 2013

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Suspending Aid To Little Avail

The Obama administration has not called the Egyptian military’s July 3 removal of President Mohammed Morsi a coup; however, the administration will halt the transfer of over $560 million in cash and loan guarantees to the Egyptian government. Since the “coup” label would require the US to suspend all but humanitarian aid, the administration seems to have found a middle ground position that allows it to punish the military-led regime’s violence against domestic protestors while still supporting the current government in areas of shared interest. Ultimately, despite the punitive appearance of the Obama administration’s decision to withhold the aid, it will actually do little to change the Egyptian regime’s domestic policy.


Gulf State Compensation

Although the US has been the Egyptian military’s most generous benefactor for decades, the current regime is less dependent on US money to buoy its military. Many analysts observed after the events of July 3, that the regime now operates with a financial safety net for internal security matters. Saudi Arabia and the United Arab Emirates are willing to support Egypt as their proxy in their ongoing quest to contain the Muslim Brotherhood, essentially paying billions of dollars to keep that problem away from their side the Red Sea. On July 9, just six days after the Egyptian military regained control of the government from the Morsi and the Brotherhood, Saudi Arabia and the UAE offered the new Egyptian government grants and loans totaling some $8 billion USD, a sum that dwarfs the suspended US aid package. In response to Egypt’s newfound loss of military assistance from the US, it is highly likely that Saudi Arabia, the UAE and other Gulf States will continue to fill the financial void for as long as necessary.


A Convergence of Strategic Interests

Even though cutting aid to Egypt’s military will not likely soften the regime’s position on harsh response to protests and political exclusiveness, the move is also unlikely to change the regime’s strategy on an issue beneficial to the US. One of the most pressing concerns for the US regarding Egypt’s foreign policy is its relationship with Israel, and despite the Obama administration’s stated objective of encouraging democratic inclusion and less violence, the health of the Camp David treaty is not something the administration would likely give up in return. For his part, General ‘Abd al-Fattah al-Sisi values the peace with Israel more than accord inside Egypt as he sees the Israeli military as a more advantageous partner than the Brotherhood. Suspending military aid, therefore, poses little threat to Camp David and the Egypt-Israel peace treaty, even if it represents a default on one provision of the accord.

As militant Islamists in the Sinai region are making a common enemy of the Egyptian government and Israel alike, the regime understands that the peace treaty is indispensible to Egypt’s security and avoiding further economic damage, particularly with respect to any threat to the Suez Canal. From their vantage point, Israeli officials are keen to emphasize the importance of Egyptian security forces in maintaining a secure border area along Israel’s southern flank. While the New York Times cited Israeli Prime Minister Benyamin Netanyahu on October 9, as being “concerned” that the U.S. endangered Camp David by reneging on financial aid to Egypt, the same article noted that “Israeli officials say security cooperation between Israel and Egypt [under General al-Sisi]…has grown closer than ever.” At the time of the Camp David negotiations over three decades ago, US aid was viewed as strong leverage with Egypt. The Washington Post’s Max Fisher summarized the point, writing: “At the time of the 1979 Camp David accords, the aid was a way for the United States to steer Egyptian foreign policy. But, today, Egyptian foreign policy is pretty naturally aligned with that of the United States anyway.” In all likelihood, Egypt’s present interest in maintaining peace with Israel will trump any feeling of disappointment at the loss of $560 million from the US, and the Camp David treaty will endure on its own merit.


Strategic Impact

A convergence of strategic goals in the region, particularly on counterterrorism in the Sinai Peninsula and peace with Israel, offers the best explanation of why suspending military aid will not significantly alter events on the ground in Egypt. Just as granting the Egyptian regime aid packages hardly ever deterred it from cracking down on Islamists in Mubarak’s time, cutting aid is not sufficient to deter the regime from doing the same now. Fortunate for the US, however, its core interests – counterterrorism and the Egypt-Israel peace treaty – are wedded to Egypt’s, producing a interdependent relationship that can weather a temporary suspension in military aid. Rhetorical protest from Egypt’s president can be expected, but it will be obligatory in the face of mutual interests among the US, Egypt, and Israel.  Moreover, aid money designated for counterterrorism will continue to flow. If the absence of US military aid becomes the norm, however, the Egyptian government will strike deals with other weapons manufacturing and subsidizing countries which lack the standards for client behavior comparable to that of the US.

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