Obama set to speed aid to Egypt: official

DAVOS, Switzerland Wed Jan 25, 2012 4:52pm EST

President Barack Obama meets greeters as he arrives in Cedar Rapids, Iowa, January 25, 2012.    REUTERS/Jason Reed

President Barack Obama meets greeters as he arrives in Cedar Rapids, Iowa, January 25, 2012.

Credit: Reuters/Jason Reed

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DAVOS, Switzerland (Reuters) - U.S. President Barack Obama plans to accelerate the pace of American aid to Egypt, a top State Department official said on Wednesday, as the most populous Arab nation reaches a critical stage in its uncertain transition away from autocratic rule.

Undersecretary of State Robert Hormats, part of a U.S. delegation that held unprecedented talks last week with Egypt's Muslim Brotherhood, said Washington wanted to provide "more immediate benefits" to Egyptians, who earlier this month conducted their first democratic elections in decades.

"During this period, we want to be as supportive as we can. This is an historic moment. Egypt's a country of enormous importance," Hormats said.

Under the plan, some non-urgent U.S. aid slated for other countries - he did not name them - would be redirected to Egypt. And funding in the pipeline for long-term programs in Egypt would be shifted to quick-impact projects, he said.

Hormats, speaking to Reuters on the sidelines of the annual World Economic Forum, emphasized that the White House had not made any final decisions, and that he was providing Washington's "broad thinking" on the subject.

It was unclear whether the total amount of U.S. aid to Egypt would be increased. "Whether it's an increase or whether it's reprioritizing existing assistance, we're still working this out," Hormats said.

Still, he made clear the United States wants to be seen as doing more to assist a hoped-for democratic evolution in Egypt, where the military still holds ultimate power on the first anniversary of protests that ousted President Hosni Mubarak.

Egypt has long been among the top recipients of U.S. aid, which began flowing in substantial sums after it became the first Arab nation to sign a peace agreement with Israel in 1979, regarding the money as an investment in regional security.

According to a report by the Congressional Research Service, the United States gave roughly $2 billion or more annually for 25 years after the peace agreement, most of it for the military.

That figure has drifted down to hold steady at around $1.55 billion in recent years.

Congress approved $1.3 billion in military aid to Egypt for the current fiscal year, but with conditions attached. It also approved $250 million in economic aid, as well as an "enterprise fund" of up to $60 million.

For the money to flow, Secretary of State Hillary Clinton must certify that the Egyptian government is supporting the transition to a civilian government, including holding free and fair elections, and implementing policies to protect freedom of expression, association, and religion, and due process of law.

In addition, the law says that none of the aid, military or economic, can be spent unless Egypt is meeting its obligations under the 1979 Egypt-Israel peace treaty.

U.S. lawmakers appear in no mood to approve more, at least for Egypt's military, which has earned U.S. criticism for cracking down on pro-democracy non-governmental organizations and for the way security forces have treated women protesters.

SUPPORT FOR DEMOCRACIES

In his State of the Union address Tuesday, Obama said the United States had a "huge stake in the outcome" of the revolutions that have swept the Arab world. He pledged to "support policies that lead to strong and stable democracies," but offered no concrete proposals for additional assistance.

Obama is to unveil his proposed federal budget for fiscal year 2013, including foreign assistance, on February 13.

He has yet to announce major new aid packages following the overthrow of governments in Egypt, Tunisia and Libya.

U.S. officials have cited fiscal restraints at home, as well as resistance in the Congress.

"It's unfortunate the juxtaposition, that our budgetary constraints come at the same time that you have this enormously hopeful series of changes in the region," Hormats said.

When the Cold War ended in 1989 and it was clear which anti-Communist leaders would take power in former Soviet bloc states, Congress was quick to provide backing "without a lot of cajoling," Hormats noted.

Following the revolts of the "Arab Spring," and in Egypt particularly, "you have a much more fluid situation, and we don't know what the government's going to look like," he said.

Underscoring that point, Hormats last week held what he called the first-ever economic meetings between a senior U.S. official and the Muslim Brotherhood, a once-banned Islamist group that this month won the biggest share of seats in Egypt's lower house of parliament.

The delegation that met with the Brotherhood, which Washington had long kept at arm's length, was led by Deputy Secretary of State William Burns.

Hormats described the half-dozen Brotherhood officials he met with as "very pragmatic. They understand, they're the majority party now in the parliament. They are going to be the primary political party in Egypt. They need to deliver results."

"And their focus primarily is on small- and medium-enterprise" as generators of job creation, he said.

Earlier this month, Representative Frank Wolf, a Virginia Republican, wrote to Obama and Clinton, warning them that recent raids on foreign non-governmental organizations in Cairo could jeopardize U.S. military assistance.

While acknowledging lawmakers' concerns over trends in Egypt and other Middle East countries where dictators have been toppled, Hormats said, "democracy is not always a smooth or predictable process."

"We have to understand that and not expect miracles. ... We have to explain to the American people that patience is needed and support is needed," he said.

Along with formal government assistance to Egypt, the Obama administration is promoting expanded trade ties; supporting efforts by the International Monetary Fund to reach an agreement with Cairo; and encouraging U.S. firms to explore investment.

A U.S. business mission led by General Electric (GE.N) is headed to Egypt next month, Hormats said.

(Additional reporting by Susan Cornwell and Arshad Mohammed in Washington; Editing by Jon Boyle and Sandra Maler)

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