Kerry presses Egypt on economic reform, says aid depends on it

ADDIS ABABA Sat May 25, 2013 5:35pm EDT

1 of 2. U.S. Secretary of State John Kerry (L) meets with Egyptian President Mohamed Mursi in Addis Ababa May 25, 2013.

Credit: Reuters/Jim Young

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ADDIS ABABA (Reuters) - Secretary of State John Kerry urged Egypt to act swiftly on economic reforms to secure a $4.8 billion International Monetary Fund loan, saying the measures were needed to get further aid from the U.S. Congress, an American official said.

Kerry met Egyptian President Mohamed Mursi for about an hour on the sidelines of an African Union summit on Saturday, discussing Syria's civil war, the Israeli-Palestinian conflict, human rights in Egypt and the country's faltering economy, the official said.

Egypt's Islamist-led government has been resistant to introducing the austerity measures needed to win the IMF funding, including raising taxes and cutting fuel subsidies, fearing such painful reforms could provoke social unrest.

However, an IMF deal could help shore up investor and donor concerns after two years of political instability since the overthrow of former president Hosni Mubarak in early 2011. The instability has depressed tourism, a crucial industry for Egypt.

The U.S. official, who spoke on condition of anonymity, said Kerry had made the argument that the reforms were necessary to persuade American lawmakers to proceed with further economic support for the country, which borders U.S. ally Israel.

"He urged action on making reforms happen now to move towards requirements to get the IMF package," the official said.

During his first visit to Cairo as secretary of state, on March 3, Kerry told Mursi the United States would provide the first $190 million of $450 million in pledged budget support because of Mursi's commitment to see the IMF process through.

The remainder, however, would depend on the economic reforms, a point Kerry made again in the Ethiopian capital.

"He said ... we need to be able to show Congress that you have taken the necessary reforms," said the official. "I have been a strong advocate of support for Egypt. I continue to support aid for Egypt, but ... we need to see reforms in place that will encourage my former colleagues back at home to act."

Kerry served in the U.S. Senate for nearly 30 years before becoming the country's top diplomat on February 1.

Egypt has in recent years received about $1.3 billion in military aid from Washington, support that dates back to its signing of a peace treaty with Israel more than 30 years ago. That assistance, however, is not seen as contingent on Egyptian economic reform.

(Reporting by Arshad Mohammed; Editing by Pravin Char)

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Comments (4)
Vuenbelvue wrote:
Congress needs to take away the check books and promises of free money from these Secretary of States. The last three, Rice, Clinton, and now Kerry need to develop relationships on a different level. Mursi is a prominent Muslim Brotherhood spokesman and thinks publicly of ridding the world of the United States.

May 25, 2013 5:46pm EDT  --  Report as abuse
Burns0011 wrote:
The ‘reforms’ Kerry wants to talk about are along the lines of removing bread subsidies, thus multiplying food prices for the majority of Egyptians by FIVE TIMES. When the average Egyptian is living on two dollars a day, raising the price of a loaf of bread from five cents to a quarter, that’s just begging for constant riots.

May 25, 2013 6:05pm EDT  --  Report as abuse
Jonathan77 wrote:
Why are we sending US tax dollars to a regime that has pushed women’s rights – and human rights in general – back toward the stone age?

May 25, 2013 8:30pm EDT  --  Report as abuse
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