Egypt: Background and U.S. Relations
Jeremy M. Sharp
Specialist in Middle Eastern Affairs
September 2, 2009
Congressional Research Service
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repared for Members and Committees of Congress
Egypt: Background and U.S. Relations
Summary
This report provides an overview of U.S.-Egyptian diplomatic relations, Egyptian politics, and
U.S. foreign aid to Egypt. It also includes a political history of modern Egypt.
U.S. policy toward Egypt is aimed at maintaining regional stability, improving bilateral relations,
continuing military cooperation, and sustaining the March 1979 Egyptian-Israeli peace treaty.
Successive Administrations have long viewed Egypt as a moderating influence in the Middle
East. At the same time, in recent years, there have been increasing U.S. calls for Egypt to
democratize. Congressional views of U.S.-Egyptian relations vary. Many lawmakers view Egypt
as a stabilizing force in the region, but some Members would like the United States to pressure
Egypt to implement political reforms, improve human rights, and take a more active role in
reducing Arab-Israeli tensions.
The United States has provided Egypt with an annual average of over $2 billion in economic and
military foreign assistance since 1979. P.L. 111-8, the FY2009 Omnibus Appropriations Act,
provides $200 million in Economic Support Fund (ESF) assistance and $1.3 billion in Foreign
Military Financing (FMF) assistance to Egypt. For the first time, Congress stipulated that FMF
grants to Egypt may be used for “border security programs and activities in the Sinai,” a reference
to anti-smuggling initiatives on the Egypt-Gaza border. The ESF grants to Egypt were less than
half of the FY2008 level with $20 million earmarked for democracy programs and $35 million
for education programs, including scholarships for Egyptian students with high financial need.
Egypt received an additional $50 million in ESF assistance from P.L. 111-32, the FY2009
Supplemental Appropriations Act. S. 1434, the Senate version of the Department of State, Foreign
Operations, and Related Programs Appropriations Act, 2010 (which awaits floor action), includes
a provision that would fund a U.S.-Egypt endowment.
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Contents
U.S.-Egyptian Relations: The Road Ahead .................................................................................. 1
Possible Policy Options toward Egypt ................................................................................... 2
Latest Developments................................................................................................................... 3
Current Issues in U.S.-Egyptian Relations ................................................................................... 6
Presidential Succession: Who will Follow Hosni Mubarak?................................................... 6
Egypt and the Israeli-Palestinian Conflict .............................................................................. 8
Overview ........................................................................................................................ 8
Current Egyptian Mediation Efforts................................................................................. 8
The Smuggling Tunnels .................................................................................................. 9
Containing Iran’s Regional Influence .................................................................................. 11
The Economy and U.S-Egyptian Trade and Investment ....................................................... 14
Egypt and the Global Financial Crisis............................................................................ 14
U.S.-Egyptian Trade...................................................................................................... 15
Qualified Industrial Zones............................................................................................. 16
Human Rights, Religious Freedom, and Women’s Rights .................................................... 16
Religious Freedom ........................................................................................................ 17
Women’s Rights............................................................................................................ 19
Sudan.................................................................................................................................. 19
Government Structure ............................................................................................................... 20
The Role of the Military in Egyptian Society................................................................. 21
The National Democratic Party (NDP) .......................................................................... 21
The Judiciary ................................................................................................................ 22
Reinforcing Regime Rule.................................................................................................... 23
Political Opposition and Civil Society ....................................................................................... 25
The Muslim Brotherhood .................................................................................................... 25
The Brotherhood’s “Party Platform”.............................................................................. 26
Brotherhood Arrests ...................................................................................................... 27
The Al Wasat Party ....................................................................................................... 27
Ayman Nour ....................................................................................................................... 28
Civil Society in Egypt ......................................................................................................... 28
Organized Labor ................................................................................................................. 29
U.S. Foreign Assistance to Egypt .............................................................................................. 30
Overview ............................................................................................................................ 30
The Debate over U.S. Assistance to Egypt ........................................................................... 30
Promoting Democracy in Egypt: Differing Perspectives ................................................ 31
History of Congressional Action on Aid to Egypt .......................................................... 32
Economic Aid ..................................................................................................................... 34
Military Aid ........................................................................................................................ 35
Recent Arms Sales ........................................................................................................ 36
Egypt During the Colonial Era ............................................................................................ 40
The Constitutional Monarchy and the British....................................................................... 40
Nasser and Egypt During the Cold War ............................................................................... 41
Egypt-Israeli Peace ............................................................................................................. 42
The Camp David Agreement and 1979 Peace Treaty ..................................................... 42
Egypt Under Mubarak......................................................................................................... 43
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Figures
Figure 1. Map of Egypt ............................................................................................................... 5
Tables
Table 1. U.S.-Egyptian Trade: 2006-2008.................................................................................. 16
Table 2. Recent U.S. Foreign Assistance to Egypt...................................................................... 36
Table 3. U.S. Foreign Assistance to Egypt, 1946-1997............................................................... 37
Appendixes
Appendix. Historical Background ............................................................................................. 40
Contacts
Author Contact Information ...................................................................................................... 44
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Egypt: Background and U.S. Relations
U.S.-Egyptian Relations: The Road Ahead
In the last year, Egyptian foreign policy, particularly its relationship with the United States, has
benefitted substantially from both a change in U.S. policy and from events on the ground. The
Obama Administration, as evident in the President’s June 2009 speech in Cairo, has elevated
Egypt’s importance to U.S. foreign policy in the region, as U.S. policymakers work to revive the
Arab-Israeli peace process. In choosing Cairo as a venue for the President’s signature address to
the Muslim world, Egyptians feel that the United States has shown their country respect
commensurate with its perceived stature in the Arab world.
At the same time, continuing tensions with Iran and Hamas have bolstered Egypt’s position as a
moderating force in the region and demonstrated the country’s diplomatic utility to U.S. foreign
policy. Based on its own interests, Egypt has opposed Iranian meddling in the Levant and in Gaza
and has recently expanded military cooperation with Israel in order to demonstrate resolve against
further Iranian provocations, such as arming Hamas or allowing Hezbollah to operate on Egyptian
soil. Furthermore, Israel’s Operation Cast Lead (December 2008 to January 2009) highlighted the
need to moderate Hamas’s behavior, attain Palestinian unity, and reach a long-term Israel-Hamas
cease-fire/prisoner exchange, goals which Egypt has been working toward, albeit with limited
success so far.
Indications of an improved bilateral relationship have been clearly evident. Over the last six
months, there has been a flurry of diplomatic exchanges, culminating in President Obama’s June
2009 visit to Egypt and Egyptian President Hosni Mubarak’s trip to Washington in August 2009,
his first visit to the United States in over five years. Following President Obama’s June visit, the
two governments held their annual strategic dialogue. Several months earlier, the United States
pledged to expand trade and investment in Egypt.
Despite the appearance of a more positive atmosphere, inherent tensions and contradictions in
U.S.-Egyptian relations remain. For U.S. policymakers and Members of Congress, the question of
how to simultaneously maintain the U.S.-Egyptian strategic relationship born out of the Camp
David Accords and the 1979 peace treaty while promoting human rights and democracy in Egypt
is a major challenge with no clear path. As Egyptian opposition figures have grown more vocal in
recent years over issues such as leadership succession, corruption, and economic inequality, and
the regime has subsequently grown more repressive in its response to increased calls for reform,
activists have demanded that the United States pressure Egypt to create more breathing space for
dissent. The Egyptian government has resisted any U.S. attempts to interfere in its domestic
politics and has responded harshly to overt U.S. calls for political reform. At the same time, as the
Israeli-Palestinian situation has further deteriorated, Egypt’s role as a mediator has proved
invaluable to U.S. foreign policy in the region. Egypt has secured cease-fire agreements and
mediated negotiations with Hamas over prisoner releases, cease-fire arrangements, and other
issues. Since Hamas is a U.S.-designated Foreign Terrorist Organization (FTO) and calls for
Israel’s destruction, neither Israel nor the United States government directly negotiates with its
officials, using Egypt instead as a go-between. With the Obama Administration committed to
pursuing Middle East peace, there is concern that U.S. officials may give a higher priority to
Egypt’s regional role at the expense of human rights and democratic reforms.
Overall U.S.-Egyptian military and intelligence cooperation remains strong and, in many
respects, is the foundation of bilateral ties, but questions abound over the non-security aspects of
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the diplomatic relationship. As U.S. economic assistance to Egypt has dwindled from over $800
million in FY1998 to $250 million in FY2009, some observers have questioned whether or not
U.S. economic assistance provides sufficient leverage to pursue U.S. national security interests in
Egypt. The Egyptian government has grown dismissive of U.S. economic assistance at its current
level (around $250 million annually), arguing that based on the relative growth of the Egyptian
economy over the last two decades and the decline in overall U.S. assistance, per capita aid is a
mere fraction of what it used to be. The Egyptian government has argued that if both sides agree
to continue the aid relationship, funds should either be increased or gradually phased out, but,
most importantly from Egypt’s perspective, be directed toward economic development rather than
toward democracy promotion and support for civil society.
On the other hand, some lawmakers, U.S. officials, democracy activists, and Egyptian opposition
groups would like U.S. economic assistance to continue with some support directed toward civil
society and political reform. Staunch critics of the Mubarak regime have gone further, asserting
that both military and economic aid should be conditioned or even withheld pending
improvements in the regime’s human rights and political reform record.
The issue of whether the United States government should employ U.S. foreign assistance and
other foreign policy tools to robustly promote democracy in Egypt continues to divide the policy
community. The lack of resolution to this issue has prevented both sides from developing
initiatives to frame the bilateral relationship in terms outside the Camp David framework.
U.S. and Egyptian private sector interests have attempted to shift the focus of the bilateral
relationship away from aid to trade and investment. However, a U.S.-Egyptian free trade
agreement does not appear to be a realistic goal at the moment, and it is unclear what more can be
done at the government-to-government level to expand commercial relations.
With Egypt about to hold two critical elections (parliamentary and presidential) between 2010
and 2011, the current period could be crucial in setting a tone for U.S. policy toward Egypt for the
years ahead. Most analysts believe that bilateral relations will remain fairly static until new
Egyptian leaders come to the fore. Others suggest that the manner in which a leadership transition
takes place, if at all, will dictate the trajectory of relations for the years ahead. Most importantly,
there is a sense among many experts that, although Egypt has temporarily boosted its relevance to
U.S. foreign policy, the country is in decline, and it will be the task of the next Egyptian leader to
address deep socioeconomic fissures, restore the people’s faith in their own government, and
revive Egypt’s soft power. Until the succession issue is resolved, however, it would appear that
the onus for moving relations forward or even disengaging from Egypt would be on the
Administration and Congress. Therefore, in assessing whether or not to expand aid, trade, and
military cooperation with Egypt in an era of shrinking U.S. resources, officials not only have to
choose between supporting democracy or dictatorship, but also have to measure Egypt’s relative
importance to U.S. national security in a context of many competing global priorities. Once the
second-largest recipient of U.S. aid annually, in FY2009 Egypt ranks fifth behind Israel,
Afghanistan, Pakistan, and Iraq, respectively.
Possible Policy Options toward Egypt
Experts have posited a number of approaches to guide U.S. policy toward Egypt. Among the
many suggestions, the following are most frequently proffered:
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• Hard Line Approach – Often espoused by those who believe in a principle-based
foreign policy; regime opponents and democracy advocates have asserted that the
United States government should publicly express its concern over the regime’s
human rights and political freedom record. If foreign assistance is to continue,
they argue, the United States should channel funds toward democracy promotion
inside Egypt. The Egyptian government has resisted attempts to pressure it
internally, and some experts believe that this approach would harm, among other
things, bilateral military and security cooperation.
• Quiet Approach – Often espoused by foreign policy “realists,” some argue that
because of the power differential between the two countries and Egypt’s history
of colonialism, U.S. policymakers should raise sensitive issues behind closed
doors in order not to embarrass the regime publicly. Strong supporters of the
bilateral relationship would like to see, in the spirit of the 1979 peace treaty, U.S.
assistance to Egypt restored to a 3:2 ratio with U.S. aid to Israel. Private sector
interests would like to see the bilateral relationship evolve from one based
primarily on military and intelligence cooperation to a partnership based on the
promotion of mutually beneficial trade and investment.
• Multipronged Approach - Some experts believe that U.S. security interests and
efforts to promote reform in Egypt are not necessarily mutually exclusive.
According to a report by the Brookings Institution, “Fortunately, there is not a
zero-sum tradeoff between promoting democracy and protecting stability in
Egypt. Indeed, a wise policy would pursue both goals simultaneously, through
cooperative measures.”1 Analysts cite the 2004 Memorandum of Understanding
on financial-sector reform as an instance where dialogue produced U.S.-Egyptian
agreements on a reform agenda, which was supported by and tied to American
aid. At the same time, advocates of a multipronged approach argue that U.S.
assistance can and should support government-to-government reform projects
alongside support for independent civic groups. As part of this policy approach,
analysts suggest that policymakers should hold Egyptian leaders accountable for
their own promises, such as President Mubarak’s 2005 campaign vow to end the
emergency laws.
Latest Developments
• On August 17 and 18, President Hosni Mubarak visited Washington, D.C. for the
first time in five years. He was accompanied by his entire cabinet, including
Intelligence Chief Omar Suleiman, and by his son, Gamal Mubarak. The
presidents discussed how to jump-start the moribund Israeli-Palestinian peace
process. In an interview following his trip, Mubarak stated that “Some Arab
countries that exchanged representatives and trade offices might think of
reopening these offices if Israel committed itself to stop settlement expansion and
to resume final-status peace negotiations.”2 Some experts believe that Egypt also
may be pressing the Obama Administration to engage Hamas leaders in order to
1 Michele Dunne and Tamara Cofman Wittes, Democracy In Egypt: Necessary Ingredient in a U.S.-Egyptian
Partnership, Brookings Institution, August 17, 2009.
2 "In US, Egypt Leader puts Onus on Israel," Agence France Presse, August 17, 2009.
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facilitate Palestinian reconciliation. President Mubarak also held meetings with
various American Jewish3 and Egyptian-American groups and representatives.
Overall, some commentators have suggested that Mubarak’s low-key August visit
was a return to an earlier era of U.S.-Egyptian diplomacy, in which dialogue
takes place primarily at the highest levels behind close doors. Some democracy
activists and Egyptian opposition activists protested the visit and have called on
the Obama Administration to take a more principled stance on promoting
political reform inside Egypt.
• In August 2009, Egyptian security forces uncovered and arrested a terrorist cell
which allegedly had been planning to assassinate Israel’s Ambassador to Cairo
Shalom Cohen. Israeli Prime Minister Benjamin Netanyahu thanked President
Mubarak for the efforts of his security forces.
• In July 2009, an Israeli Dolphin-class submarine and SAAR V-Class warships
passed through the Suez Canal on their way to conduct military exercises in the
Red Sea, presumably as a signal to Iran. According to one source, Israeli
maneuvers began in mid-June and involved a drill in the Red Sea by the nuclear
submarine Leviathan.4 Egyptian officials publicly stated that they had granted the
Israeli vessels permission to pass through the Canal. According to one unnamed
Israeli official, “This is preparation that should be taken seriously. Israel is
investing time in preparing itself for the complexity of an attack on Iran. These
maneuvers are a message to Iran that Israel will follow up on its threats.”5
• In June 2009, following President Obama’s historic speech in Cairo, U.S. Under
Secretary of State for Political Affairs William J. Burns represented the United
States government in its annual strategic dialogue6 with Egyptian officials. In
addition to high-level meetings with officials, Under Secretary Burns also met
with representatives of civil society organizations, such as the Cairo Institute for
Human Rights Studies (CIHRS) and the Egyptian Organization for Human
Rights.7
• In June 2009, Egypt’s Nuclear Power Plants Authority formally signed a
consultancy contract with the Australian firm Worley Parsons. Several months
earlier, it had been reported that U.S. firm Bechtel8 had successfully bid for the
10-year, $175 million contract to guide Egypt’s civilian nuclear reactor
construction program, but reportedly negotiations stalled, and Egypt chose the
3 The American Jewish groups which met with President Mubarak include the Anti-Defamation League, J Street, B'nai
B'rith International, the American Jewish Congress, the Israel Policy Forum, the Jewish Council for Public Affairs and
AIPAC. See, “U.S. Jewish leaders: Mubarak 'surprisingly positive' on Netanyahu,” Ha’aretz, August 18, 2009.
4 Israel reportedly has three Dolphin-class capable of launching nuclear-tipped, long-range cruise missiles. Two more
are currently being built in Germany for deliveries by 2014. See, “Iran threat steers Israeli navigation of Red Sea,”
Jane’s Defense Weekly, July 7, 2009.
5 "Israeli Navy in Suez Canal Prepares for Potential Attack on Iran ," The Times (UK), July 16, 2009.
6 The U.S.-Egyptian strategic dialogue was first started in 1998 during the Clinton Administration. It is designed to
expand cooperation and resolve disagreements in talks conducted annually at the highest levels of the U.S. Department
of State and the Egyptian Ministry of Foreign Affairs. See, U.S. Department of State Press Statement by James P.
Rubin, Spokesman, July 16, 1998.
7 "Strategic Dialogue Launched," Al Ahram Weekly Online, June 17, 2009, Issue 951.
8 In 2009, Bechtel hired former U.S. Ambassador to Egypt and former Assistant Secretary of State for Near East
Affairs David Welch to be vice president for Europe, Africa, the Middle East and Southwest Asia.
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runner-up in the bid process, Worley Parsons. The contract includes providing
guidance on design specifications and location for the construction of several
power plants over the next decade. Just days after Bechtel’s contract annulment,
other reports surfaced that the International Atomic Energy Agency (IAEA) is
investigating the discovery of traces of highly enriched uranium at a nuclear
research site in Egypt. The IAEA stated that the traces turned up in
environmental swipe samples taken at Egypt's Inshas nuclear research site
sometime between 2007 and 2008. The Egyptian government has downplayed
the discovery, asserting that materials “could have been brought into the country
through contaminated radio-isotope transport containers.”
Figure 1. Map of Egypt
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Current Issues in U.S.-Egyptian Relations
Presidential Succession: Who will Follow Hosni Mubarak?
Uncertainty over the potential successor to 81-year-old President Hosni Mubarak has clouded
Egyptian domestic politics and U.S.-Egyptian relations for the last decade.9 In 2009, there have
been rumors in the Egyptian press suggesting that Mubarak’s health has deteriorated, that he is
frail, and that he is emotionally distraught over the death of his 12-year-old grandson. Another
wave of arrests of Muslim Brotherhood leaders accompanied by speculation that parliament
would dissolve early and new elections would follow also have contributed to the uncertain
atmosphere surrounding the President’s future.
Based on a series of constitutional amendments enacted in the last few years, ruling elites have
worked to establish the veneer of a legal framework to facilitate a smooth transition of power,
despite claims by the opposition that the amendments are illegitimate. For potential presidential
candidates not from the ruling National Democratic Party (NDP), Egyptian law sets a high bar for
establishing eligibility to run. For example, amended Article 76 states that for any candidate to
run for president, he or she has to gain the approval of 250 members of elected assemblies and
municipalities, including, among other signatures, 25 members of the Shura Council (upper
house), which is almost entirely composed of pro-ruling party members. In addition, a candidate
representing a political party must be a member of the party’s respective higher board for at least
one year. Parties that have had at least one member in either house of parliament since May 1,
2007, are eligible to nominate a candidate for the presidency until 2017. Finally, all parties that
nominate a candidate must have been legally operating for at least five consecutive years before
the starting date of candidature.
The next presidential election is scheduled for the fall of 2011. Gamal Mubarak, the President’s
46-year-old son, is, according to most experts, the overwhelming favorite to follow his father. The
younger Mubarak has had a meteoric rise to the highest levels of the NDP, suggesting to many
observers that his accession to the presidency may be imminent. Gamal Mubarak is already
deputy/assistant secretary general of the NDP party, and was appointed to the NDP’s new 50-
member Supreme Council, which will choose the party’s presidential candidate. In the summer of
2009, the Coptic Pope Shenouda III wholeheartedly endorsed Gamal Mubarak stating, “I wish
and pray for God to prolong Hosni Mubarak’s life, but the presidency issue has got nothing to do
with succession.... Most Egyptians love Gamal Mubarak and they will vote for him ahead of any
other candidate running against him in elections—that is if they find anyone to run against
him.”10 During President Mubarak’s visit to the United States in August 2009, he stated in an
interview that “We have never discussed it. Nobody knows who will succeed—we have elections.
When the time comes for elections, the people will vote.”11
Should the Muslim Brotherhood, Egypt’s only organized opposition movement, choose to oppose
an NDP candidate, the group would need to field an independent candidate. The Brotherhood is
an illegal organization and is not recognized as a political party. Therefore, it is highly unlikely
9 In 2004, President Mubarak fainted during a speech before parliament generating rumors that his health was rapidly
deteriorating.
10 “Coptic Pope Likes President’s Son, Los Angeles Times, July 29, 2009, Babylon & Beyond Blog.
11 “‘I have Never Discussed Succession with my Son,’ says Mubarak,” Daily News Egypt, August 18, 2009.
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that it can obtain the necessary signatures of standing politicians, most of whom are NDP
members.12
Unless a new figure comes to light in the next two years, analysts have speculated that the only
other viable candidate for the presidency is Egyptian intelligence chief Omar Suleiman. However,
at age 73, it is unlikely that Suleiman, should he become president, would rule for a long period
of time. Furthermore, as head of Egypt's General Intelligence Service (GIS), Suleiman would
need to retire from military service since active-duty military officers are not allowed
membership in political parties. In addition, if Suleiman desired party sponsorship, he would need
to be a member of a party’s supreme council for at least one year before the election. Suleiman is
currently engaged in a number of sensitive diplomatic operations and is one of President
Mubarak’s closest confidants, making his departure from military service unlikely.
Among the various transition scenarios posited, observers suggest the following would appear to
be the most credible:
• In 2011, Gamal Mubarak represents the NDP against a token opposition figure.
Omar Suleiman is retained as intelligence chief and continues to manage
sensitive foreign affairs issues and internal security. Others have speculated that
this scenario is likely several years after 2011, noting that President Mubarak
could stand for reelection in 2011.
• An Egyptian military officer carries out a soft coup, in which constitutional
proceedings are set aside and civilian elites quietly acquiesce to the military’s
reassertion of power. According to Michele Dunne, an expert on Egypt at the
Carnegie Endowment for International Peace, “Some Egyptian observers believe
that the military will intervene and put one of its own into the presidency instead
of Gamal, perhaps with support from members of the NDP old guard. As there
are no military officers in the Supreme Council, such a course would require
setting aside or twisting the elaborate legal and constitutional framework
developed in the last two years, which seems unlikely under present
circumstances but remains possible.”13
If President Mubarak becomes incapacitated or dies in office, Article 84 of the Constitution
states:
In case vacancy of the Presidential office or the permanent disability of the President of the
Republic, the Speaker of the People's Assembly shall temporarily assume the Presidency;
and, if at that time, the People's Assembly is already dissolved, the President of the Supreme
Constitutional Court shall take over the Presidency, provided, however, that neither shall
nominate himself for the Presidency, subject to abidance by the ban stipulated in paragraph 2
of Article 82. The People's Assembly shall then proclaim the vacancy of the office of
President. The President of the Republic shall be chosen within a maximum period of 60
days from the day the Presidential office becomes vacant.
12 Article 76 states that signatures must come from “250 elected members of the People's Assembly, the Shura Council
and local popular councils on governorate level, provided that those shall include at least 65 members of the People's
Assembly, 25 of the Shura Council and ten of every local council in at least 14 governorates.”
13 Michele Dunne , "Egypt’s National Democratic Party: The Search for Legitimacy," Carnegie Endowment for
International Peace, November 16, 2007.
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Some analysts fear that a less-than-smooth transition of power could open the door for the
Muslim Brotherhood to mobilize its supporters and demand an Islamist government. If such a
situation were to occur, many observers wonder whether the military and security establishment
would remain in their barracks or reenter politics to establish order. Recent unrest in Iran
following its disputed election has raised concern that similar unrest could take place in Egypt.
Others assessments have been less dramatic, as many experts believe that the Egyptian political
system is stable and that the chances of popular revolution or military counter-coup are remote.
Egyptians themselves have admitted that widespread popular apathy and disenchantment with
politics overall are some of the steepest obstacles for reformers to overcome.
Egypt and the Israeli-Palestinian Conflict
Overview
Although Egypt’s regional prominence has gradually declined over decades, it still plays a vital
role assisting the United States government in navigating the complexities of the Israeli-
Palestinian conflict, intra-Palestinian politics, and the overall quest for Middle East peace. Egypt
has continually sought a more active U.S. role in peacemaking and, like most Arab countries, has
criticized U.S. support for Israel as “unbalanced.” Nevertheless, Egypt and Israel have maintained
their 1979 peace treaty obligations and, although their relations remain cool, have conducted a
dialogue on issues of mutual concern, such as isolating Hamas. Egypt is a firm supporter of the
Palestinian Authority (PA) government in the West Bank and has unsuccessfully tried for months
to secure a Palestinian unity government which could reestablish a PA presence in Gaza.
Most importantly, Egypt would like to keep Hamas contained. The secular Mubarak regime is
opposed to Islamists wielding real political power, and it fears that Hamas could serve as a model
for Egyptian Muslim Brotherhood activists who may seek to establish an Iranian-style theocracy
in Egypt. In addition, Egypt seeks to maintain a mostly sealed border with Gaza in order to keep
Palestinian civilians from entering the Sinai peninsula in large numbers, as they did during a
January 2008 border breach. According to one Palestinian commentator, “For Egypt, the issue of
Hamas is not just about politics and their relationship with the Muslim Brothers. It is also about
security and Hamas’s relationship with Sinai Bedouins. Cairo fears the prospect of Hamas sleeper
cells in Sinai being activated to carry out anti-Israeli attacks.”14
For several years, General Omar Suleiman has spearheaded Egypt’s regional diplomatic efforts.
Suleiman has close contacts with high-level Israeli and Palestinian officials, including Hamas
leaders, and is generally well regarded in U.S. policymaking circles and Congress. In June 2008,
Suleiman was instrumental in brokering an unofficial “cease-fire” between Israel and Hamas. The
United States supported Egypt’s role as a mediator between Israel and Hamas, which, as a U.S.-
designated Foreign Terrorist Organization (FTO), is sanctioned by the U.S. government.
Current Egyptian Mediation Efforts
Egyptian diplomacy between rival Palestinian factions and Israel and Hamas is focused on
achieving a Palestinian unity government and a prisoner exchange15/long-term Israeli-Hamas
14 International Crisis Group, Gaza's Unfinished Business, Middle East Report #85, April 23, 2009.
15 Israel has been trying to secure the release of Cpl. Gilad Shalit, an Israeli soldier kidnapped by Hamas on June 25,
(continued...)
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cease-fire. When taken together and if successful, these conditions would, in Egypt’s view, lay
the necessary foundation for all sides to begin final-status negotiations for a permanent settlement
to the conflict. However, while Egyptian officials have conducted multiple rounds of talks and
shuttle diplomacy, their efforts have borne little fruit, as there have been no major breakthroughs
in the Israel-Hamas and Hamas-Fatah talks. Hamas has reportedly demanded that any prisoner
exchange deal for captured Israeli Corporal Gilad Shalit involve the return of an estimated 450
Palestinian prisoners, including several high-profile leaders such as Fatah leader Marwan
Barghouti, who was just elected to the Palestinian faction’s Central Committee.16
Egyptian-mediated Palestinian unity talks are stalled over differing views on how to integrate PA
and Hamas security operations, when and how to conduct Palestinian presidential and legislative
elections, and whom to appoint to government positions. Both sides have had difficulty in
discussing the critical issues at play, as they instead have focused on consolidating their power in
the territories they respectively control. It is possible that both factions are content to preserve the
status quo until elections draw nearer (possibly in January 2010), with each hoping that
developments in the meantime will strengthen its legitimacy and popularity vis-à-vis the other.
The Smuggling Tunnels
Though it has persisted for decades, smuggling via a network of underground tunnels beneath the
8-mile Egypt-Gaza border has become widespread due to Israel’s total blockade of Gaza,
Hamas’s demand for weapons, and the lack of viable economic alternatives to black-market
activity on both sides of the border. Over the last three years, arms smuggling has increased
dramatically due to intra-Palestinian fighting and Israeli-Palestinian violence. At the same time,
the demand for commercial items inside Gaza has skyrocketed due to the international aid boycott
of the Palestinian Authority that followed the formation of a Hamas-led government in 2006 and
Israel's closure of the Gaza Strip following Hamas’s 2007 Gaza takeover.
One goal of Israel’s 2008-2009 war in Gaza was to destroy as many underground tunnels as
possible. Although Israeli military officials estimate that repeated aerial bombardments destroyed
hundreds of tunnels, numerous reports indicate that smuggling activity has resumed. Experts note
that a number of systemic factors contribute to the ongoing smuggling trade between Egypt and
Gaza, including:
• the prevalence of smuggling amongst Egyptian Bedouins in the Sinai Peninsula.
The Bedouin community is largely self-governed and partially dependent on
smuggling goods, people, drugs, and arms for its livelihood. Aside from the
tourist industry, the Egyptian government has invested little in Bedouin areas.
Furthermore, the 1979 Israel-Egypt peace treaty limits the number of Egyptian
army and police forces who can patrol parts of the Sinai, making it difficult to
enforce the rule of law there.
• the ease of tunnel construction. According to numerous media reports, tunnels
are financed by tightly knit Palestinian and Bedouin clans on both sides of the
(...continued)
2006.
16 "Israeli Source Confirms Progress on Shalit Deal, US Said Involved in Efforts," Open Source Center, August 13,
2009, OSC Summary, Document ID#GMP20090813738007.
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border for $30,000-$120,000 each, depending on a tunnel’s length and depth.17
The equipment needed to build a successful tunnel (electric generators, cable,
telephone wire, pipes, plastic containers) is widely available, and labor costs are
cheap. Once built, a tunnel can recoup its owner’s investment in just a few
months, and Hamas allegedly taxes proceeds from the sale of smuggled goods,
giving the group a vested interest in the enterprise.18
• the lack of security forces on both sides of the border with the political will to
halt smuggling. On the Gaza side of the border, there is no non-Hamas entity
capable and/or willing to stop smuggling. In fact, authorities there encourage and,
as previously mentioned, even tax the trade. On the Egypt side, a 750-man
Egyptian Border Guard Force (BGF) was deployed along the border following
Israel’s withdrawal from Gaza in 2005.19 Over the last two years, Israel has
questioned Egypt’s political will to stop arms smuggling, though in recent
months Israel has refrained from its previous public criticisms. In August 2008,
Israeli defense officials acknowledged that they had received information from
IDF military intelligence that Egypt was making an extra effort to curb the flow
of weaponry and explosives into Gaza.20 Although Egypt may be more diligent in
halting weapons smuggling, others allege that BGF troops look the other way
when it comes to smuggling items other than guns and ammunition. According to
one tunnel owner, “There's too many people interested in keeping the tunnels
open. There's too much money to be made.”21 In July 2009, two Egyptian
policemen were arrested for accepting a $5,000 bribe to smuggle a Palestinian
family cross into Egypt via the Rafah border crossing.22
U.S. Border Monitoring and Tunnel Detection Assistance
In late 2007, the Bush Administration and the Egyptian government agreed to set aside $23
million of Egypt's FY2009 Foreign Military Financing (FMF) toward the procurement of more
advanced detection equipment, such as censors, surveillance cameras, remote-controlled robotic
devices, seismic-acoustic tunnel detection equipment, and the computers to process seismic
data.23 On June 16, 2008, U.S. Embassy in Cairo Spokesman Robert Greenan said that a U.S.
Defense Department team had begun training Egyptian forces in using electronic equipment,
including instruments that measure ground fluctuations, to detect smuggling tunnels.24 According
to the Egyptian Embassy in Washington, DC, “In October 2008, training sessions for Egyptian
officers were held in Egypt to use the new equipment at a training site set specifically for that
17 "Gaza’s Subterranean Resistance," The National, January 22, 2009.
18 "Hamas Making $20 million a Month from Gaza Smuggling Tunnels," Ha'aretz, August 31, 2008.
19 When Israel unilaterally dismantled its settlements and withdrew its troops from the Gaza Strip in August 2005, it
negotiated a new security arrangement with Egypt to bolster efforts to secure the Egyptian side of Rafah. After
extensive Israeli-Egyptian talks, Egypt deployed 750 border guards to secure the Philadelphi Route. The memorandum
of understanding between Israel and Egypt delineated the type of equipment the Egyptians may use (small arms and
jeeps, no heavy armor) and the length of the patrol area (14km on the ground and 3 km into the sea).
20 "Intel Branches Split on Egypt's Role," Jerusalem Post, August 5, 2008.
21 "Gaza Smugglers Ready to Resume Work," Associated Press, February 11, 2008.
22 "Egypt Police Arrested Smuggling Gaza Family," Daily News Egypt, July 14, 2009.
23 "Egypt to Bolster Gaza Border," Washington Post, January 7, 2008.
24 "US trains Egypt Forces in Gaza Tunnel Detection," Agence France Presse, June 16, 2008.
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purpose. Pentagon officials commended the seriousness and skills of the Egyptian officers trained
to use the equipment. The BGF started employing the new U.S. equipment upon their arrival in
January 2009.”25 Equipment installations for advanced cameras, sensors, and ground-penetrating
radar are being completed and training provided by the U.S. Army Corps of Engineers. Egypt
may also be planning additional purchases of helicopters, ambulances, hummer patrol vehicles,
ground to air radios, and Motorola base radios to upgrade its military presence along its border
with Gaza. In FY2009, Congress provided Egypt with $50 million in Nonproliferation,
Antiterrorism, Demining, and Related Programs (NADR) aid for the purchase of Backscatter x-
ray machines to be used at the Rafah border crossing.
Reports indicate that U.S. assistance to the BGF in Rafah is somewhat deterring smuggling
activity. According to one Gaza tunnel owner, “The Egyptians have deployed everywhere on the
other side and they have set up cameras. We haven't been able to bring anything.”26 According to
another smuggler, “The Egyptians are closing the tunnels because the Jews and the Americans are
putting pressure on them.... The situation now is dangerous.”27 In another report, a smuggler
stated, “We know the Egyptian police established checkpoints to stop shipments coming to the
tunnel areas.... They ambushed trucks at tunnel shafts and they confiscated the goods before they
bombed the tunnel.”28 Reportedly, Egyptian forces also are pumping water into tunnels to cause
them to collapse, while Hamas has accused Egypt of using gas to suffocate smugglers. Israeli
security officials suggest that Egyptian efforts have stymied some arms smuggling, but Hamas
weapons trafficking continues. According to Israeli Military Intelligence Chief Amos Yadlin,
“The situation is better than before, but the Gaza Strip has still not been hermetically sealed to
smuggling.”
Containing Iran’s Regional Influence
Throughout history, Egypt and Iran have, at times, been fierce rivals, a natural outgrowth of the
region’s balance of power. Egypt envisions itself as the standard-bearer of Arab nationalism, and
Persian Iran serves as a foil. During the Cold War, Egypt was militarily aligned with the Soviet
Union while Iran was a U.S. client state. Then, in the late 1970s, as a result of the Camp David
Peace Accords and the Iranian revolution, Egypt and Iran essentially traded places in their
regional allegiances. Egypt’s peace treaty with Israel resulted in a much closer relationship with
the United States, while Iran’s revolutionary theocratic government perceived the United States,
its moderate Arab allies, and Israel as its primary adversaries in the Middle East, and Iran
developed a closer relationship with Russia. For over 30 years, this pattern has persisted and, in
recent years, new dimensions have been added to the Egyptian-Iranian rivalry.
Iran and Egypt severed diplomatic ties in 1980, a year after the Iranian revolution. Iran not only
objected to Egypt’s peace treaty with Israel, but also to its hosting of the deposed Shah and its
support for Iraq during the 1980-1988 Iran-Iraq war. As a provocation, Iran applauded the
assassination of former Egyptian President Anwar Sadat, naming a street after the assassin
(Khalid Islambouli). The Egyptians have insisted that this street be renamed and the mural of
Islambouli along side it be removed before normal ties can be restored.
25 Embassy of Egypt Fact Sheet, February 6, 2009.
26 "Gaza Smugglers Say Egypt Tightening Tunnel Trade," Agence France Presse, February 8, 2009.
27 "Israel: Rafah Tunnel Smugglers Say Business Down 60% After IDF Operation," Jerusalem Post, February 6, 2009.
28 "Egypt Puts the Bite on Gaza Tunnel Smugglers," Reuters, April 28, 2009.
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Currently, Egypt is concerned about Iran’s support for Palestinian militants, particularly Hamas,
Iran’s influence in Iraq, and Iran’s nuclear program. Hamas's control of the Gaza Strip poses a
challenge for neighboring Egypt. Hamas's call for armed resistance against Israel and its alleged
Iranian financial and military support29 runs counter to Egypt's foreign policy, which is largely
based on its peace treaty with Israel and friendly relations with the United States.
A nuclear-armed Iran and its effect on the regional balance of power is a pressing security
concern. Egypt firmly opposes Iran’s nuclear ambitions, and, as is the case with its stance toward
Israel’s clandestine nuclear program, Egypt has called for a “nuclear-free zone” in the Middle
East. Egypt is a signatory to the Nuclear Non-Proliferation Treaty (NPT) and has pledged not to
develop weapons programs of its own. It also has rebuffed U.S. talks of a nuclear shield
protecting Gulf states and possibly Egypt from an Iranian attack.
In 2006 the Mubarak government announced its intention to develop a civilian nuclear energy
program.30 To date, progress on development has been slow, and most experts expect that it will
be at least a decade before the construction of nuclear power plants will be completed. Although
Egypt may have legitimate energy shortfalls driving the pursuit of nuclear energy, most analysts
suspect that concern over Iran’s quest for nuclear weapons helped jumpstart the Egyptian
initiative.
Between 2007 and 2008, for reasons not entirely clear, Egypt and Iran began a dialogue to
tentatively explore improving bilateral relations. During that period, Iran had been reaching out to
a number of Sunni Arab states, in—as some commentators called it—a charm offensive designed
to assuage fears of its regional ambitions and nuclear program. Egypt also may have been looking
to raise eyebrows in U.S. policymaking circles, hoping that its independent initiative with Iran
might draw more Bush Administration attention and political support at a time when relations had
been strained due to U.S. concerns about human rights in Egypt.
In December 2007, Iranian National Security Council Chief Ali Larjani, a close aide to Supreme
Leader Ali Khamenei, visited Egypt and held talks with President Mubarak. As a follow-up, on
January 30, 2008, Mubarak held talks with Iran's then Majles (parliament) Speaker Gholam Ali
Haddad Adel in Cairo. Adel was the first senior Iranian parliamentary official to conduct high-
level talks with Egyptian counterparts in three decades. At the end of March 2008, Former Iranian
President Mohammed Khatami visited Cairo for additional discussions.
However, the supposed Egypt-Iran rapprochement was short-lived, as neither side appeared ready
to reconcile differences. In July 2008, an Iranian group, the Committee for Commemoration of
29 In the aftermath of Israel’s Operation Cast Lead in Gaza between December 2008 and January 2009, Hamas
reportedly sought Iranian military assistance in replenishing and upgrading its stockpiles. According to one report in
Jane’s Defence Weekly, an arms convoy destroyed by Israeli aircraft while transiting through Sudan on its way to the
Egypt-Gaza border was carrying Iranian-supplied Russian Igla-1E (SA-16 'Gimlet') and Igla (SA-18 'Grouse') surface-
to-air missiles (SAMs) as well as what the security and intelligence sources said were Stinger missiles. See, “Iran was
Source of Hamas SAMs Destroyed in Sudan Airstrike,” Jane’s Defence Weekly, April 3, 2009.
30 Egypt’s nascent nuclear program was frozen in 1986 following the accident at the Chernobyl power plant in the
Ukraine; however, it maintained a small experimental nuclear reactor. In May 2009, the International Atomic Energy
Agency (IAEA) reported that it had found traces of highly enriched uranium in Egypt. Egypt is a signatory to the
Nuclear Non-Proliferation Treaty (NPT) that allows for the peaceful production of nuclear energy. In 2005, the IAEA
investigated Egypt’s nuclear activities and concluded that Egypt had conducted atomic research but that the research
did not aim to develop nuclear weapons and did not include uranium enrichment. Egypt admitted failing to disclose the
full extent of its nuclear research activities to the IAEA.
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Martyrs of Global Islamic Movement, re-edited an old Al Jazeera documentary on the murder of
former Egyptian President Anwar Sadat and released it publicly as a new documentary entitled,
“Execution of a Pharaoh.” The film positively portrayed Sadat’s assassin as a martyr. Although
Iran attempted to distance itself from the film, relations again soured. In October 2008, Egyptian
Foreign Minister Ahmad Abu al Ghayt warned Iran that anyone “who intervenes in Egypt's
internal affairs will not be happy with the response they receive. The Iranians cannot interfere in
our internal affairs.”31
Although Egyptian-Iranian relations have been cool for decades, tensions remained relegated to
the diplomatic and cultural spheres. However, in April 2009, the discovery of an alleged
Hezbollah military cell in Egypt significantly heightened tensions. On April 8, 2009, the Egyptian
government declared that it had uncovered a 49-person Hezbollah “cell” clandestinely operating
in Egypt. According to authorities, cell members had been monitoring ship traffic at the Suez
Canal and were planning terrorist attacks against Sinai tourist resorts, particularly those
frequented by Israelis. Egypt also accused Hezbollah of smuggling weapons to Hamas along the
Egypt-Gaza border and spreading “Shi’ite ideology” inside Egypt. On April 10, Hezbollah chief
Shaykh Hassan Nasrallah acknowledged that one of the plotters in custody had been dispatched to
Egypt to conduct “reconnaissance” for Hezbollah.
The revelation of a Hezbollah cell serves Egyptian interests in several ways. First, it draws a
sharp contrast between it and Iran, the primary U.S. and Israeli adversary in the region. By
demonstrating that Egypt is a direct target of Iran’s regional meddling, Egypt may hope to rally
other moderate Arab states behind it, while placing Iran’s Arab allies (such as Hezbollah, Hamas,
Syria, and Qatar) on the defensive. Egypt also may be trying to discredit arguments for
diplomatic engagement with Iran by taking a harder line.
The cell’s “discovery” also comes nearly two weeks after CBS News reported that, in January
2009—at the height of Israel’s Operation Cast Lead in Gaza—the Israeli Air Force allegedly had
conducted an air strike against trucks driving from Sudan to Egypt, carrying Iranian-supplied
weapons bound for Hamas militants. News of Israel’s air strike may have temporarily
embarrassed Egypt, which, as a result, may have been eager to demonstrate its resolve to act
decisively against Iranian intelligence and weapons smuggling in its sphere of influence. Finally,
Egyptian leaders had been eager to retaliate against Iranian-backed Hezbollah after the Lebanese
Shiite organization called for the overthrow of the Mubarak regime for its alleged lack of support
to Palestinians in Gaza during Israel’s Operation Cast Lead between December and January 2009.
Overall, so long as Iran pursues a nuclear program and continues to strongly back Hamas and
Hezbollah, Egypt will feel threatened and will work to counter Iranian policy, despite Iran’s
occasional efforts to court Egypt in order to bolster its own regional diplomatic position,
particularly among the Arab states. However, a direct confrontation appears highly unlikely. For
now, Iran will use non-state actors to provoke and pressure Egypt, while the Mubarak government
will continue to rally other Sunni Arab states around its mantle of leadership to keep Iran in
check. Egypt also will continue to demand that Israel and the United Sates prioritize the Arab-
Israeli peace process in order to reduce the appeal of Iran’s so-called axis of resistance.
31 "Egypt Wary of Iran's Perceived Growing Influence in Region," Open Source Center, November 5, 2008, pp.
GMP20081105425001 Egypt, Iran -- OSC Report in English .
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The Economy and U.S-Egyptian Trade and Investment
By far, the biggest challenge facing Egypt today is its ability to remain competitive in the global
economy and build a 21st century workforce. The obstacles to meeting these goals are familiar to
many observers and other developing nations: high poverty levels,32 an inadequate and
overstressed education system, inadequate housing and decaying infrastructure, and pervasive
corruption, among other problems. In 2008, Egypt was ranked 115 out of 180 countries on
Transparency International's Global Corruption Perception Index.33 Egyptians themselves
understand their challenges, and an economic “dream team”34 of well-regarded economists and
businessmen has been spearheading an economic reform program that, together with high global
high oil prices, achieved successive years of strong growth between 2005 and 2009.
Economic growth in Egypt rests on the government’s ability to stimulate the private sector. The
state can no longer guarantee employment for every young Egyptian, particularly the hundreds of
thousands of college graduates entering the labor market each year. According to the World Bank
Doing Business 2008 report, Egypt’s pace of business reforms and deregulation between 2006
and 2007 ranked first worldwide. In recent years, the state has reinvigorated its privatization
program by divesting shares in the state-dominated banking and insurance sectors. Additionally,
the government removed import service fees and surcharges and reduced the average weighted
rate for tariffs. The government also streamlined the tax system, canceled many customs duties,
and forced smaller banks to merge with the country’s four largest banks. Nevertheless, according
to the U.S. Department of Commerce 2009 Country Commercial Guide for Egypt, “Although the
reformers have developed considerable momentum, red tape remains a business impediment in
Egypt, including a multiplicity of regulations and regulatory agencies, delays in clearing goods
through customs, arbitrary decision-making, high market entry transaction costs, and a generally
unresponsive commercial court system.”35
Egypt and the Global Financial Crisis
Egypt, like the rest of the global economy, is expected to experience modest growth in 2009 and
perhaps through 2010 as well. Economists predict GDP growth of 4% in both 2009 and 2010, and
inflation remained high at just under10% as of June 2009.36 Foreign direct investment also has
dropped off, from a high of over $13 billion between 2007/2008 to $5.2 billion between
2008/2009.37 The global recession has affected Egypt’s tourism industry, Suez Canal revenues,
and its general manufacturing sector.38 Tourism, which employs 10% of all Egyptian workers, and
Canal revenues are major sources of foreign currency earnings, and steep declines may affect the
Central Bank of Egypt’s ability to cover import costs over the long term. However, Egyptian
32 In Egypt, an estimated 20% of the country’s 80 million citizens live in poverty (international estimates suggest that
up to 40% of Egyptians live on less than $2 a day.)
33 See, http://www.transparency.org/policy_research/surveys_indices/cpi/2008
34 The architects of Egypt’s liberalization plan include Ministers of Finance Youssef Boutros-Ghali, Minister of
Investment, Mahmoud Mohieddin, and Foreign Trade and Industry Minister Rachid Mohamed Rachid.
35 U.S. Department of Commerce, Doing Business in Egypt: 2009 Country Commercial Guide for U.S. Companies.
36 International Monetary Fund, Arab Republic of Egypt—IMF Staff Visit, Concluding Statement, July 16, 2009.
37 According to the Egyptian central bank, the oil and gas sector was the largest single recipient of foreign direct
investment, accounting for 68.8% of the total between 2008 and 2009.
38 Egypt’s banking sector has remained strong due to its rudimentary nature and lack of exposure to investments in
mortgage-backed securities.
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consumers should benefit from an overall decline in global commodity prices. According to the
Economist Intelligence Unit, inflationary pressures are tightly connected to food prices in Egypt,
as domestic food consumption comprises 44% of the household basket of goods.39
Income inequality is a major source of concern for both foreign observers and Egyptians
themselves. Although agriculture accounts for a smaller percentage of GDP than in years past,
nearly 30% of all workers are small farmers. There is a pervasive public perception that most
middle- and lower-class Egyptians have not benefitted from recent years of strong
macroeconomic growth. Egypt is the world's largest importer of wheat, and recent high food
prices angered the general public and drained the government’s coffers.40 In order to ease public
pressure, the government has raised public-sector wages, launched a stimulus plan, and expanded
subsidy benefits for millions of citizens, though all these policies have added to Egypt’s national
debt. According to official figures, the budget deficit as a percentage of GDP will rise to 8.4% in
2010, up from 6.9% in 2009.
U.S.-Egyptian Trade
The United States is Egypt’s largest bilateral trading partner, while Egypt is the United States’
52nd-largest trading partner. Egypt is one of the largest single markets worldwide for American
wheat and is a significant importer of other agricultural commodities, machinery, and equipment.
The United States also is the second-largest foreign investor in Egypt, primarily in the oil and gas
sector.41 Since the mid-1990s, Egyptian officials have sought to negotiate a Free Trade Agreement
(FTA) with the United States, claiming that an Egyptian-American FTA could boost Egypt’s
economy by as much as 3%. As a first step, the two parties signed a Trade and Investment
Framework Agreement (TIFA) in 1999. The TIFA established a Council on Trade and Investment
(TIFA Council) composed of representatives of both governments and chaired by the United
States Trade Representative (USTR) and Egypt’s Minister of Economy and Foreign Trade.
Intellectual property rights (IPR) protection was a contentious issue in pre-FTA negotiations held
under the TIFA. In 2008, the U.S. Trade Representative (USTR) moved Egypt to its Watch List
(from Special 301 Priority Watch List), reflecting improvements in its enforcement of intellectual
property rights. In the past, Egypt had been cited by U.S. trade officials for lax IPR enforcement
and issuance of market approvals for unauthorized pharmaceutical products.
39 "Country Report - Main report: Egypt," Economist Intelligence Unit, February 23, 2009.
40 Bread is heavily subsidized in Egypt, with prices affordable to anyone, though in limited quantities. As food prices
have increased, consumer demand for subsidized bread has risen. Many observers assert that the entire subsidy system
is broken, as many government-subsidized bakeries conspire with corrupt bureaucrats and inspectors to sell their
allotments to private bakeries. Larger families in need of more bread must turn to private distributors, whose prices
skyrocketed in 2008, and shortages compelled President Mubarak to order the military to bake additional loaves.
Between 2007 and 2008, an estimated 11 people died in bread lines either from heat exhaustion or stab wounds
suffered in altercations for positions in line. In 1977, when the Egyptian government temporarily lifted its bread
subsidy, 70 people were killed in rioting, and then President Sadat had to order the military to deploy to Cairo to restore
order. For five days, the government lost control of its capital city.
41 The stock of U.S. foreign direct investment in Egypt was $7.5 billion in 2007 (latest data available), up from $6.5
billion in 2006. The Apache Oil Corporation is a major investor in Egypt’s oil and gas sectors, and the single largest
U.S. investor in Egypt. Other major American corporate investors include: American Express, AIG, American
Standard, Bechtel, Bristol-Myers Squibb, Citibank, Coca-Cola, Commercial International Bank, Devon Energy,
Energizer, ExxonMobil, Eveready, General Motors, GlaxoSmithKline, Guardian Industries, H.J. Heinz, Johnson and
Johnson, Microsoft, Procter and Gamble, Pfizer, PepsiCo, Pioneer, and Xerox. Foreign investors in Egypt’s energy
sector must, by law, provide the Egypt General Petroleum Company a 15% stake in a local venture. Egypt’s labor laws
also restrict the foreign workforce composition of any one company operating in Egypt to 10%.
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In May 2009, U.S. Trade Representative Ron Kirk and Egyptian Minister of Trade and Industry
Rachid Mohammed Rachid signed a U.S.-Egyptian Plan for a Strategic Partnership, which aims
to further promote economic cooperation between the United States and Egypt. According to
Minister Rachid, “We want to double trade (with the United States) in the next four years.” As
part of their announcement, both sides agreed to add two more Qualifying Industrial Zones in
Upper Egypt (in Beni Suief and Al Minya).
Qualified Industrial Zones
In 1996, Congress authorized the creation of Qualified Industrial Zones (QIZ) in order to entitle
goods jointly produced by Israel and either Jordan or Egypt to enter the United States duty free.
In December 2004, Egypt finally reached an agreement with Israel to designate several QIZs in
Egypt under the mandate of the U.S.-Israeli Free Trade Agreement. Goods produced in Egyptian
QIZs allow Egyptian-made products to be exported to the United States duty-free if the products
contain at least 10.5% input from Israel. Egypt would like to see this percentage reduced to
around 8%, which is the case with the U.S.-Jordanian-Israeli QIZ agreement. Most products
exported from Egyptian QIZs are textiles. According to the American Chamber of Commerce in
Egypt, exports to the United States from Egypt’s 15 QIZs rose to $744.7 million in 2008 up from
$288.6 million in 2005, and products manufactured in QIZs now account for one-third of
Egyptian exports.42
Table 1. U.S.-Egyptian Trade: 2006-2008
$s in millions
2006 2007 2008
U.S. Exports to Egypt
4,132.7
5,346.8
6,030.0
U.S. Imports from Egypt
2,395.8
2,376.7
2,370.0
Balance
1,736.9 2,970.1 3,660.0
Source: TradeStats Express™ - National Trade Data,
Notes: Based on data collected by the Foreign Trade Division, U.S. Census Bureau.
Human Rights, Religious Freedom, and Women’s Rights
As a major recipient of U.S. assistance, Egypt has been of great interest to lawmakers, some of
whom believe that portions of U.S. aid should be conditioned on improvements in Egypt’s human
rights record. According to the U.S. State Department’s 2008 Country Reports on Human Rights
Practices, “the government's respect for human rights remained poor, and serious abuses
continued in many areas.” The 2008 report, as in past years, documents several instances of
torture allegedly carried out by Egyptian security forces. The prison system, particularly detention
facilities used for incarcerating suspected Islamist radicals, has come under increasing
international scrutiny for exacerbating militancy in the region due to its tendency to harden some
criminals who have been tortured over prolonged periods of time. Several of Al Qaeda’s leaders,
including second-in-command Ayman al Zawahiri, are former prisoners in Egyptian jails.
42 "Peace Treaty’s Trade Tensions a Trial ," The National , March 26, 2009.
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International human rights organizations have long documented instances of torture, arbitrary
detainment, and discrimination against women, homosexuals, and Coptic Christians in Egypt. In
2007, the international human rights watchdog group Human Rights Watch commended the
government for convicting two police officers on charges of illegally detaining, beating and then
raping a 21-year-old mini-bus driver while he was in police custody.43 However, some observers
suggest that the incident was an attempt to placate the international community and would never
have come to light had Egyptian bloggers not circulated a cell phone video of the beating over the
internet.
Some Egyptian and international human rights activists have charged that U.S. human rights
policy toward Egypt is hypocritical, asserting that U.S. policymakers have not adequately
championed human rights in Egypt due to realpolitik considerations in the region. In addition,
several reports suggest that, since the September 11, 2001, terrorist attacks, the U.S. Central
Intelligence Agency has deported several suspected Al Qaeda operatives to Egypt (along with
other Arab countries) in order to be interrogated and possibly tortured.44 Some observers have
questioned the credibility of U.S. human rights policy toward Egypt, if, on the one hand, the
United States condemns Egyptian practices of torture and illegal detainment, and, on the other
hand, condones Egyptian government behavior when it suits the interests of U.S. national
security.
Religious Freedom
In its 2008 report on religious freedom in Egypt, the U.S. State Department concludes that
“Although there were some positive steps in support of religious freedom, the status of respect for
religious freedom by the Government declined overall during the period covered by this report.”
The State Department attributes this decline to the continued failure of the Egyptian government
to redress “laws and governmental practices that discriminate against Christians, effectively
allowing their discriminatory effects and their modeling effect on society to become further
entrenched.” Over the past year, there were several high-profile incidents involving violence
against Copts in Upper Egypt, most notably a May 31, 2008, assault on the Abu Fana Monastery
in Al Minya province.
Although the Egyptian constitution provides for equal rights without regard to religion, in
practice, discrimination against Copts, Baha’is, and other small religious communities persists at
the both the official and societal levels. In Egypt, certain residual issues can trigger outbursts of
sectarian violence. These include:
• Land disputes. Conflicts over land ownership have triggered a number of violent
incidents involving members of different religious sects, particularly in rural
Upper Egypt.
• Religious conversions. The conversion of Copts to Islam, as well as the marriage
of Coptic women to Muslim men, has been a constant irritant in Muslim-Coptic
relations. Converts to Christianity in Egypt also may face bureaucratic obstacles
in registering their new religious status with the government. There also is the
43 “Egypt: Police Officers Get Three Years for Beating, Raping Detainee,” Human Rights Watch, November 7, 2007.
44 Egypt has admitted that between 60 and 70 of its citizens have been seized abroad and flown to Egypt. See, “Inside
the Dark World of Rendition,” The Independent (London), June 8, 2007.
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issue of forced conversions. While the 2008 State Department report states that
there were no reports of forced religious conversion carried out by the
government, there were (as in past years) reports of forced conversions of Coptic
women and girls to Islam by Muslim men, in some cases allegedly involving
kidnapping, rape, and forced marriage. The State Department notes that these
reports are disputed and often include inflammatory allegations and categorical
denials.
• Church repair and construction. Copts have consistently complained of
excessive bureaucracy when repairing or building churches. For example, the 10
articles of "Humayun," or the Humayun Code, a portion of Ottoman legislation
from 1856, still controls the building or repair of churches in Egypt and is a
source of great aggravation to Coptic Christians. Under this law, a license is
required to erect a church. In addition, there are 10 restricting conditions for the
construction of churches, including a minimum distance between churches and
between a church and the nearest mosque, as well as the absence of objection on
the part of Muslim neighbors. In December 2004, President Mubarak issued a
new decree that devolved church repair and reconstruction decisions to the
provincial level and stipulated that churches would be permitted to proceed with
rebuilding and repair without legal hindrance. However, permits for construction
of new churches require a presidential decree.
Typically, after an outbreak of Coptic-Muslim violence, both the government and the Coptic
Orthodox Church rapidly respond to ease communal tensions. However, more often than not, the
Egyptian government only acts to redress the immediate causes of violence rather than the
underlying symptoms. Despite being nearly 10% of Egypt’s population of 81 million, Copts are
not widely represented at the highest levels of Egyptian institutions. There are few, if any,
Christians serving as governors, police commissioners, city mayors, public university presidents,
or deans. Christians hold less than 2% of the seats in the People’s Assembly and Shura Council.
There are few Christians in the upper ranks of the security services and armed forces. Public
funds compensate Muslim imams but not Christian clergy.
There have been reports of periodic discrimination against small minority communities of Baha’is
(an estimated 2,000 Baha’is live in Egypt). However, in January 2008, an Egyptian court ruled
that Baha’is may obtain state documents if they omit listing their faith on their identification
cards, a move that repudiates the Muslim religious establishment's longtime refusal to recognize
the Baha’i faith. In March 2009, the Supreme Administrative Court upheld the lower court’s
ruling and allowed followers of the Bahai faith to obtain ID cards without falsely listing their
faith as one of the only three recognized by the state. According to Hossam Bahgat, director of
the Egyptian Initiative for Personal Rights, “It is a significant development in our legal history as
a nation.... It is the first legal institution to sanction, or even accommodate, the idea that you can
be Egyptian and follow a religion outside the three recognized ones.”45
In 2009, the United States Commission on Religious Freedom placed Egypt on its watch list due
to “serious problems of discrimination, intolerance, and other human rights violations against
members of religious minorities, as well as non-conforming Muslims, [which] remain widespread
in Egypt.”
45 "Egyptians Win the Right to Drop Religion from ID Cards," Christian Science Monitor, April 20, 2009.
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Women’s Rights
Although Egyptian women played major roles in the country’s drive for independence and many
women currently serve in prestigious public posts, women face a number of obstacles at the legal,
religious, and cultural levels. As in many parts of the Arab world, women are underrepresented in
official leadership positions. Personal status laws governing marriage, divorce, custody, and
inheritance discriminate against women. Domestic violence also is a major issue, as some
estimate that as many as one-third of all married Egyptian women have faced some form of
physical abuse.46 In recent years, new non-governmental organizations have started to provide
services and counseling to women who may be too afraid to go to the authorities. Sexual
harassment also is a daily challenge for many women. According to a 2008 study released by the
Egyptian Center for Women's Rights (ECWR), 62% of Egyptian men admit to sexually harassing
women and 83% of Egyptian women reported being harassed.47 Female genital mutilation (FGM)
remains a serious problem because of widespread cultural acceptance, despite the government’s
attempts to eliminate the practice.
Quota for Women in Parliament
In the spring of 2009, parliament passed a new law48, which expanded the seats in the People’s
Assembly (lower house) from 454 to 51849, with all of the 64 new seats reserved for women.
Over the last 20 years, female representation in the People’s Assembly has noticeably declined.
Women claimed nine of 454 seats in the 2005 legislative election. Only four women were elected,
with the remaining appointed by President Mubarak. The quota will be in effect for parliamentary
elections scheduled in 2010 and 2015 but will expire thereafter. Under the new law, women
candidates may vie for quota seats or general seats. The opposition has criticized the new quota,
asserting that it will only expand the ruling NDP party’s hold on political life since women with
connections to the ruling party will receive the most resources and support. The new quota will be
applied only in the lower house and not in the Shura Council or upper house.
Sudan
Maintaining the unity of Sudan and preserving Egypt’s share of Nile River flows are primary
Egyptian national security interests. The Nile is the lifeblood of Egypt and its main source of
freshwater. The Blue Nile and White Nile converge in Sudan’s capital of Khartoum. According to
one Egyptian academic, “For Egypt, a threat to the Nile constitutes a threat to national security....
In the 1970s, when Ethiopia prepared to embark on river projects that infringed on Egypt's share
of water, (late president Anwar) Sadat threatened to declare war in response.”50 In August 2009,
representatives of nine Nile basin countries postponed the signing of a new agreement to govern
access to and use of the Nile waters after disputes flared related to proposals to reduce Egypt’s
quota. Some of Egypt’s regional neighbors are attempting to amend the colonial-era treaties
governing Nile water use in order to increase their shares, while Egypt is proposing assistance
46 Human Rights Watch, “Divorced from Justice: Women’s Unequal Access to Divorce in Egypt,” June 2004.
Available online at http://hrw.org/reports/2004/egypt1204/.
47 "In Egypt, Sexual Harassment Grows," Christian Science Monitor, September 23, 2008.
48 Between 1979 and the mid 1980s, there was a 30-seat quota for female parliamentarians in the People’s Assembly.
49 Of the 518 total seats in the People’s Assembly, 508 are elected and 10 appointed by the President.
50 “Egypt: Unquiet Flows the Nile,” IPS, June 21, 2009.
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and coordination efforts to promote more efficient upstream water usage and economic
development.
Egypt has been a strong supporter of the 2005 Comprehensive Peace Agreement (CPA) between
Khartoum and Southern Sudan. It has dispatched 1,200 observers and peacekeepers to the south
and has touted its own investments there, such as its construction of power plants, universities,
and hospitals. In November 2008, President Mubarak made a historic visit to Juba, the capital of
Sudan’s semiautonomous southern enclave. Egypt is somewhat concerned that southerners could
vote for independence in a 2011 referendum.
International condemnations of the Sudanese government’s complicity in the killings of Muslim
African ethnic groups by the Arab Janjaweed militia in Darfur have placed Egypt in a difficult
diplomatic position. On the one hand, Egypt has attempted to symbolically support international
efforts to alleviate the humanitarian crisis in Darfur. To date, it has contributed 2,300
peacekeepers to the African Union/United Nations Hybrid operation in Darfur (UNAMID). On
the other hand, Egypt, through the Arab League, has refused to call the killings in Darfur a
“genocide” and has denounced the U.S. imposition of sanctions on the Sudanese government.
According to Egyptian Foreign Minister Ahmed Aboul Gheit, “Sanctions have never solved a
problem.” Egypt also has criticized the International Criminal Court (ICC) warrant for the arrest
of Sudanese President Omar Bashir for crimes against humanity and war crimes committed in
Darfur. Egypt has tried to mediate peace negotiations between the warring factions in Darfur and
reportedly has expressed annoyance toward Qatar for attempting to serve as an intermediary in
Egypt’s own backyard.
Government Structure
Since the 1952 revolution, Egypt has officially
Egypt at a Glance
been a republic, and its political system has
Population: 83 million (July 2009 est.)
developed some aspects of a democracy, though
GDP per Capita (PPP): $5,400 (2008)
most observers continue to describe Egypt as an
authoritarian regime dominated by a strong
Religions: 90% Sunni Muslim, 9% Coptic
Christian
president, who draws his support from the ruling
National Democratic Party (NDP) and the military.
Literacy Rate (over age 15) : 71% (83% of
Under the 1971 Constitution, authority is vested in
males, 59% of females, 2005 est.)
an elected president who must stand for reelection
Unemployment Rate: 8.7% (2008 est.)
every six years.51 The president appoints the
cabinet, which generally drafts and submits
Source: U.S. Central Intelligence Agency
legislation to the legislature, the People’s
World Factbook 2009.
Assembly (lower house) and the Shura Council
(upper house). The People’s Assembly debates legislation proposed by government ministries and
calls for amendments to government-sponsored bills but rarely initiates its own bills. The Shura
Council has modest legislative powers and must ratify treaties and constitutional amendments.
Overall, analysts consider Egypt’s legislative branch to be weak; the ruling party constitutes an
51 In 1980, the Constitution was amended to allow the president to run for an unlimited number of terms, rather than
one as was stipulated in the 1971 Constitution. An English language version of the Egyptian Constitution is available at
http://www.parliament.gov.eg/EPA/en/sections.jsp?typeID=1&levelid=54&parentlevel=6&levelno=2.
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overwhelming majority. Based on low voter turnout in recent elections, there is a clear lack of
public confidence in the parliament.
In the People’s Assembly, 508 members are elected and ten are appointed by the President; 176
members of the Shura Council are elected and 88 are appointed.52 People’s Assembly members
are elected for five-year terms, and Shura Council members for six-year terms (one-half the
Council members are elected every three years). The NDP controls 324 seats in the Assembly,
Muslim Brotherhood-affiliated members hold 88 seats, and the remaining seats are held by a mix
of independents and secular opposition parties. NDP members won 84 of the 88 seats contested in
the June 2007 Shura Council election. Religious parties, such as the Muslim Brotherhood, are
officially banned.
The Role of the Military in Egyptian Society
Although military officers no longer play a direct role in the affairs of the civilian-run
government, the military remains the preeminent institution in society, and has been called on by
successive governments to maintain internal security and regime stability.53 The military also
provides employment and social services for hundreds of thousands of young people in a country
with annual double-digit unemployment rates. Military experts have often asserted that Egypt’s
armed forces are bloated and maintain manpower at unnecessary levels for peacetime, while
others contend that the large size of the military is justified by the services it provides to soldiers
and their families. Some experts estimate that the military trains 12% of young Egyptian males
and that defense industries employ over 100,000 people.54 The military has its own companies
that produce consumer products, pharmaceuticals, and manufactured goods. The officer corps
also benefit from higher salaries, better housing, and high-quality health care, which help ensure
their loyalty to the government. Some members of the opposition have criticized these special
benefits and the military’s fiscal autonomy, asserting that there is little civilian control over the
military’s budget.
The National Democratic Party (NDP)55
As the ruling party, the NDP dominates the political scene in Egypt, controlling well over 80% of
the seats in parliament. The party itself is more of a coalition of business and political elites than
a coherent and disciplined organization with a unifying ideology. In the 2000 parliamentary
election, popular dissatisfaction with the status quo led to the defeat of many NDP incumbents,
though the party maintained its super-majority in parliament after a number of “independents”
who had been NDP members rejoined the party. Thereafter, NDP officials embarked on a
campaign to improve the party’s public image, holding the first party congress in 10 years in
2002. Since then, the NDP has held conferences in each successive year, touting a number of
political reforms under the slogan of “new thinking.” More importantly, the President’s son,
52 One half of the elected members of the People’s Assembly and the Shura Council must be farmers and laborers (Art.
87 and Art. 196 of the Constitution).
53 In 1986, President Mubarak called on the military to put down riots in Cairo, sparked by the protests of police
conscripts who were angry about low pay and poor working conditions. The military also was deployed in 1977 during
riots over a temporary reduction in food subsidies.
54 Imad Harb, “The Egyptian Military in Politics: Disengagement or Accommodation?,” Middle East Journal,
Washington, Spring 2003. vol. 57, Issue 2, p. 269.
55 The NDP’s website is at http://www.ndp.org.eg/index_en.htm.
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Gamal Mubarak, was appointed to the NDP’s higher policy council, and other young figures have
become more visible in the party.
The Judiciary
Many Egyptian reformers and democracy activists believe the judicial branch of government
offers the best hope for instituting checks and balances against executive authority. Despite the
fact that judicial independence is enshrined in the Constitution, the Egyptian state has a long
history of attempting to coerce judges.56 Created in 1969 by Gamal Abdel Nasser, the Supreme
Judicial Council attends to matters of appointment, promotion, and transfer of judges.
Nevertheless, in general, the civilian court system is well regarded and operates independently of
the executive branch. However, there is an entire parallel justice system to deal with security-
related and high-profile political cases. The State Security Emergency Courts try cases in which
the defendant has been accused of violating the 1981 emergency law, which, among other things,
prohibits gatherings of more than five people and limits speech and association.57 Since 1992,
military courts have tried civilians for terrorism and other security-related offenses. Under the
emergency law, the government can hold an individual for up to 30 days without charge. On May
26, 2008, parliament approved a two-year extension of the emergency laws, which have been in
place since Sadat’s assassination in 1981. During his 2005 election campaign, President Mubarak
pledged to introduce a number of reforms, including the elimination of the emergency laws which
have been used to quell political dissent by holding people without charge for long periods and
referring civilians to military courts, where they have fewer rights.
Some judges spoke openly about election abuses allegedly committed by pro-government forces
in 2005. The government responded by detaining several high-profile judges, sparking large-scale
protests. Mahmoud Mekki and Hisham Bastawisi were stripped of their judicial immunity and
detained after publicly charging electoral fraud during parliamentary elections in 2005. Bastawisi,
who suffered a heart attack before his hearing, was warned that another offense would lead to his
dismissal from the judiciary, while Mekki was cleared of all charges. According to Steven Cook,
an Egypt expert at the Council on Foreign Relations, “Egypt's judges had proved that they could
in many ways act as the conscience of the Egyptian people, many of whom want a more open and
democratic future. Without becoming partisan themselves or pouring into the streets as the
lawyers of Pakistan regularly do, Egypt's judges can help shape Egypt's political future.”58
Judicial oversight of elections is a major issue facing the judicial branch. Earlier versions of the
Constitution required that “balloting take place under the supervision of a judicial body.” In 2000,
Egypt’s Supreme Constitutional Court struck down the former election law because, according to
experts at the Carnegie Endowment for International Peace, “it did not provide for judicial
oversight of each polling station and failed to give judges the necessary authority over
balloting.”59 Amended article 88 of the Constitution60 transfers the oversight of elections to a
56 Article 65 of the Constitution states that “ The State shall be subject to law. The independence and immunity of the
judiciary are two basic guarantees to safeguard rights and liberties.”
57 Sentences issued by the State Security Emergency Courts cannot be appealed except on procedural grounds, and are
subject to ratification by the president, who can annul both convictions and acquittals. See, Arab Political Systems:
Baseline Information and Reforms, published jointly by the Carnegie Endowment for International Peace and the
Fundación para las Relaciones Internacionales y el Diálogo Exterior (FRIDE), March 6, 2008.
58 Steven A. Cook, "Adrift on the Nile: The Limits of the Opposition in Egypt," Foreign Affairs, March/April 2009.
59 Nathan Brown, Michele Dunne, and Amr Hamzawy, Egypt's Controversial Constitutional Amendments, Carnegie
Endowment for International Peace, March 23, 2007.
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higher committee, which, although made up of some judges, removes most from direct oversight
of balloting stations. According to the new chairman of the Court of Cassation and the Supreme
Judicial Council Adil Abd al Hamid, “It is impossible to have a judge to monitor each ballot box,
either in presidential, parliamentary or municipal elections.... The number of judges is not
enough.... We can only allocate a judge to monitor the general polling station. Judges'
participation in monitoring the election was at the expense of their judicial work.”61
Reinforcing Regime Rule
Over the last several years, the Mubarak government has tightened its grip on power and cracked
down on domestic opponents (see below). Experts have posited a myriad of reasons for both the
increase in domestic opposition and the subsequent government crackdown. Some analysts assert
that the government is deliberately flexing its muscles during a delicate period of political
transition, as the president may be grooming his son to succeed him. Others have speculated that
the regime may be sending a message to the international community, particularly the United
States, that it will not be pressured into liberalizing its political system. Still other observers take
a more Marxist approach, citing the growing resentment by the poor and middle classes of the
private sector elite and the disproportionate benefits that the elite has gained in recent years from
the state’s economic liberalization policies.
The government has used both legal tactics and brute force to suppress opposition activity.
Independent analysts have long noted that the Egyptian legal system is a labyrinth of codes and
procedures that can be twisted to the state’s benefit when necessary. The following is a sampling
of recent government action to reinforce its rule:
• Between 2006 and 2009, dozens of bloggers were detained and incarcerated
under provisions outlined in the emergency law. Abdel Karim Suleiman (Kareem
Amer) was sentenced in 2006 to four years in prison for “insulting Islam” and
one year for “insulting the president.” He was the first Egyptian blogger ever to
be convicted for his online writings.
• On August 2, 2008, a court sentenced prominent self-exiled dissident Saad Eddin
Ibrahim to two years in prison for harming Egypt’s reputation through his public
writings. The court ruled that Ibrahim, who is currently abroad, could post a bond
of $1,900 to remain free pending an appeal. In response, the U.S. State
Department issued a press release stating, “We are disappointed by the recent
conviction in Egypt of democracy activist Dr. Saad Eddin Ibrahim. On August 2,
Dr. Ibrahim was convicted of harming Egypt’s reputation through his writings in
the foreign press and was sentenced to two years in prison. Lawsuits should not
(...continued)
60 Article 88 states that “balloting shall be conducted on one single day. An independent and impartial higher
committee shall supervise elections in the manner regulated by the law. The law shall set out the functions, method of
formation and guarantees for the committee, which shall have among its members current and former members of
judicial bodies. This committee shall form general committees to supervise elections in constituencies as well as
committees to administer the balloting process and vote tallying and sorting committees. The general committees shall
be composed of members of judicial bodies and vote tallying and sorting shall be made under the supervision of the
general committees in accordance with the rules and procedures stipulated by the law.”
61 BBC Monitoring Middle East, "Egypt's New Chief Judge says Judiciary should Stay Away from Politics," Egyptian
Channel 1 TV's live weekly program Viewpoint , July 13, 2009.
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be used to undermine the principles of freedom of expression. We strongly
advocate—in all countries—the protection of civil and political rights, including
freedom of speech and due process.”
• On April 8, 2008, after a two-year delay, Egypt held nationwide municipal
elections for local councils. These councils had been of little importance in
national politics, but became more relevant after the Egyptian Constitution was
amended in 2005. Under the revision of Article 76, which, for the first time in
Egypt’s history legally established the framework for a multi-candidate
presidential election, the Constitution now requires that all presidential candidate
nominations must obtain the support of at least 250 members of various elected
bodies, including 65 members of the lower house of parliament, 25 members of
the upper house, and 140 members of various local councils. The Muslim
Brotherhood (MB), the only well organized opposition group in Egyptian
politics, boycotted the elections at the last minute, citing various government
attempts to thwart its participation and rig the results. The MB had initially
fielded several thousand candidates for 52,000 seats on 4,500 local councils.
Bureaucratic obstruction eventually whittled the number of MB candidates down
to a few hundred, of whom only a handful (perhaps 20) were expected to
compete.62 Ultimately, the ruling National Democratic Party won a majority of
seats, helping to maintain its monopoly over the political system.
• In September 2007, authorities closed the Association for Human Rights and
Legal Aid after it helped bring a case against the government over a political
activist who died in police custody.
• Also in September, a judge sentenced four newspaper editors, including Ad
Dustour chief editor Ibrahim Issa (also spelled Eissa), to prison on charges of
defaming President Mubarak and his son Gamal. Issa was already on trial on
charges of “disturbing the peace and harming national economic interests” after
he published several speculative articles about the health and possible death of
President Mubarak. According to Oxford Analytica, “The regime is exacting
revenge against individuals such as Eissa for their zealous criticism of the
government since the war on Iraq. Much of the criticism was seen as breaking
previous publishing red-lines. While it would not have been prudent to crack
down then given the international pressure and attention, the context has changed
and the regime is feeling secure enough to repress.”63
• On June 11, 2007, Egypt held a mid-term election for the Shura Council, the
upper chamber of parliament with modest legislative powers. The NDP won 84
of 88 seats. As usual, opposition activists charged that the election was marred by
irregularities and violations (e.g. ballot stuffing, obstruction of polling centers,
and underage voting ) committed by the state and NDP. Prior to election day,
police and security forces arrested hundreds of Muslim Brotherhood members,
including several Shura Council candidates, claiming that they violated
prohibitions against the use of religious slogans in political campaign material.
62 “Egypt Vote Ends with Little Excitement,” Agence France Presse, April 8, 2008.
63 “EGYPT: Press Crackdown Linked to Succession,” Oxford Analytica, November 1 2007.
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• On March 26, 2007, 34 amendments to the Egyptian Constitution were approved
in a popular referendum widely considered to be managed by pro-government
forces. U.S. officials criticized both the content of the amendments and the speed
of their approval while Amnesty International called the amendments the
“greatest erosion of human rights in 26 years” in Egypt. Amended Article 179
allows the president to have civilians tried in military courts and eliminates
protections against arbitrary search and arrest in offenses related to terrorism.
Revised Article 88 curtails judicial supervision of general elections and transfers
oversight responsibility to an electoral commission. In 2000, the Egyptian
Supreme Constitutional Court ruled that elections should have direct judicial
oversight. Revised Article 62 changes the electoral system from a candidate-
centered system to a mixed system of party lists and individual districts. This
revision further restricts the Muslim Brotherhood since, as an illegal
organization, it cannot field a list of party candidates (Brotherhood members run
as independents). This amendment also establishes a quota for female lawmakers
in parliament.
Political Opposition and Civil Society
Over the past few years, political opposition in Egypt has broadened to include an array of
groups, both secular and religious. However, despite a growing chorus of regime critics,
particularly over the internet, the Muslim Brotherhood remains the only well-organized
opposition movement in Egypt today. Nevertheless, labor strikes and spontaneous demonstrations
organized by activist bloggers have received more international attention as of late, despite
widespread political apathy and resignation that pervades Egyptian society.
A handful of legal opposition parties, which must be approved by the government, serve as the
token, official opposition to the NDP.64 Most experts regard Egypt’s legal opposition parties as
divided with limited popular support. In the 2000 parliamentary elections, the principal
opposition parties secured just 17 seats, despite widespread popular dissatisfaction with the ruling
NDP. In 2005, these parties fared even worse, winning just 12 seats.
The Muslim Brotherhood65
The Muslim Brotherhood (MB) was founded in Egypt in 1928 to turn Egypt away from
secularism and toward an Islamic government based on sharia (religious) law and Muslim
principles.66 The Muslim Brotherhood operates as a religious charitable and educational
institution, having been banned as a political party in 1954; however, many Muslim Brotherhood
members run for parliament as independents. In the 2000 parliamentary elections, 17 independent
64 By law, political parties must be approved by the seven-member Political Parties Committee (PPC). Since 1977, the
Committee has approved 19 political parties and rejected almost 50. The most recent party to obtain a license was the
Democratic Front Party, made up of former NDP members, which was established in May 2007.
65 For more information, see CRS Report RL33486, U.S. Democracy Promotion Policy in the Middle East: The
Islamist Dilemma, by Jeremy M. Sharp.
66 The Muslim Brotherhood is generally considered the parent organization of Brotherhood branches throughout the
Middle East. Former Brotherhood members have formed a number of radical and extremist off-shoots, including
Hamas. See Gilles Kippel, Jihad: The Trail of Political Islam (Cambridge: Harvard University Press, 2002), p. 151.
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candidates regarded as Brotherhood sympathizers were elected. In 2005, Brotherhood-affiliated
candidates won 88 seats in parliament. Over the years, the Egyptian government has alternated
between tolerating and suppressing the Muslim Brotherhood, sometimes arresting and jailing its
members, and other times allowing them to operate almost without hindrance.
Many foreign observers agree that the organization has renounced the use of violence as a
political tactic, while many Egyptian officials continue to perceive the Brotherhood as a threat
and are unwilling to legalize the movement.67 In the United States, the issue of whether or not to
recognize the Muslim Brotherhood as a legitimate political actor continues to perplex
policymakers, particularly after the September 11, 2001 terrorist attacks. On the one hand, there
has been a general reluctance to push for Islamist inclusion in politics, out of concern that, once
in power, groups such as the Muslim Brotherhood will pursue policies counter to U.S. interests in
the region or will transform states into theocracies like Iran.68 On the other hand, some experts
believe that if Islamists were brought into a functional democratic system, then they would
temper their rhetoric in order to appeal to a wider audience. According to U.S. Ambassador to
Egypt Margaret Scobey:
“The Muslim Brothers is a banned group in Egypt, and there are no direct relations with
them. But we deal with political personalities through parliament. The day of President
Obama's address, invitations were issued to independent personalities who could be from the
Muslim Brothers and were elected through Parliament and recognized. But there is no direct
dialogue between us and them. The channels are open, and it is possible to contact official
personalities through parliament.”69
Most analysts believe that, from an organizational standpoint, the Brotherhood is the only
movement capable of mobilizing significant opposition to the government, though opinions vary
on how much mass support the Brotherhood commands. As is typical for Islamist groups across
the region, the Muslim Brotherhood is strongest among the professional middle class, controlling
many of the professional syndicates (associations), including those representing engineers,
doctors, lawyers and academics.70
The Brotherhood’s “Party Platform”
For years critics have charged that the Muslim Brotherhood, like other Islamist groups, has been
unable to articulate concrete policies and has relied too heavily on conveying its agenda through
vague slogans, such as the party mantra of “Islam is the solution.” When the Brotherhood
circulated a draft party platform in late 2007, it generated a great deal of attention and
condemnation by its opponents. The draft, which was contested by a more moderate faction of the
Brotherhood,71 called for the establishment of a board of religious scholars with whom the
67 During the 1940s and early 1950s, the Brotherhood’s paramilitary wing waged a guerrilla campaign against British
rule and, after independence, against Nasser.
68 According to Essam al Arian, a leading figure in the movement, “The Muslim Brotherhood does not recognize Israel
and rejects the Camp David agreement.... If a popular referendum were held, we’re sure the people would also reject
it.” See, “Egyptian Government, not People, Recognize Israel,” Inter Press Service, December 21, 2007.
69 Open Source Center, "Interview With US Ambassador to Egypt Margaret Scobey," Cairo Al-Jumhuriyah in Arabic,
June 27, 2009, Document ID# GMP20090627007001.
70 John Walsh, “Egypt’s Muslim Brotherhood,” Harvard International Review (Cambridge): Winter 2003, Vol. 24,
Issue 4, p. 32.
71 Some observers contend that the authorities deliberately arrested the more moderate Brotherhood members in order
(continued...)
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president and the legislature would have to consult before passing laws. According to one critic,
“Reminiscent of Iran’s Guardian Council, this undemocratically selected body could have the
power vested by the state to veto any and all legislation passed by the Egyptian parliament and
approved by the president that is not compatible with Islamic sharia law.... The Muslim
Brotherhood should have looked to Turkey as a model for how to integrate Islam into a secular
system.”72 The draft platform also states that neither women nor Christians may stand for
president.
Brotherhood Arrests
As part of their systematic coercion strategy, security forces continually arrest and imprison
Brotherhood members to keep the group on the defensive. According to Egyptian law, citizens
who have been incarcerated cannot stand for elected office, and authorities have used this
provision to target some of the Brotherhood’s most promising young leaders, even those who may
be more accommodating toward improving the group’s relations with the West. In June 2009,
police arrested Dr. Abdel Moneim Aboul Fotouh,73 a member of the group’s elite Guidance
Bureau/Council and secretary-general of the Union of Arab Doctors, along with six other leaders
on charges of belonging to an outlawed group, conspiring with international terrorist
organizations such as Hezbollah, and money laundering. Prosecutors charge that MB leaders were
responsible for forming terrorist cells inside Egypt and had funneled fighters and funds to Hamas
in the Gaza Strip. Egyptian authorities have criticized the MB’s support for Hamas and Hezbollah
in Lebanon and have accused the Brotherhood of disloyalty to the state and of having an
international agenda. Arrests also have targeted a number of MB-owned businesses in order to
financially squeeze the Brotherhood’s extensive charitable organizations.74
The Al Wasat Party
Although not a legally recognized party, the Al Wasat organization has received attention from
Western observers for its commitment to pluralism, religious toleration, and acceptance of secular
political principles. Established in 1996 by former Brotherhood members who have more
moderate views on democracy and the role of women and Copts in political life, Al Wasat is
made up of a cadre of younger political activists and encourages participation by women and by
Coptic Christians. According to party leader Abou Al Ilah Al Mahdi, the Al Wasat Party is not a
religious party. “We affirmed on many occasions that we are against religious parties that are
based on a religious basis, and adopt the theocratic thinking of clergymen, which we totally
reject.” However, its application for legal recognition as a political party has been rejected on four
occasions by the government's Political Parties Committee on the grounds that it illegally sought
to establish a party with an Islamic basis (Egyptian law prohibits political parties based on
(...continued)
to make the platform reflective of conservative and hardliners’ positions. See, “Egypt Politics: Brothers at Odds,”
Economist Intelligence Unit - ViewsWire, October 15, 2007.
72 “The Muslim Brotherhood Shows its True Colors,” Christian Science Monitor, October 12, 2007.
73 Some experts have speculated that Dr. Aboul Fotouh could be in line to succeed 81-year-old Mahdi Akef as the
Brotherhood's supreme guide.
74 Open Source Center, "Spotlight on Arrests of Egypt's Muslim Brotherhood Leaders (BBCM)," OSC Feature - BBC
Monitoring, July 28, 2009, Document ID# FEA20090730877075.
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religion). The regime claims that, once legalized, Al Wasat could be infiltrated by the Muslim
Brotherhood. Overall, the organization appears relatively weak in terms of popular support.
Ayman Nour
Ayman Nour (age 45), a former member of parliament and second-place finisher in Egypt’s first
multi-candidate presidential election in 2005, had been serving a five-year sentence for forgery in
a prison hospital until his sudden and unexpected release on health grounds in February 2009.
Some Members of Congress and officials in the Bush Administration had regularly called for
Nour’s release from prison. In June 2007, at the conference on Democracy and Security in
Prague, Czechoslovakia, President Bush named Ayman Nour as one of several “dissidents who
could not join us, because they are being unjustly imprisoned.” During his incarceration, Nour’s
political party, Al Ghad, split in half, and the party headquarters burned to the ground after a
violent confrontation there between rival wings of the party. Egyptian law prohibits individuals
with criminal records from holding a political office, and Nour, who has vowed to return to public
life, is in the process of appealing this ruling. In an interview days after his release, Nour stated
that “I still don’t know why they suddenly released me, and what they want from me, and I don’t
care.... But I know what I want to do after getting out: to rebuild my party and my liberal trend.”75
Some experts caution that Nour’s popular support is fairly limited, but with few recognizable
alternatives to the Muslim Brotherhood among Egypt’s political opposition, he receives a
disproportionate amount of foreign media attention.
Civil Society in Egypt
Although political opposition continues to be stymied, observers note that, over the past two
decades, Egypt has developed a vibrant civil society, which some development experts hope will
further democratization in the country. The term “civil society” generally refers to the growing
number of non-governmental organizations (NGOs), charities, and advocacy groups that openly
operate in Egyptian society. Many of these groups pursue so-called “safe issues,” such as
women’s rights, economic development, and social equality, as a way to work toward the much
broader goal of democratization. While others focus more directly on human rights, voter
education, and election monitoring. Often times, the Egyptian government has created its own
associations in order to boost its reform image at home and abroad, such as the government-
sponsored National Council on Human Rights. Critics charge that such official associations have
hampered the space in which independent civil society can operate, as well as the resources they
can garner.
In Egypt, NGOs are required to apply for legal status and, according to Association Law 84-2003,
NGOs must be registered with the Ministry of Social Affairs. There are an estimated 16,000
registered civic organizations in Egypt. In some cases, it may take years before the ministry rules
on an application, and many groups are routinely rejected. Often, no response is given to the
application, leaving an organization in legal limbo. If an NGOs application is rejected, it has few
legal rights and can be shut down. Its members can be imprisoned. However, even registered
NGOs must tread carefully when engaging in sensitive political issues, as some groups have been
periodically closed or have had their legal status revoked. NGOs also must report all foreign
donations to the Ministry of Social Affairs. Overall, tolerance for the activities of non-registered
75 "I Know it will be a Fierce Battle," The National , February 25, 2009.
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groups varies, and many NGOs operate without any legal protection.76 According to the U.S.
State Department’s 2008 Human Rights Report, “Several leading human rights groups and civil
society organizations continued to press legal challenges against government decisions that
prohibit them from registering under the NGO law. Although these organizations generally were
allowed to conduct operations, albeit on a limited basis, they did so in technical violation of the
NGO law with the omnipresent prospect of government interference and/or closure looming over
them.”77
In 2009, Egyptian lawmakers proposed new amendments to the NGO law to halt foreign funding
to NGOs altogether. According to independent MP Mohamed El Omda, “Funding is the new tool
for neo-colonialism, both cultural and political.”78 Though most observers expect the proposed
amendments to fail, a complete ban on foreign funding to NGOs would deal a serious setback to
U.S. government democracy-promotion efforts in Egypt, such as USAID democracy and
governance programs and the State Department’s Middle East Partnership Initiative (MEPI) small
grants to Egyptian NGOs program.79
Organized Labor
While reform-minded intellectuals and conservative Islamists have served as the backbone of
political opposition in Egypt, a series of successful worker strikes in 2007 led some analysts to
speculate that organized labor could become one of the most effective opposition movements in
Egypt today. Low wages and rising inflation led to several strikes at mostly government-owned
textile factories. One strike, at a textile factory in the Nile Delta town of Mahalla al Kubra, took
the form of a week-long sit-in of an estimated 20,000 workers. Protestors not only demanded a
wage hike, but expressed opposition to the government’s economic liberalization strategy, fearing
that privatization would lead to job cuts. According to Joel Benin, a professor at the American
University in Cairo, “It seems like the decision is to pacify the workers and give them what they
want and crack down on the intellectuals and not give them anything.... The workers are more of
a threat.” A report by Carnegie Endowment for International Peace speculated that:
recent strikes represented a departure from the tradition of workers holding sit-ins while
work continued, because strikes were seen as hurting Egypt’s national interest. This
perception changed, however, as the reform process advanced. A new feature of the most
recent strikes is that they are ending peacefully, whereas in the past they would be broken by
police force. Some analysts have interpreted this as a sign of the increased societal tensions
around economic reform, while others have seen it as a result of increased international
scrutiny.80
Between 2008 and 2009, as inflation increased and average incomes stagnated, labor strikes have
become widespread. According to Hamdi Abdelazim, an economist and former president of the
76 Human Rights Watch, “Margins of Repression: State Limits on Non-Governmental Organization Activism,” July
2005. Available online at http://hrw.org/english/docs/2005/07/04/egypt11217.htm.
77 U.S. State Department’s Bureau of Democracy, Human Rights, and Labor, 2008 Human Rights Report: Egypt, 2008
Country Reports on Human Rights Practices, February 25, 2008.
78 "Deputy Proposes Ban on Foreign Funding of Civil Society Organizations," Daily News Egypt Online, February 23,
2009.
79 For a list of MEPI’s Egyptian grantees, see [http://www.medregion.mepi.state.gov/egypt.html]
80 Sufyan Alissa, “The Political Economy of Reform in Egypt: Understanding the Role of Institutions,” Carnegie
Endowment for International Peace, Carnegie Middle East Center, October 2007.
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Cairo-based Sadat Academy, “The success of the labor actions in 2007 and 2008 encouraged
workers to demonstrate and call strikes to realize longstanding demands.... Many people now see
labor strikes as the only means of forcing the government to address their grievances.”81
While Egyptian workers belong to a number of trade unions, the Egyptian Trade Union
Federation (also referred to as the General Confederation of Trade Unions), is the sole legally
recognized labor federation. In April 2009, workers from the Real Estate Tax Authority (RETA)
were recognized by the Ministry of the Labor Force as an independent union, a move that some
international labor law experts are calling unprecedented in Egypt. Other independent unions,
such as the Independent Textile Workers' League, are active in the labor movement but have not
been officially recognized by the Ministry of the Labor Force. According to one labor activist,
“Getting free unions was always the silver bullet.... When free unions strike, mobilize mass
protests and get the machines to stop working—that's when you hit (the regime) where it hurts the
most.”82
U.S. Foreign Assistance to Egypt
Overview
Since 1979, Egypt has been the second largest recipient, after Israel, of U.S. foreign assistance. In
FY2009, Egypt was the fifth largest aid recipient behind Israel, Afghanistan, Pakistan, and Iraq
respectively. In the last decade, overall U.S. assistance to Egypt has declined from $2.1 billion in
FY1998 to $1.6 billion in FY2009 owing to a gradual reduction in economic aid. In July 2007,
the Bush Administration signed a 10-year Memorandum of Understanding (MOU) with Israel to
increase U.S. military assistance from $2.4 billion in FY2008 to over $3 billion by 2018. Egypt
received no corresponding increase in U.S. military aid; instead, the Bush Administration pledged
to continue to provide Egypt with $1.3 billion in military aid annually, the same amount it has
received annually since 1987. Unlike Israel and Jordan, the Bush Administration did not sign a
bilateral MOU with the Egyptian government.83 Congress typically earmarks foreign assistance
for Egypt in the foreign operations appropriations bill.
The Debate over U.S. Assistance to Egypt
Although U.S. assistance has helped cement what many deem to be a successful 30-year Israel-
Egypt peace treaty, as time has passed, critics of continued U.S. assistance to Egypt have grown
more vocal in arguing that U.S. aid props up a repressive dictatorship and that, to the extent that
any U.S. funds are provided, policymakers should channel them toward supporting opposition or
civil society groups. Over the past five years, Congress has debated whether U.S. foreign aid to
Egypt should be conditioned on, among other things, improvements in Egypt’s human rights
81 "Egypt: Labor Strikes Point to Economic Pain," Inter Press Service, March 16, 2009.
82 "EGYPT: Union Eyes the Silver Bullet," IPS, August 18, 2009.
83 A year after the 2007 US-Israel Memorandum of Understanding (MOU), the U.S. and Jordanian governments
reached an agreement whereby the United States will provide a total of $660 million in annual foreign assistance to
Jordan over a 5-year period. Under the terms their non-binding MOU, this first-of-its-kind deal commits the United
States, subject to future Congressional appropriations and availability of funds, to providing Jordan with $360 million
per year in Economic Support Funds (ESF) and $300 million per year in Foreign Military Financing (FMF).
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record, its progress on democratization and religious freedom, and its efforts to control the Egypt-
Gaza border. Some Members believe that U.S. assistance to Egypt has not been effective in
promoting political and economic reform and that foreign assistance agreements must be
renegotiated to include benchmarks that Egypt must meet to continue to qualify for U.S. aid.
Successive administrations, some lawmakers, and the Egyptian government assert that U.S.
assistance to Egypt is symbolic of a strong strategic partnership which directly benefits U.S.
national security interests. Proponents of strong bilateral ties argue that Egypt is key to
maintaining a strong military presence in the oil-rich Persian Gulf and projecting power in south
and central Asia. Reducing Egypt’s aid, they argue, would undercut U.S. strategic interests in the
region, including support for Middle East peace, U.S. naval access to the Suez Canal, and U.S.-
Egyptian intelligence cooperation. U.S. military officials argue that continued U.S. military
support to Egypt facilitates strong military-to-military ties. The U.S. Navy, which sends an
average of a dozen ships through the Suez Canal per month, receives expedited processing for
nuclear warships to pass through the Canal, a valued service that can normally take weeks
otherwise required for other foreign navies. Egypt also provides over-flight rights to U.S. aircraft.
In addition, some U.S. lawmakers argue that cutting aid, particularly military assistance, harms
the United States since all of Egypt’s FMF must be spent on American hardware and associated
services and training.
Promoting Democracy in Egypt: Differing Perspectives
Although funding for democracy promotion is not the only way to promote reform abroad, its use
in Egypt has been a lightning rod of controversy over the last five years. The Egyptian
government has staunchly opposed foreign support to independent civic groups that demand
government accountability, as well as civic groups that have not received government approval.
During the Bush Administration, policymakers and Members of Congress directed some amounts
of Economic Support Funds toward USAID programming in the democracy and governance
(D&G) sector and toward direct support to Egyptian NGOs. However, some experts note that
only a small proportion of the D&G funds are spent on independent Egyptian groups and an even
smaller proportion to groups that do not receive approval from the Egyptian government. The
vast majority of USAID D&G assistance goes to Government of Egypt-approved consensual,
government-to-government projects.84
Most importantly, in FY2005, Congress directed that “democracy and governance activities shall
not be subject to the prior approval of the GoE [government of Egypt],” language which remained
in annual foreign operations appropriations legislation until FY2009 (see below). 85 Egypt claims
that U.S. assistance programs must be jointly negotiated and cannot be unilaterally dictated by the
United States.
84 CRS conversation with Tamara Cofman Wittes, Director, Middle East Democracy and Development Project,
Brookings Institution, September 1, 2009.
85 Congress sought to ensure that U.S. foreign assistance for Egypt was being appropriately used to promote reform. In
conference report (H.Rept. 108-792) language accompanying P.L. 108-447, the FY2005 Consolidated Appropriations
Act, conferees specified that “democracy and governance activities shall not be subject to the prior approval of the GoE
[government of Egypt]. The managers intend this language to include NGOs and other segments of civil society that
may not be registered with, or officially recognized by, the GoE. However, the managers understand that the GoE
should be kept informed of funding provided pursuant to these activities.”
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Between FY2004 and FY2009, USAID obligated approximately $206.4 million in economic
assistance toward the D&G sector in Egypt. However, as overall ESF aid to Egypt has decreased,
so too has U.S. democracy assistance. In FY2009, the Bush Administration unilaterally cut
overall economic aid to Egypt by more than half, requesting $200 million in ESF. Therefore,
because U.S. economic assistance is divided among several sectors (health, education, economic
development, and democracy promotion), fewer funds were available in FY2009 for D&G aid.
The FY2009 Omnibus Appropriations Act (P.L. 111-8), provides the full $200 million request and
then caps funds earmarked for democracy programs at $20 million. In the past, Congress had set a
floor for democracy promotion funds rather than a ceiling. The law also does not include
language found in earlier appropriations laws that stated, “with respect to the provision of
assistance for Egypt for democracy, human rights and governance activities, the organizations
implementing such assistance and the specific nature of that assistance shall not be subject to the
prior approval by the Government of Egypt.”
Some analysts believe the Obama Administration would like to ease tensions with the Egyptian
government by de-emphasizing democracy assistance. Others assert that U.S. funding has been
largely ineffective anyway and that assistance should be channeled into areas that make a more
immediate impact on the daily lives of average Egyptians. According to Steven Cook at the
Council on Foreign Relations:
“As surveys and focus groups consistently demonstrate, if people in the Arab world want
anything from America, it's the kind of technical assistance that makes a tangible difference
in their daily lives. And a healthier, wealthier and better-educated Egyptian population is
more likely to start demanding personal and political freedoms—the kind of demands that
may, someday, actually lead Egypt to democratize and sustain it when it does.”86
In remarks with a group of visiting Egyptian democracy activists in May 2009, Secretary of State
Hillary Rodham Clinton remarked:
“Well, we always raise democracy and human rights. It is a core pillar of American foreign
policy. And I think that there is a great awareness on the part of the Egyptian Government
that with young people like this and with enhanced communications, it is in Egypt's interest
to move more toward democracy and to exhibit more respect for human rights. And so we're
going to continue to engage in that dialogue.... We've spent, as you know, many billions of
dollars over the last years promoting NGOs, promoting democracy, good governance, rule of
law. And I want to stress economic opportunity because out of economic opportunity comes
confidence, comes a recognition that people can chart their own future.”87
History of Congressional Action on Aid to Egypt
Since the 108th Congress, there have been several attempts in Congress to reduce or reallocate
U.S. assistance to Egypt, including the following.
108th Congress
86 Steven A. Cook, “Washington’s Pyramid Scheme Spending Money on Democracy Promotion in Egypt only made
Matters Worse. Here's how to Help,” Newsweek, June 1, 2009.
87 U.S. Department of State press release, “Remarks With Visiting Egyptian Democracy Activists Before Their
Meeting Hillary Rodham Clinton Secretary of State,” May 28, 2009.
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• An amendment offered on July 15, 2004, to the House FY2005 foreign
operations bill (H.R. 4818) would have reduced U.S. military aid to Egypt by
$570 million and increased economic aid by the same amount, but the
amendment failed by a vote of 131 to 287.
109th Congress
• An amendment offered on June 28, 2005, to the House FY2006 foreign
operations bill (H.R. 3057) would have reduced U.S. military aid to Egypt by
$750 million and would have transferred that amount to child survival and health
programs managed by USAID. The amendment failed by a recorded vote of 87 to
326.
• H.R. 2601, the FY2006/FY2007 House Foreign Relations Authorization bill,
would have reduced U.S. military assistance to Egypt by $40 million for each of
the next three fiscal years, while using the funds to promote economic changes,
fight poverty, and improve education in Egypt. There was no comparable
provision in the Senate’s Foreign Relations Authorization bill (S. 600).
• On May 25, 2006, the House Appropriations Committee in a voice vote rejected
an amendment to cut $200 million in military aid to Egypt during markup of H.R.
5522, the FY2007 Foreign Operations Appropriations Bill. In June 2006, the
House narrowly defeated an amendment (198-225) to the bill that would have
reallocated $100 million in economic aid to Egypt and used it instead to fight
AIDS worldwide and to assist the Darfur region of Sudan. Many supporters of
the amendment were dismayed by the Egyptian government’s spring 2006
crackdown on pro-democracy activists in Cairo. Representative David Obey of
Wisconsin sponsored both amendments.
• In report language (H.Rept. 109-486) accompanying the House version of H.R.
5522, the FY2007 Foreign Operations Appropriations Bill, appropriators
recommended that the Administration rescind $200 million in cash assistance
funds previously appropriated but not yet expended. The Senate version
recommended rescinding $300 million from prior year ESF assistance for Egypt.
110th Congress
• On February 15, 2007, Congress passed H.J.Res. 20, the FY2007 Revised
Continuing Appropriations Resolution (P.L. 110-5). Section 20405 of the Act
rescinded $200 million in previously appropriated economic assistance to Egypt.
• Section 690 of P.L. 110-161, the Consolidated Appropriations Act, FY2008,
withheld the obligation of $100 million in FMF or ESF until the Secretary of
State certifies, among other things, that Egypt has taken concrete steps to “detect
and destroy the smuggling network and tunnels that lead from Egypt to Gaza.”
111th Congress
• During Senate consideration of P.L. 111-8, the FY2009 Omnibus Appropriations
Act, Senator John Kyl proposed an amendment (S.Amdt. 630) to require the
Secretary of State to submit a report to Congress on whether additional funds
from Foreign Military Financing assistance provided annually to the Government
of Egypt could be expended to improve efforts by the Government of Egypt to
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counter illicit smuggling, including arms smuggling, across the Egypt-Gaza
border; and to intercept weapons originating in other countries in the region and
smuggled into Gaza through Egypt. The amendment failed by a recorded vote of
34 to 61.
Economic Aid
The United States has significantly reduced economic aid to Egypt over the last decade, and many
observers believe that U.S. economic assistance may be phased out entirely in the years ahead.
There are several reasons for the reduction in U.S. assistance. Overall, U.S. economic aid to
Egypt has been trending downward due to a 10-year agreement reached in the late 1990s known
as the “Glide Path Agreement.” In January 1998, Israeli officials negotiated with the United
States to reduce economic aid and increase military aid over a 10-year period. A 3 to 2 ratio
similar to total U.S. aid to Israel and Egypt was applied to the reduction in economic aid ($60
million reduction for Israel and $40 million reduction for Egypt), but Egypt did not receive an
increase in military assistance. Thus, the United States reduced ESF aid to Egypt from $815
million in FY1998 to approximately $411 million in FY2008.88
With the expiration of the Glide Path agreement, the continued expansion of Egypt’s economy, a
growing desire for more U.S.-Egyptian trade, and a reluctance by Egypt to accept “conditions”
for U.S. aid, U.S. and Egyptian officials have expressed a desire to “graduate” Egypt from U.S.
bilateral economic assistance.89 However, neither the United States nor Egypt seem to agree on
how aid should be reduced over the coming decade. Egypt would like to establish an endowment
to jointly fund development projects.90 The Mubarak government argues that based on current aid
levels, Egyptian debt repayments to the United States exceed U.S. foreign assistance.91 Some
analysts believe that the proposed endowment, which reportedly would be matched by the
Egyptian government on a dollar-for-dollar basis, would serve as a substitute for the annual
appropriations process and shield Egypt from potential conditions mandated by Congress. So far,
there has been limited U.S. interest in pursuing an aid endowment. However, S. 1434, the Senate
version of the Department of State, Foreign Operations, and Related Programs Appropriations
Act, 2010, includes a provision that would provide up to $200 million for an endowment to
“further the shared interests of the United States and Egypt.”
For FY2010, the Administration is requesting $250 million in ESF for Egypt. According to the
U.S. State Department’s FY2010 Congressional Budget Justification, ESF funds will improve
primary health care, enhance education, and support Egypt’s efforts to transition to a private
sector-led economy. U.S. assistance also will support democracy promotion programs designed to
increase public participation “while promoting human rights, civic education, and administration
88 In FY2003, Egypt, along with Israel and several other regional governments, received supplemental assistance as
part of the FY2003 Iraq Emergency Supplemental Appropriations Act (P.L. 108-11). It included $300 million in ESF
for Egypt, which could have been used to cover the costs of up to $2 billion in loan guarantees. The loan guarantees
were to be issued over three years.
89 CRS conversation with U.S. and Egyptian officials, January 9, 2008.
90 The Senate version of the FY2008 Foreign Operations bill (H.R. 2764), contained an amendment, entitled “The
United States-Egypt Friendship Endowment,” that would have provided up to $500 million in ESF to establish an
endowment to “further social, economic and political reforms in Egypt.”
91 Egypt’s debt repayments to the United States, as of 2006, stood at an estimated $370 million a year, based on a total
debt estimated at $4.2 billion.
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of and access to justice.” A portion of U.S. economic assistance is provided to Egypt as a direct
cash transfer to help Egypt further liberalize its economy.
Military Aid
The Administration has requested $1.3 billion in FMF for Egypt in FY2010—the same amount it
received in FY2009. FMF aid to Egypt is divided into three general categories: (1) acquisitions,
(2) upgrades to existing equipment, and (3) follow-on support/maintenance contracts.92 According
to U.S. and Egyptian defense officials, approximately 30% of annual FMF aid to Egypt is spent
on new weapons systems, as Egypt’s defense modernization plan is designed to gradually replace
most of Egypt’s older Soviet weaponry with U.S. equipment.93 That figure is expected to decline
over the long term due to the rising costs associated with follow-on maintenance contracts.
Egyptian military officials have repeatedly sought additional FMF funds to offset the escalating
costs of follow-on support. They point out that as costs rise, static aid appropriations amount to a
reduction in net assistance.
U.S.-Egyptian co-production of the M1Al Abrams Battle tank is one of the cornerstones of U.S.
military assistance to Egypt. A co-production program began in 1988. Egypt plans to acquire a
total of 1,200 tanks. Under the terms of the program, a percentage of the tank’s components are
manufactured in Egypt at a facility on the outskirts of Cairo and the remaining parts are produced
in the United States and then shipped to Egypt for final assembly. General Dynamics of Sterling
Heights, Michigan is the prime contractor for the program. Although there are no verifiable
figures on total Egyptian military spending, it is estimated that U.S. military aid covers as much
as 80% of the Defense Ministry’s weapons procurement costs.
Egypt also receives Excess Defense Articles (EDA) worth hundreds of millions of dollars
annually from the Pentagon.94 Egyptian officers participate in the International Military and
Education Training (IMET) program ($1.4 million requested for FY2010) in order to facilitate
U.S.-Egyptian military cooperation over the long term. IMET assistance makes Egypt eligible to
purchase training at a reduced rate. Bright Star is a multinational training exercise co-hosted by
the United States and Egypt that helps foster the interoperability of U.S. and Egyptian forces and
provides specialized training opportunities for U.S. Central Command Forces (CENTCOM) in
the Middle East.
In addition to large amounts of annual U.S. military assistance, Egypt benefits from certain aid
provisions that are available to only a few other countries. Since 2000, Egypt’s FMF funds have
been deposited in an interest bearing account in the Federal Reserve Bank of New York and have
remained there until they are obligated. By law (P.L. 106-280), Congress must be notified if any
of the interest accrued in this account is obligated. Most importantly, Egypt is allowed to set aside
FMF funds for current year payments only, rather than set aside the full amount needed to meet
92 According to U.S. defense officials, Egypt only allocates the minimum amount of FMF funds necessary for follow-
on maintenance, resulting in inadequate support for weapon system sustainment.
93 According to a 2006 Government Accountability Office report, over the life of Egypt’s FMF program, Egypt has
purchased 36 Apache helicopters, 220 F-16 aircraft, 880 M1A1 tanks, and the accompanying training and maintenance
to support these systems, among other items. See http://www.gao.gov/new.items/d06437.pdf.
94 According to the Defense Security Cooperation Agency (DSCA), past EDA sales and grant transfers have included
two PERRY class and two KNOX frigates, numerous HAWK parts, mine rakes, helicopter spare parts, assorted
armored vehicles (M60 tanks and M113 APCs) and various types of munitions.
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the full cost of multi-year purchases. Cash flow financing allows Egypt to negotiate major arms
purchases with U.S. defense suppliers.
Recent Arms Sales
In FY2009, the Defense Security Cooperation Agency (DSCA) notified Congress of the
following proposed arms sales to Egypt using FMF funds:
• August 6th—6 Chinook Helicopters and related equipment, prime contractor is
Boeing Helicopter Company, estimated potential total value: $308 million.
• May 26th—12 Apache Longbow Helicopters and related equipment, prime
contractors are the Boeing Company, General Electric Company, and Lockheed
Martin Missiles and Fire Control, estimated potential total value: $820 million.
In May and June 2009, Lockheed Martin executives remarked that Egypt was considering the
purchase of 24 F-16 Fighting Falcon multirole combat aircraft. Egypt currently has more than 200
F-16 aircraft of different variants.
Table 2. Recent U.S. Foreign Assistance to Egypt
($s in millions)
Fiscal Year
Economic
Military
IMET
Total
1948-1997 23,288.6
22,353.5
27.3
45,669.4
1998 815.0
1,300.0
1.0
2,116.0
1999 775.0
1,300.0
1.0
2,076.0
2000 727.3
1,300.0
1.0
2,028.3
2001 695.0
1,300.0
1.0
1,996.0
2002 655.0
1,300.0
1.0
1,956.0
2003 911.0
1,300.0
1.2
2,212.2
2004 571.6
1,292.3
1.4
1,865.3
2005 530.7
1,289.6
1.2
1,821.5
2006 490.0
1,287.0
1.2
1,778.2
2007 450.0
1,300.0
1.3
1,751.3
2008 411.6
1,289.4
1.2
1,702.2
2009 250.0
1,300.0
1.3
1,551.3
Total 30,570.8
37,911.8
41.1
68,523.7
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Table 3. U.S. Foreign Assistance to Egypt, 1946-1997
(millions of dollars)
Misc.
Military
Military
I.M.E.T
Economic
Year Total Loan
Grant
Grant
Grant
D.A. Loan
D.A. Grant
ESF Loan
ESF Grant
P.L. 480 I
P.L. 480 II
1946
9.6 — — —
9.3 Surplus
0.3 UNWRA
— — — — — —
1948
1.4 — — —
1.4
Surplus
— — — — — —
1951
0.1 — — —
0.1
Tech
— — — — — —
Asst
1952
1.2 — — — — — 0.4 — — — 0.8
1953
12.9 — — — — — 12.9 — — — —
1954 4 — — — — — 3.3 — — — 0.7
1955
66.3 — — — — 7.5 35.3 — — — 23.5
1956
33.3 — — — — — 2.6 — — 13.2 17.5
1957 1 — — — — — 0.7 — — — 0.3
1958
0.6 — — — — — 0 — — — 0.6
1959
44.8 — — — — — 2 — — 33.9 8.9
1960
65.9 — — — — 15.4 5.7 — — 36.6 8.2
1961
73.5 — — — — — 2.3 — — 48.6 22.6
1962
200.5
— — — — 20 2.2 20 — 114 44.3
1963
146.7
— — — — 36.3 2.3 10 — 78.5 19.6
1964
95.5 — — — — — 1.4 — — 85.2 8.9
1965
97.6 — — — — — 2.3 — — 84.9 10.4
1966
27.6 — — — — — 1.5 — — 16.4 9.7
1967
12.6 — — — — — 0.8 — — — 11.8
CRS-37
Misc.
Military
Military
I.M.E.T
Economic
Year Total Loan
Grant
Grant
Grant
D.A. Loan
D.A. Grant
ESF Loan
ESF Grant
P.L. 480 I
P.L. 480 II
1972
1.5 — — — — 1.5 — — — — —
1973
0.8 — — — — — — — — — 0.8
1974
21.3 — — — — — — — 8.5 9.5 3.3
1975
370.1
— — — — — —
194.3
58.5
104.5 12.8
1976
464.3
— — — — — 5.4 150
102.8
201.7 4.4
TQ
552.5
— — — — — — 429
107.8
14.6 1.1
1977
907.8
— — — — — — 600
99.2
196.8 11.7
1978
943.2
— — 0.2
0.1
Narc.
— —
617.4
133.3
179.7 12.5
1979
2588.5
1500 — 0.4 — — — 250 585
230.7 22.4
1980
1167.3
— — 0.8 — — — 280 585
285.3 16.1
1981
1681.2
550 — 0.8 — — — 70 759
272.5 28.9
1982
1967.3
700 200 2.4 — — — — 771 262 31.9
1983
2332
900 425 1.9 — — — — 750
238.3 16.8
1984
2470.8
900 465 1.7 — — — —
852.9
237.5 13.7
1985
2468.7
— 1175
1.7 — — — —
1065.1
213.8 13.2
1986 2539.1 — 1244.1 1.7 — — — — 1069.2
217.5 6.6
1987 2317 — 1300 1.8 — — — — 819.7
191.7 3.9
1988
2174.9
— 1300
1.5 — — — —
717.8
153 2.6
1989
2269.6
— 1300 1.5 — — 1.5 — 815
150.5 1.2
1990 2397.4 — 1294.4 1.6 — — — — 898.4 203
—
1991
2300.2
— 1300
1.9 — — — —
780.8
165 52.5
1992
2235.1
— 1300
1.8 — — — —
892.9
40.4 —
CRS-38
Misc.
Military
Military
I.M.E.T
Economic
Year Total Loan
Grant
Grant
Grant
D.A. Loan
D.A. Grant
ESF Loan
ESF Grant
P.L. 480 I
P.L. 480 II
1993
2052.9
— 1300
1.8 — — — —
747.0
— 4.1
1994
1868.6
— 1300
0.8 — — — —
561.6
35 6.2
1995
2414.5
— 1300 1 — — 0.2 —
1113.3
— —
1996
2116.6
— 1300 1 — — — — 815 — 0.6
1997P
2116 — 1300 1 — — — — 815 —
—
Total 45669.4 4550 17803.5 27.3.0 11.2 80.7 82.8 2620.7 15923.8 4,114.3 455.1
Notes: Totals may not add due to rounding. No U.S. aid programs for years 1947, 1949, 1950, 1968, 1969, 1970, and 1971. P.L. 480 II Grant for 1993 includes $2.1 million
in Sec. 416 food donations.
Q = Transition Quarter; change from June to September fiscal year
* = less than $100,000
I.M.E.T. = International Military Education and Training
UNRWA = United Nations Relief and Works Agency
Surplus = Surplus Property
Tech. Asst. = Technical Assistance
Narc. = International Narcotics Control
D. A. = Development Assistance
ESF = Economic Support Funds
P.L. 480 I = Public Law 480 (Food for Peace), Title I Loan
P.L. 480 II = Public Law 480 (Food for Peace), Title II Grant
P = Preliminary
CRS-39
Egypt: Background and U.S. Relations
Appendix. Historical Background
Egypt During the Colonial Era
Egypt’s relations with the West, including its current friendly relations with the United States, are
colored by a long history of foreign intervention in Egyptian politics, which has made Egypt,
along with other Arab states, wary of outside influences on their domestic affairs. In the 19th
century, Egypt was a semi-autonomous province in the Ottoman Empire, which by then was in
decline and being propped up by the British in order to serve as a buffer between it and Czarist
Russia. At the time, Egypt was viewed as extremely valuable to the British and French empires
and was prized for its agricultural output, large domestic market, and strategic location between
the Mediterranean and Red Seas. Most importantly, the British saw Egypt as vital to securing the
sea route to its most prized colony, India. Ottoman weakness led its Sultans to grant Europeans
certain legal protections and economic advantages in Egypt, which stifled the Egyptian economy
by flooding it with European manufactured goods, driving local merchants out of business.95
Over time, Egypt developed a “cash crop” economy based almost solely on the export of cotton,
the price of which constantly fluctuated, leaving the economy vulnerable and dependent on good
harvests. Without a strong, diverse economy, Egypt could not generate enough capital to fund its
modernization, leading it to become even more financially dependent on the West, as it rulers
borrowed huge sums from European banks. Six years after the completion of the Suez Canal in
1869, Egypt was forced to sell all of its shares in the Suez Canal Company, which operated the
Canal, in order to make payments on its foreign-owned debt. When Egypt could no longer pay its
debts, the British and French became directly involved in Egyptian politics—a trend that would
continue until the mid 20th century.96
The Constitutional Monarchy and the British
Britain unilaterally declared Egyptian independence in 1922, and for the next three decades,
political power in Egypt was contested among three main actors: the British, the Egyptian
monarchy, and the nationalist Wafd party, which was the driving force behind the Egyptian
independence movement after World War I. Thousands of British troops remained stationed near
the Suez Canal, and British officials served in the Egyptian ministries. Egypt’s king could appoint
a government and dismiss parliament, but ultimately relied on the British for support. The Wafd
party dominated parliamentary elections during Egypt’s experiment with parliamentary
democracy (1922-1952), though the Wafd gradually began to lose popularity to more radical
organizations, such as the Muslim Brotherhood.
95 Library of Congress, Federal Research Division, Egypt: A Country Study, accessible at http://lcweb2.loc.gov/frd/cs/
egtoc.html.
96 Napoleon invaded Egypt in 1798. The British invaded in 1882 and established a de facto protectorate. They would
keep a sizeable military force in Egypt until the 1950s.
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Egypt: Background and U.S. Relations
Nasser and Egypt During the Cold War
By the early 1950s, anti-British sentiment in Egypt had sparked civil unrest, allowing a cabal of
Egyptian Army officers, known as the Free Officers Movement, to oust the king in what is
referred to as the July 1952 revolution. The Free Officer Movement ushered in an era of military
involvement in Egyptian politics, as all of Egypt’s presidents in the post-revolutionary period
have been high-ranking officers. In the aftermath of the coup, Colonel Gamal Abdul Nasser, the
most charismatic of the Free Officers, succeeded in gaining total control over the government.
Nasser abolished the monarchy and outlawed the Muslim Brotherhood (1954), which at the time
was the only potential rival for power. Nasser would rule Egypt until his death in 1970.
During the Nasser era, Egypt found itself at the center of superpower competition for influence in
the Middle East. Wary of taking sides, Nasser managed, for a short period, to steer Egypt clear of
either the Soviet or Western “camp” and was instrumental in helping to establish the non-aligned
movement. U.S.-Egyptian relations soured when Nasser turned to the Soviets and the Czechs in
1955 for military training and equipment after the West, frustrated by Nasser’s repeated rejections
and his support of Algerian independence against the French, refused to provide Egypt with
defense assistance. A year later, following a U.S.-British decision to retract an offer of economic
assistance and help for the construction of the Aswan Dam, Nasser nationalized the Suez Canal
Company to use its revenues to finance the dam project. (Egypt owned the Suez Canal, but the
British-French company operated the Canal, and collected the revenues from which it paid a
small rent to Egypt.) In October 1956, Israel, France, and Britain invaded Egypt—Israel to stop
Palestinian guerrillas from using Egypt as a base for operations against Israel, and France and
Britain to occupy the Canal. President Eisenhower persuaded the three countries to withdraw
from Egypt in early 1957, which briefly improved U.S.-Egyptian relations.97
After the 1956 Suez War, Nasser’s popularity soared, as he came to embody Arab nationalism in
the post-colonial era. Nasser did not hesitate to brandish his newfound authority and developed a
muscular Egyptian foreign policy that attempted to destabilize pro-Western governments in
Jordan, Iraq, and Lebanon, support Palestinian guerrilla action against Israel, create a unified
Arab state by merging briefly with Syria (the United Arab Republic 1958-1961), and intervene
against the Saudi-backed royalists in the Yemeni civil war.98 However, Egypt’s defeat at the hands
of Israel in the June 1967 War and other setbacks temporarily deflated Nasser’s popularity and
crushed his ambitions to spread a pan-Arab ideology across the region.
On the domestic front, Nasser turned Egypt into a socialist dictatorship with absolute power in the
hands of the President. All banks and commercial firms were nationalized, large landowning
estates were broken up into much smaller parcels and held in a state trust, and all political parties
were banned. The precursor to the present National Democratic Party (NDP) was formed by
Nasser in 1962 and was called the Arab Socialist Union. It served as the Egyptian republic’s first
mass party and an extension of the ruling elite. Other movements, such as the Muslim
Brotherhood, were forced to go underground, as Nasser arrested thousands of Brotherhood
activists after a failed Brotherhood assassination attempt against him in 1954.99
97 M.E. Yapp, The Near East Since the First World War, London: Longman, 1991, p. 409.
98 During the Yemeni Civil War of 1963 through 1967, Egypt reportedly used mustard bombs in support of South
Yemen against Saudi-backed royalist troops in North Yemen. See Federation of American Scientists (FAS) Egypt
Special Weapons Guide, available online at http://www.fas.org/nuke/guide/egypt/index.html.
99 One of the Brotherhood activists arrested was Sayyid Qutb, a writer and former government official whose writings
(continued...)
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Egypt: Background and U.S. Relations
Egypt-Israeli Peace
After Nasser’s death in 1970, Vice President Anwar Sadat, one of the original Free Officers,
became President of Egypt. At the time, Egypt was humiliated by its defeat in the June 1967 War
and the ensuing loss of the Sinai Peninsula to Israel. In addition, military rebuilding expenditures
were absorbing nearly 25% of Egypt’s gross domestic product. Under these circumstances, Sadat
calculated that a military victory was needed to boost his own legitimacy and improve Egypt’s
position in any future negotiations with Israel. The October 1973 War, which initially took Israel
by surprise, was costly for both sides, but succeeded in boosting Sadat’s credibility with the
Egyptian people, enabling him to embark on a path which would ultimately sever Egypt’s ties to
the Soviet Union and bring it closer to the West.
In November 1973, Egypt and the United States restored diplomatic relations (which had been cut
off in 1967), and in December, the two countries participated in the Geneva peace conference.
U.S. Secretary of State Henry Kissinger’s shuttle diplomacy led to Egyptian-Israeli and Syrian-
Israeli disengagement agreements in 1974 and a second set of Egyptian-Israeli disengagements in
1975. The United States resumed economic aid to Egypt in 1975 after an eight-year hiatus.
The Camp David Agreement and 1979 Peace Treaty
On November 20, 1977, President Sadat made his historic visit to Israel, where he addressed the
Knesset (parliament). Sadat’s visit was symbolic as he became the first Arab leader to visit Israel,
thereby implicitly recognizing the Jewish state. Sadat believed that his initiative would jumpstart
the Arab-Israeli peace process, which had stalled.
In the late summer of 1978, Israeli and Egyptian leaders accepted an invitation from President
Carter to attend talks at Camp David, MD, intended to save what had been a faltering peace
process. After nearly two weeks of clandestine and exhausting negotiations, on September 17,
1978, Egypt and Israel, with the United States as a witness, signed two agreements, A Framework
for Peace in the Middle East and A Framework for the Conclusion of a Peace Treaty between
Egypt and Israel. The first “framework” called for an autonomous Palestinian entity in the West
Bank and Gaza Strip following an Israeli withdrawal. The latter agreement ultimately led to the
signing of the 1979 Israel-Egypt peace treaty. Israel maintained that the two agreements were not
linked, as it did not want to be obligated to grant self-determination to the Palestinians.
On March 26, 1979, President Sadat and Israeli Prime Minister Menachem Begin signed a peace
treaty,100 the first ever between Israel and an Arab country, in a ceremony at the White House.
Three days later, the Arab League voted to expel Egypt from it ranks. At the time, the rest of the
Arab world felt betrayed by Egypt for making a separate peace with Israel.
The 1979 Peace Treaty between Israel and Egypt ushered in the current era of U.S. financial
support for peace between Israel and her Arab neighbors. In two separate memoranda
(...continued)
provided a philosophical foundation for Islamic radicalism. Qutb spent years in prison and, after being briefly released
in 1964, was rearrested and hanged in 1966. See Daniel Benjamin & Steven Simon, The Age of Sacred Terror (New
York: Random House, 1966), p. 62.
100 A copy of the 1979 Egyptian-Israeli peace treaty is available online from MidEast Web Gateway at
http://www.mideastweb.org/egyptisraeltreaty.htm.
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Egypt: Background and U.S. Relations
accompanying the treaty, the United States outlined commitments to Israel and Egypt,
respectively. In its letter to Israel, the Carter Administration pledged to “endeavor to take into
account and will endeavor to be responsive to military and economic assistance requirements of
Israel.”101 In his letter to Egypt, former U.S. Secretary of Defense Harold Brown wrote that “the
United States is prepared to enter into an expanded security relationship with Egypt with regard
to the sales of military equipment and services and the financing of, at least a portion of those
sales.”102 Ultimately, the United States provided a total of $7.3 billion to both parties in 1979. The
Special International Security Assistance Act of 1979 (P.L. 96-35) provided both military and
economic grants to Israel and Egypt at a ratio of 3 to 2, respectively, though this ratio was not
enshrined in the treaty as Egypt would later claim.
For Egypt, U.S. funds helped to subsidize its defense budget and upgrade its aging Soviet
hardware. Egypt became the second-largest recipient of U.S. aid after 1979. The U.S. assistance
program in Egypt also helped modernize the country’s infrastructure, as U.S. economic assistance
was used to build Cairo’s sewer system, a telephone network, and thousands of schools and
medical facilities. The United States also helped organize the peacekeeping mission along the
Egyptian-Israeli border and the Multi-National Force and Observers (MFO), and still maintains a
rotating infantry task force as part of it.103
Egypt Under Mubarak
Sadat’s rule came to an abrupt end in 1981, when he was assassinated during a military parade in
Cairo by soldiers who also belonged to the Jamaah Islamiyah (Islamic Group) and Al Jihad, the
more radical offshoots of the Muslim Brotherhood. Hosni Mubarak, Sadat’s Vice President and
former commander of the Egyptian Air Force, immediately ascended to the presidency and has
remained in office to the present day. Under Mubarak, Egypt has continued to maintain good
relations with the United States, as evident in Egypt’s 1991 decision to join the allied coalition
against Saddam Hussein in Operation Desert Storm. The United States and Egypt began
conducting bi-annual joint military training exercises in 1983. U.S. and Egyptian armed forces
served together in Somalia in 1991, and were part of an international peacekeeping force in
Bosnia in the mid 1990s. Egypt now assembles the “Abrams” M-1 tank at a government facility
near Cairo (some components are shipped from the United States and other components are
manufactured in Egypt).
Following the path laid out by Sadat, Egypt has remained at peace with Israel, although critics
have characterized this as a “cold peace.” Mubarak has made a number of attempts to serve as a
broker for Israeli-Palestinian peace talks. During the Mubarak era, conflict between Egyptian
Islamists and the Egyptian authorities continued, culminating in a period (1992-1997) of violent
confrontations between Islamic militants and Egyptian police.
101 Memorandum of Agreement between the Governments of the United States of America and the State of Israel,
March 26, 1979. Available online at: http://www.mfa.gov.il/mfa/peace%20process/
guide%20to%20the%20peace%20process/us-israel%20memorandum%20of%20agreement.
102 Letter on United States Defense Assistance to Egypt, March 23, 1979. The Search for Peace in the Middle East,
Documents and Statements, 1967-79, Prepared for the House Committee on Foreign Affairs by the Congressional
Research Service, 1979.
103 The MFO is an independent (non-UN) peacekeeping mission, created as a result of the 1979 peace treaty. The
MFO’s expenses are funded in equal parts by Egypt, Israel, and the United States with additional contributions from
Germany, Japan, and Switzerland. For more information on the MFO, see http://www.mfo.org/Default.asp?bhcp=1.
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Egypt: Background and U.S. Relations
After the September 11, 2001, terrorist attacks and the ensuing U.S. focus on promoting
democracy in the Middle East, the Mubarak regime has come under increasing U.S. pressure to
accelerate political reforms and make Egypt more democratic. In an effort to control the reform
agenda without relinquishing their grip on power, Mubarak and the ruling National Democratic
Party (NDP) have instituted some political reforms, while emphasizing the need for economic
growth as a precondition for democratic change.
Author Contact Information
Jeremy M. Sharp
Specialist in Middle Eastern Affairs
jsharp@crs.loc.gov, 7-8687
Congressional Research Service
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