Egypt: Background and U.S. Relations
Jeremy M. Sharp
Specialist in Middle Eastern Affairs
March 3, 2015
Congressional Research Service
7-5700
www.crs.gov
RL33003

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Egypt: Background and U.S. Relations

Summary
This report provides an overview of the key issues for Congress related to Egypt and U.S. foreign
aid to Egypt.
The United States has provided significant military and economic assistance to Egypt since the
late 1970s. U.S. policy makers have routinely explained aid to Egypt as an investment in regional
stability, built primarily on long-running cooperation with the Egyptian military and on sustaining
the 1979 Egyptian-Israeli peace treaty.
U.S. policy makers are now debating complex questions about the future of U.S.-Egypt relations,
and these debates and events in Egypt are shaping consideration of appropriations and
authorization legislation in the 114th Congress.
Between 1948 and 2015, the United States provided Egypt with $76 billion in bilateral foreign aid
(calculated in historical dollars—not adjusted for inflation), including $1.3 billion a year in
military aid from 1987 to the present. This report discusses the conditions governing the release
of these funds. All U.S. foreign aid to Egypt (or any foreign recipient) is appropriated and
authorized by Congress. All U.S. military aid to Egypt finances the procurement of weapons
systems and services from U.S. defense contractors.
P.L. 113-235, the FY2015 Consolidated Appropriations Act, contains a number of provisions and
conditions on U.S. assistance to Egypt similar to what Congress included in the FY2014
appropriations act (P.L. 113-76) with one significant exception: Section 7041 (a)(6)(C) of the
FY2015 act authorizes the Secretary of State to provide assistance to Egypt, notwithstanding the
certification requirements specified both in the FY2015 Act and in the FY2014 Act, if the
Secretary determines that it is important to the national security interest of the United States to
provide such assistance. This determination-based waiver effectively provides for the removal of
limits imposed by Congress that prevented the provision of assistance to Egypt until democracy-
based conditions were met by the Egyptian government. As of February 2015, the Secretary of
State has not made a determination that would waive democracy-related certification
requirements and allow for the provision of assistance. Egypt plans to hold legislative elections in
March 2015.
For FY2016, the President has requested that Congress appropriate $1.3 billion in military
assistance for Egypt. The President also is asking Congress to provide $150 million in economic
aid, which would be the lowest amount of bilateral economic grant assistance given to Egypt
since 1978.


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Contents
U.S. Policy: How Important is Egypt? ............................................................................................ 1
Current Administration Policy ................................................................................................... 2
Weapons Suspension ........................................................................................................... 3
Domestic Politics ............................................................................................................................. 4
Silencing Dissent and Violating Human Rights ............................................................................... 6
Economy .......................................................................................................................................... 7
Terrorism and Insurgency in the Sinai Peninsula ............................................................................. 8
Foreign Relations ............................................................................................................................. 9
Israel and Hamas ....................................................................................................................... 9
Libya ........................................................................................................................................ 10
Russia ...................................................................................................................................... 11
U.S. Foreign Assistance to Egypt .................................................................................................. 11
Overview ................................................................................................................................. 11
Military Aid and Arms Sales ................................................................................................... 13
Overview ........................................................................................................................... 13
Special Military Assistance Benefits for Egypt ................................................................. 14
FMF to Egypt and Existing Defense Contracts ................................................................. 16
U.S.-Supplied Weapons Systems ...................................................................................... 17
Economic Aid .......................................................................................................................... 19
Overview ........................................................................................................................... 19
The Enterprise Fund .......................................................................................................... 21
Egypt and the FY2015 Consolidated Appropriations Act ....................................................... 22
Current Status of U.S. Aid ................................................................................................. 25
How Valuable is U.S. Aid to Egypt?........................................................................................ 25
Other Foreign Aid Considerations for Congress ..................................................................... 26

Figures
Figure 1. Egypt at a Glance ............................................................................................................. 4
Figure 2. GDP Growth ..................................................................................................................... 8
Figure 3. Islamic State Sinai Province ............................................................................................. 9
Figure 4. U.S. Assistance to Egypt, FY2011-FY2016 Request ..................................................... 13
Figure 5. The Military Aid “Pipeline” ........................................................................................... 16
Figure 6. The Egyptian-American Enterprise Fund ....................................................................... 22
Figure 7. U.S. Foreign Assistance to Egypt ................................................................................... 28

Tables
Table 1. U.S. Foreign Assistance to Egypt, 1946-1997 ................................................................. 29

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Egypt: Background and U.S. Relations

Contacts
Author Contact Information........................................................................................................... 31

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Egypt: Background and U.S. Relations

U.S. Policy: How Important is Egypt?
Historically, Egypt has been an important country for U.S. national security interests for reasons
attributed to its geography, demography, and diplomatic posture. From a geostrategic standpoint,
Egypt controls the Suez Canal, through which 8% of all global maritime shipping passes annually.
Moreover, Egypt expedites the passage of dozens of U.S. Naval vessels through the Canal, providing
a strategic benefit to U.S. forces deploying to the Mediterranean Sea or Persian Gulf/Indian Ocean
basin for time-sensitive operations.
Demographically, Egypt, with a population of 83 million, is by far the largest Arab country, and by
2030 its population may exceed 100 million people. Although it may not play the same type of
leading political or military role in the Arab world as it has in the past, Egypt still has significant
“soft power.” The Arab League is based in Cairo, as is Al Azhar University, which claims to be the
oldest university still functioning and has symbolic importance as a leading source of Islamic
scholarship. Additionally, Egypt’s 1979 peace treaty with Israel remains to this day one of the single
most significant diplomatic achievements for the promotion of Arab-Israeli peace. While people-to-
people relations remain cold overall, Israel and the military-backed Egyptian government that has
been in power since July 2013 have increased their cooperation in common cause against Islamist
militants and instability in the Sinai Peninsula and Gaza Strip.
And yet, some U.S. policymakers may view Egypt as less strategically important to U.S. national
security interests than in previous eras. In recent years, U.S.-Egyptian military cooperation has
lacked a signature cooperative endeavor. The last significant U.S.-Egyptian joint military operation
was in 1991, when Egypt contributed 20,000 troops to Operation Desert Storm.1 With the United
States continually engaged in military operations against terrorist groups across the broader Middle
East, the U.S. military seeks partners that can provide intelligence, training, and counter-insurgency
support. Analysts consider the Egyptian armed forces to be more oriented to fight interstate rather
than asymmetric warfare.
Moreover, although Israeli-Egyptian relations are strong, a lack of definitive resolution of the Arab-
Israeli conflict has contributed to Egypt playing a less prominent diplomatic role than it once did.
Although Egypt still actively serves as a broker between Palestinian factions and between Israel and
Hamas, this role garners it less global attention than it did during times of active peace negotiations.
The terrorist attacks of September 11, 2001 also may have profoundly and negatively impacted how
some U.S. policymakers view Egypt. Whereas the bilateral relationship had previously focused on
promoting regional peace and stability, the 9/11 attacks reoriented U.S. policy, as Americans
considered possible links between authoritarianism and terrorism. Egypt has been at the forefront of
this reorientation, as several prominent Egyptian terrorists helped form the original core of Al
Qaeda.2 The Egyptian government has largely rejected the idea that its authoritarian governance has
fostered transnational Islamist terrorism and has responded defensively to changes in U.S. policy
that have gradually increased calls for political reform in Egypt.

1 In Operation Enduring Freedom in Afghanistan, Egypt contributed a field hospital at Bagram.
2 The Egyptian national Mohamed Atta was one of the leaders of the 9/11 attacks and the Egyptian cleric Ayman al-
Zawahiri remains the head of Al Qaeda worldwide.
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Egypt’s role in the so-called Arab Spring of 2011 briefly elevated the country toward the top of the
U.S. foreign policy agenda, as officials tried to delicately navigate a transitional period that
witnessed an existential power struggle between Islamists and the military. After a two-and-a-half
year period of U.S. efforts to promote a democratic transition in Egypt, the return of authoritarian
rule that began with the military’s July 2013 takeover has left U.S. policymakers in a quandary.
President Obama and members of his administration continue to express the view that authoritarian
governance and the denial of basic human and political rights create atmospheres conducive to the
growth of violent extremism. Egypt’s government describes its Islamist adversaries as terrorists and
views U.S. attempts to dictate terms or impose conditions related to Egypt’s internal affairs as naïve,
malign or both. Instead, Egypt’s rulers have welcomed the support of like-minded Arab governments
in the Gulf region that view political Islam as an existential threat.
How Egypt’s military-backed government copes with terrorist attacks emanating from Libya and the
Sinai Peninsula may test its relationship with the United States in the months ahead. While U.S.
officials have been quick to condemn repeated terrorist attacks against Egypt and have stressed that
the United States respects the right of self-defense of all nations, the Obama Administration has
stressed that many conflicts across the region require political and not just military solutions. There
is some concern that while the United States has attempted to broker political solutions to the
multitude of conflicts across the region, Egypt’s counterterrorism response at home and in its near
abroad may be too heavy-handed and indiscriminate.
In the months and years ahead, lawmakers may reexamine Egypt’s relative importance in the region.
Some policy questions for Congress include:
• How stable is Egypt? Given the violent turmoil in Libya, Syria, Iraq, and Yemen,
what is the likelihood of prolonged civil strife in the Arab world’s most populous
country?
• Is Egypt inwardly oriented or does it seek to be a regional leader? What effects
might Egyptian action in Libya have on Egypt’s security?
• Is lasting stability in Egypt a realistic prospect? Will the reemergence of
authoritarianism increase the threat of transnational terrorism emanating from
Egypt?
• What level of U.S. government attention and resources should be devoted toward
Egypt?
Current Administration Policy
The Obama Administration has attempted to craft a policy toward Egypt that continues strong
military-to-military ties without condoning Egypt's crackdown against dissent. President Obama
remarked in a May 28, 2014 speech at the U.S. Military Academy at West Point that:
In Egypt, we acknowledge that our relationship is anchored in security interests—from the
peace treaty with Israel, to shared efforts against violent extremism. So we have not cut off
cooperation with the new government. But we can and will persistently press for the reforms
that the Egyptian people have demanded.3

3 Remarks of President Obama, Commencement Address, West Point, New York, May 28, 2014.
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The President’s 2015 National Security Strategy also alludes to this balance between principles and
interests, noting that “We will maintain strategic cooperation with Egypt to enable it to respond to
shared security threats, while broadening our partnership and encouraging progress toward
restoration of democratic institutions.”
Principles Versus Interests
For the United States, especially in the last few years, Egypt has presented serious challenges to U.S. policymakers
seeking to balance competing priorities. On the one hand, the Obama Administration would like to see Egypt move
toward a more democratic form of government and market-based economy in order to address the grievances of its
relatively young population. On the other hand, Egypt’s military, which has cultivated little in terms of democratic
practices and institutions since the end of Egypt’s monarchy in 1952, has and still remains the country’s primary political
actor, a reality that may benefit short-term U.S. national security interests but arguably hinders long-term hopes for
Egypt’s development and stability. If the United States fully embraces the military, it risks alienating those Egyptians who
espouse liberal democracy or an Islam-based system of governance. If the United States emphasizes democracy, Egypt’s
security apparatus typically turns against it, accusing American diplomats of, among other things, supporting the Muslim
Brotherhood, spreading neo-colonialism, and undermining Egypt’s stability.
With the Obama Administration preoccupied with Operation Inherent Resolve against the Islamic
State in Iraq and Syria and with ongoing nuclear negotiations with Iran, Egypt has been less of a
regional priority for the U.S. government. As Egypt continues to crackdown against all forms of
dissent, the Obama Administration and the Egyptian government have competing narratives of how
best to secure Egypt’s stability.
Weapons Suspension
In October 2013, the Administration announced that it would withhold the delivery of certain large-
scale military systems (such as F-16s, Apache helicopters, Harpoon missiles, and M1A1 tanks) to
the Egyptian government pending credible progress toward democracy. As of February 2015, the
Administration has continued to suspend the deliveries of F-16s, M1A1s, and Harpoon missiles.
Apache helicopters were delivered to Egypt in December 2014.
Recently, in response to terrorist attacks directed against Egypt and the ongoing nuclear negotiations
with Iran, some lawmakers and commentators have called on the Administration to end its weapons
suspension. In February 2015, Representative Kay Granger, Chairwoman of the House
Appropriations Subcommittee on State, Foreign Operations, and Related Programs, wrote to
President Obama stating that “They [the Egyptians] need these planes and other weapons
immediately to continue the fight against ISIL and other terrorists threatening Egypt’s security, but
your Administration has refused to use the authority Congress provided you in law to provide Egypt
these weapons.”4 On February 27, 2015, Columnist David Ignatius wrote that “A strong, U.S.-
backed Egypt can stiffen the backbone of the Sunni world and ease fears that Washington is forming
a new alliance with Iran. That's the best argument for helping Sisi - that he can help restore the
Sunni-Shiite balance on which regional stability depends, especially after a nuclear deal with Iran.”5

4 Letter to President Obama From Rep. Granger Regarding Weapons Deliveries to Egypt to Fight ISIL
Rep. Kay Granger, R-Texas, February 20, 2015.
5 “The U.S. is the ally Egypt needs,” Washington Post, February 27, 2015.
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Figure 1. Egypt at a Glance


Domestic Politics
When then-General and now President Abdel Fatah al Sisi assumed executive power in July 2013,
the period of fluidity that characterized Egyptian politics following the 2011 resignation of former
President Hosni Mubarak ended. Centralized authority is, once again, in the hands of a former
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military commander. Formally, Egypt is a republic, governed by a constitution6 that was approved in
a national referendum in January 2014. In June 2014, Sisi was elected president, garnering 96.91%
of the vote amidst a political atmosphere that the Obama Administration and some foreign observers
termed “restrictive.”7
For practical purposes, many analysts have characterized Sisi’s Egypt as the re-creation of an
authoritarian regime, in which the civilian government is a facade covering the real authority of the
military.8 Sisi’s proponents and critics all claim to have a popular mandate in support of either
stability or democracy. Nonetheless, whether it is due to government suppression of dissent,
widespread approval of the regime, or citizenry fatigue, popular protests are less common than they
were between 2011 and 2013. According to one report, “Politics in Egypt today is hardly dead, but it
is weak, circumscribed, and contained.”9
The Muslim Brotherhood, just a few years removed from its political ascendancy, once again finds
itself outlawed. Many of its leaders remain imprisoned, including former president Mohamed Morsi.
Egyptian authorities have formally designated it as a terrorist organization. The Brotherhood’s
political party, the Freedom and Justice Party, has been dissolved by court order. Many former
Brotherhood members are in exile, and the Egyptian government has accused the group of
fomenting violence, which it denies. According to one article in Foreign Affairs, “The Brotherhood's
stubbornness—even in the face of such severe setbacks—is not particularly surprising. Far from
being a ‘moderate’ or ‘pragmatic’ organization, as many optimistic analysts once described it, the
Brotherhood is a deeply ideological, closed vanguard.”10
For two-and-a-half years, Egypt has been without an elected parliament,11 and successive Egyptian
presidents have issued new laws by executive decree,12 including:
• The Protest Law (November 2013). This law replaced the state of emergency then
in effect. It bans public gatherings of more than 10 people without approval from
the police, which must receive prior notification of any planned gathering. Most
importantly, the law authorizes police to ban any protest deemed a threat to “public
order.”
• The Electoral Law (June 2014). This law creates a 567-seat Parliament, of which
420 seats are elected via the individual candidate system, 120 are elected by a party
list system, 13 and 27 are allocated via presidential appointment in order to increase

6 An unofficial English translation of the constitution is available here: [http://www.sis.gov.eg/Newvr/Dustor-en001.pdf]
7 The White House, Office of the Press Secretary, Statement by the Press Secretary on the Presidential Election in Egypt,
June 04, 2014.
8 “Egypt's Double Standard,” Washington Post, December 7, 2014.
9 Nathan J. Brown, Katie Bentivoglio, “Egypt’s Resurgent Authoritarianism: It’s a Way of Life,” Carnegie Endowment for
International Peace, October 9, 2014.
10 Eric Trager and Gavi Barnhard, “Brothers in Trouble? Gomaa Amin and the Future of the Muslim Brotherhood,”
Foreign Affairs, September 24, 2014
11 A court dissolved the lower house of parliament in June 2012, and the upper house was abolished after the enactment of
the 2014 constitution.
12 Article 156 of the 2014 constitution authorizes the president, in the event that the House of Representatives is not in
session, to issue decrees that have the force of law.
13 The electoral law also creates a winner-take-all system for party lists rather than a proportional vote system. In addition,
it stipulates that party lists must reserve seats for female, Christian, youth, disabled, and rural candidates.
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the representation of Coptic Christians and women. This law allows authorities to
disqualify any candidate who is deemed to support a religiously-based or
religiously-discriminatory organization, provisions directed against candidates from
the already outlawed Muslim Brotherhood.14
• The Anti-Terrorism Law (February 2015). This law authorizes the authorities to
act against groups or individuals deemed a threat to national security. The law
defines “terrorist entities” as groups or organizations that “through any means inside
or outside the country, seek to call for the disabling of laws, or prevent state
institutions or public authorities from functioning, or seek to attack the personal
liberty of citizens, or other freedoms and rights granted [to citizens] by the law and
constitution, or to harm national unity or social peace.”
The first round of Egypt’s 2015 Parliamentary elections had been scheduled to take place beginning
on March 22. However, on March 1, the Supreme Constitutional Court (SCC) ruled that certain
provisions in the Elections Constituency Division Law are unconstitutional, leading authorities to
delay parliamentary elections for at least several months until the law can be revised. With 420
members to be elected via the individual candidate system, many analysts expect that former ruling
elites will dominate the new parliament and follow the executive’s lead in lawmaking.15
Recent Violence in Egypt
Opponents of the government, whether they are offshoots or sympathizers of the Muslim Brotherhood, soccer fans
known as “Ultras,” disaffected youths, or terrorist groups, have been frequently targeting police officials, public spaces,
and the military—presumably to reduce public confidence in the state and sow panic. Although much anti-government
violence occurs in the Sinai Peninsula, it also happens in Cairo, Alexandria, and other cities. Explosive devices have been
found and disarmed at Cairo International Airport, and small improvised explosive devices (IEDs) have gone off in public
squares and at police checkpoints. One group, calling itself the Popular Resistance Movement in Giza, has attacked a
Cairo shopping mal and committed arson outside a Cairo branch of the Emirates National Bank of Dubai.16
Silencing Dissent and Violating Human Rights
President Sisi and the security apparatus’s reassertion of control over Egypt has been contentious;
many Egyptians and foreign observers have accused the government of committing serious abuses
of human rights against a broad spectrum of opponents, secular and Islamist alike. Sisi and his
supporters level similar charges against their Muslim Brotherhood predecessors. Moreover, the
ongoing crackdown against dissent may have come not only with a significant human cost, but also
at a significant cost to the country’s international reputation, particularly in the West, where many
observers had hoped that the 2011 uprising against Mubarak17 would change Egypt’s trajectory for
the better. Some notable incidents since Sisi took power include:
• Killings at al Nahda and Rabaa al Adawiya Squares: In August 2014, Human
Rights Watch published a report documenting how a year earlier, during the

14 “Egyptian Election Law Helps to Block Opposition,” New York Times, June 6, 2014.
15 The 2014 Egyptian constitution empowers the parliament with impeachment authority (Article 159) and the ability to
hold votes of no confidence against the government.
16 Jane’s Intelligence Weekly, February 6, 2015.
17 Former president Hosni Mubarak, age 86, remains held at a military hospital in a southern suburb of Cairo. In late 2014,
a Cairo Criminal Court dropped charges against Mubarak relating to the killing of protesters in January 2011. After four
years in prison, his two sons were released in early 2015.
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military’s overthrow of the Morsi government, police and army soldiers, on orders
from high level officials, fired live ammunition against peaceful demonstrators
encamped in several public squares, resulting in the killing of at least 1,150
demonstrators by Egyptian security forces, in what Human Rights Watch claims
“probably amounts to crimes against humanity.”18 The Egyptian military portrays
these events from an entirely different perspective, asserting that the encampments
were a threat to national security and that those who occupied them provoked
violence against police.
• Conviction of Three Al Jazeera Journalists: In June 2014, a Cairo criminal court
convicted three Al Jazeera journalists (Australian reporter Peter Greste, Egyptian-
Canadian bureau chief Mohamed Fahmy, and Egyptian producer Baher Mohamed)
of spreading false news and collaborating with the Muslim Brotherhood after the
overthrow of President Morsi in 2013. Their sentences of seven years in prison drew
international condemnation. Secretary of State John Kerry noted after their
conviction that “Today's verdicts fly in the face of the essential role of civil society,
a free press, and the real rule of law.”19 In early February 2015, Greste was released
and deported. Several weeks later, Fahmy and Mohamed were released from jail,
though the case against them is still pending. Reporters Without Borders ranks
Egypt as 158th out of 180 countries in its 2015 World Press Freedom Index.
• Mass Death Sentences: Since 2013, there have been several instances in which
Egyptian judges have sentenced hundreds of Muslim Brotherhood supporters to
death. In December 2014, a court sentenced 188 to death over the killing of 13
policemen in August 2013.20 Earlier in 2014, a judge issued two mass death
sentences in which a total of 1,212 people were sentenced. After a court review,
many but not all of these sentences were changed to life in prison.
Economy
Egypt’s economy and national budget are slowly stabilizing, due in large part to the financial
largesse of the Gulf Arab monarchies. Countries such as the United Arab Emirates, Kuwait, and
Saudi Arabia have injected billions of dollars into the economy and treasury, providing cash grants,
concessional loans, and fuel imports. Since the ouster of former president Morsi in July 2013, Gulf
states have provided government-to-government aid to Egypt of least $20 billion, with billions more
coming in the form of private sector investment.21 This assistance has bolstered the Sisi government
and given it the confidence to enact unpopular but fiscally prudent measures such as reducing fuel
subsidies by 30%. The International Monetary Fund (IMF) projects economic growth of 3.8% in
2015 and increases in growth toward 5% in the years ahead. The country has seen a rebound in
international tourism and increases in tax revenue collected, and has benefitted from the global drop
in oil prices.

18 See, “All According to Plan: The Rab’a Massacre and Mass Killings of Protesters in Egypt,” Human Rights Watch,
August 12, 2014.
19 U.S. State Department, “Conviction of Al Jazeera Journalists,” John Kerry, Secretary of State, June 23, 2014.
20 In early 2015, an Egyptian court upheld 183 of these death sentences.
21 The Economist Intelligence Unit, Egypt Country Report, January 28, 2015.
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Despite a falling budget deficit, Egypt’s fiscal
picture remains problematic. The deficit, which
Figure 2. GDP Growth
was 12.8% of GDP in 2014, has been
manageable only because of the massive
infusion of Gulf aid, which constituted 4% of
GDP in 2014. Government subsidies on food and
fuel consume nearly 43% of state revenue. The
deficit has been financed mostly by domestic
banks, and the government is eager for foreign
investors to buy Egyptian treasury bonds.
Foreign investors, for their part, seek assurances
that Egypt is headed in the right direction
economically and is politically stable. Egyptian
officials have attempted to persuade the
international community that Egypt is a safe
investment. President Sisi spoke in January 2015

at the World Economic Forum in Davos,
Source: Financial Times, January 28, 2015
Switzerland, where he told listeners that Egypt would streamline its bureaucracy and pass new
legislation to ease the way for foreign investment.22 Egypt also has embarked on major infrastructure
projects, such as an $8.5 billion expansion of the Suez Canal, a megaproject that is expected to triple
annual Suez Canal revenue.
At this time, the IMF has no plans to extend loans to Egypt. The IMF and Egypt have had extensive
talks over the past few years to reach a loan agreement, to no avail.23 The IMF has encouraged Egypt
to reduce subsidies and enact a more flexible currency rate, both of which Egypt has done to some
extent. Overall, Egypt still has considerably low foreign currency reserves of $15.3 billion (as of
December 2014). Reserves were over $36 billion before the 2011 uprising.
Terrorism and Insurgency in the Sinai Peninsula
One of the biggest concerns for Egyptian and regional stability over the past several years has been
the Sinai Peninsula, where a mix of radicalized indigenous Bedouin Arabs, foreign fighters, and
Palestinian militants from neighboring Gaza have reportedly formed terrorist cells24 and targeted
both Egypt and Israel. Egypt has declared a state of emergency in northern Sinai, where most of the
attacks take place. Recent major attacks include:

22 “Egypt Sisi says all in "Same Battle" against Terror,” BBC Monitoring Middle East, January 22, 2015.
23 See CRS archived report, Egypt and the IMF: Overview and Issues for Congress,
http://www.crs.gov/pages/Reports.aspx?PRODCODE=R43053&Source=search
24 On December 18, 2014, the U.S. State Department designated the Egyptian Ajnad Misr group as Specially Designated
Global Terrorists under Executive Order (E.O.) 13224. Ajnad Misr splintered from Ansar Bayt al Maqdis (ABM), another
designated (in April 2014) foreign terrorist organization (FTO) and Specially Designated Global Terrorist entity. In early
November 2014, Ansar Bayt al Maqdis declared its allegiance to the leader of the Islamic State organization and changed
its name to the Sinai Province (Wilayat Sinai) of the Islamic State (IS-SP).
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• In January 2015, terrorists belonging to
the Sinai Province, an affiliate of the
Figure 3. Islamic State Sinai Province
Islamic State, attacked a military base
Militants captured an M60 tank in October 2014.
and hotel in north Sinai, killing29 and
wounding at least 58.
• In October 2014, militants used suicide
vehicle bombs to attack an Egyptian
Army mechanized detachment at a
checkpoint near the town of Sheikh
Zuwayd in North Sinai. A total of 33
Egyptian soldiers were killed. For more
background on the Sinai insurgency, see

CRS Report IN10199, The Islamic State
Source: Jane’s Defence Weekly
in Egypt: Implications for U.S.-Egyptian
Relations, by Jeremy M. Sharp.
Many observers have questioned whether the Egyptian military is capable of effectively waging a
counter-insurgency campaign in the Sinai. The military claims that it is gaining ground against
militants by increasing the army’s troop presence, closing smuggling tunnels, and engaging the local
population. According to one Sinai Province militant, “about 1,000 of us have been killed and about
500 or 600 arrested.... There are far fewer weapons because tunnels have been destroyed. It is
difficult to move weapons.”25 However, many observers express greater interest in whether Egypt
offers Sinai residents economic and political support (such as investments in infrastructure,
payments to tribes, and employment opportunities), than in the nature and intensity of military might
Egypt demonstrates. As militants attempt to coopt or intimidate local tribesmen in the Sinai, most
conventional analytical wisdom holds that the Egyptian military will need to both provide security
and prosperity for the local population in order to counter their radicalization.
Foreign Relations
Israel and Hamas
Israeli-Egyptian relations have markedly improved since the 2013 ouster of former Egyptian
President Mohammed Morsi. Israel had been apprehensive about the long-term prospect of an
Islamist-governed Egypt, and while its relationship with Egypt’s military is not without challenges,
both sides maintain regular dialogue on defense and intelligence issues.
Israel and Egypt share a common adversary in the Palestinian terrorist group Hamas, which Egypt
accuses of aiding anti-government militants in the Sinai Peninsula. In the summer of 2014, during a
50-day conflict between Israel and Palestinian militants in Gaza (Israel code-named the conflict
Operation Protective Edge), Egypt served as an intermediary between Hamas and Israel, though it
was generally perceived as favoring Israel during repeated negotiations over a cease-fire. There was
some U.S. concern that Egypt’s animosity toward Islamists was actually weakening its influence as a
mediator. During the conflict, Secretary of State John Kerry showed openness to having Turkey and
Qatar play a mediating role during the conflict. U.S. officials may have perceived that those two

25 “Special Report: How Cairo is taking the fight to Sinai Militants,” Reuters, February 4, 2015.
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countries had greater leverage with Hamas than did Egypt since they were politically and/or
financially supporting Hamas.26
Since it deposed President Morsi in July 2013, Egypt’s military has attempted to more dramatically
curb weapons smuggling to Gaza-based militants. It repeatedly claims to have destroyed tunnels,
and in recent months it has taken the unprecedented step of largely dismantling the town of Rafah
along the Egypt-Gaza border. Egypt hopes to create a “buffer zone,” which it claims would
dramatically curb underground weapons smuggling to Hamas. To date, Egypt has razed 2,000 homes
near the border, though it plans to rebuild a “New Rafah” and relocate nearly thousands of people
further away from Gaza. Egypt also controls the Rafah border crossing into Gaza, the only non-
Israeli controlled entry way into the Strip, which it periodically closes due to the security situation.
Other areas of Israeli-Egyptian cooperation include:
• Energy: Egypt has been negotiating for the possible import of recently-discovered
offshore Israeli natural gas. Such imports could begin as soon as 2017. Before 2011,
Egypt had exported natural gas to Israel, but repeated sabotage of pipelines
traversing the Sinai Peninsula halted exports.
• Maintaining the 1979 Peace Treaty: The Israeli-Egyptian peace treaty limits the
number of soldiers that Egypt can deploy in the Sinai, subject to the parties’ ability
to negotiate changes to Egyptian deployments as circumstances necessitate. Egypt
and Israel mutually agree upon any short-term increase of Egypt’s military presence
in the Sinai. Both sides coordinate with the Multinational Force of Observers
(MFO), which monitors force deployments.
Libya
Terrorist violence emanating from Libya and directed against Egyptian citizens living and working
there has forced Egypt to militarily intervene in its neighbor’s civil war. On February 15, Islamists
allied with the Islamic State (IS) released a video in which 21 hostages, most of whom were
Egyptian Coptic Christians, were beheaded on a beach near the central Libyan town of Sirte. The
following morning, Egypt responded with air strikes against terrorist camps in Derna, another IS
stronghold in eastern Libya. Local civilians decried the strikes as indiscriminate and posted images
of dead children. The air strikes mark the first time that Egypt publicly acknowledged its
intervention in Libya, although Libyans have accused Egypt and the Arab Gulf States of militarily
supporting forces aligned with Qadhafi-era retired general Khalifah Haftar.27 In August 2014, there
was speculation that Emirati fighter jets using Egyptian bases had conducted air strikes in Libya
against militia positions around Tripoli's international airport.
On February 17, President Sisi called on the United Nations Security Council to lift its arms
embargo on the internationally-recognized government based in Tobruk (but not on the embargo
against Libya Dawn, the coalition at war with the government in Tobruk that includes some Libyan
Islamists). It is unclear how Western nations will respond to President Sisi’s appeal. There is some
concern that a unilateral Egyptian intervention, particularly using ground forces, may further

26 Secretary of State Kerry also publicly acknowledged Egypt’s role as a mediator, saying that “I want to commend the
Egyptians for their role in hosting the negotiations in Cairo and for continuing to work to reach agreement on a cease-fire.”
Statement on Today's Cease-fire Agreement, State Department Press Releases and Documents, August, 26 2014.
27 “No plan for Egyptian Military Action against Islamic State in Iraq, Syria,” Reuters, October 20, 2014.
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enflame the conflict. According to one retired Egyptian general, “The militants in Libya would see
Egyptian armed forces as an occupying power, and would retaliate in some way.”28 On February 20,
bomb attacks struck Qubbah, a town close to Derna and the home of the speaker of the Tobruk-based
House of Representatives, killing dozens of people.
The civil war in neighboring Libya has provided terrorist groups in Egypt with new sources of arms,
training areas, and new recruits, while endangering hundreds of thousands of Egyptian citizens
working in Libya and living along the two countries’ porous desert border. In July 2014, more than
20 Egyptian soldiers were killed in a terrorist attack emanating from Libya and weeks later,
President Sisi called for “a serious approach to meet the reality of events on the ground in Libya.”
President Sisi has called on the West to become more involved in Libya, saying that “We will need
the same measures happening in Iraq and Syria to be taken in Libya.” 29
Russia
Russia and Egypt are attempting to substantially improve bilateral relations. Presidents Sisi and
Putin have exchanged visits, and both sides have pledged to increased trade and military
cooperation. In February 2015, Russian President Vladimir Putin visited Egypt and pledged to help
it construct a nuclear power plant. President Sisi, in an interview with a Russian newspaper,
remarked that “in recent months special value has been attached to the position adopted by President
Putin, who supports Egypt in matters relating to the fight against terrorism and is aware of the real
situation in our country.”30
In September 2014, Russia announced that it had reached a preliminary $3.5 billion arms sale with
Egypt. There have been no additional details on this sale or who will be financing the deal.
U.S. Foreign Assistance to Egypt
Overview
Between 1948 and 2015, the United States provided Egypt with $76 billion in bilateral foreign aid
(calculated in historical dollars—not adjusted for inflation), including $1.3 billion a year in military
aid from 1987 to the present.
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 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.” In his letter to Egypt, former
U.S. Secretary of Defense Harold Brown wrote:

28 “Egypt calls for United Nations-backed Military Operation in Libya,” Washington Post, February 17, 2015.
29 “Egypt's Sisi calls on West to support Libya to avoid new Syria, Iraq,” Reuters, November 20. 2014.
30 “Russia's Putin in Cairo for talks with Egypt's Sisi,” BBC News, February 10, 2015.
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In the context of the peace treaty between Egypt and Israel, 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, subject to such
Congressional review and approvals as may be required.31
All U.S. foreign aid to Egypt (or any foreign recipient) is appropriated and authorized by Congress.
The 1979 Egypt-Israel Peace Treaty is a bilateral peace agreement between Egypt and Israel, and the
United States is not a legal party to the treaty. The treaty itself does not include any U.S. aid
obligations, and any assistance commitments to Israel and Egypt that could be potentially construed
in conjunction with the treaty were through ancillary documents or other communications and
were—by their express terms—subject to congressional approval (see above). However, as the peace
broker between Israel and Egypt, the United States has traditionally provided foreign aid to both
countries to ensure a regional balance of power and sustain security cooperation with both countries.
In some cases, an Administration may sign a bilateral “Memorandum of Understanding” (MOU)
with a foreign country pledging a specific amount of foreign aid to be provided over a selected time
period subject to the approval of Congress. In the Middle East, the United States has signed foreign
assistance MOUs with Israel (FY2009-FY2018) and Jordan (FY2015-FY2017). Currently, there is
no U.S.-Egyptian MOU specifying a specific amount of total U.S. aid pledged to Egypt over a
certain time period. In July 2007, the Bush Administration had announced, as a part of a larger arms
package to the region, that it would begin discussions with Egypt on a proposed $13 billion military
aid agreement over a 10-year period. Since Egypt was already receiving approximately $1.3 billion a
year in military assistance, the announcement represented no major change in U.S. aid policy toward
Egypt. Since then, no such bilateral MOU on U.S. military aid to Egypt has been reached either by
the Bush or Obama Administrations with the Egyptian government.
Congress typically specifies a precise allocation of most foreign assistance for Egypt in the foreign
operations appropriations bill. Egypt receives the bulk of foreign aid funds from three primary
accounts: Foreign Military Financing (FMF), Economic Support Funds (ESF), and International
Military Education and Training (IMET).32 The United States offers IMET training to Egyptian
officers in order to facilitate U.S.-Egyptian military cooperation over the long term.

31 See, Letter From the Secretary of Defense (Brown) to-the Egyptian Minister of Defense and War Production (Ali),
March 23, 1979, “United States Sales of Military Equipment and Services to Egypt.” 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.
32 Egypt also receives, though not consistently, relatively small sums from the Nonproliferation, Antiterrorism, Demining,
and Related Programs (NADR) account and the International Narcotics Control and Law Enforcement (INCLE) account.
NADR funds support counter-terrorism training through the Antiterrorism Assistance Program. INCLE funds support
police training and respect for human rights in law enforcement. The Administration typically requests these funds, but
they are not usually specifically earmarked for Egypt (or for most other countries) in legislation. After the passage of a
foreign operations appropriations bill, federal agencies such as the State Department and the U.S. Agency for International
Development (USAID) allocate funds to Egypt from these aid accounts. They then submit a country allocation report
(653a Report) to Congress for review.
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Figure 4. U.S. Assistance to Egypt, FY2011-FY2016 Request
(Regular and Supplemental Appropriations; Current Year $ in Millions)

Source: U.S. State Department.
Notes: In FY2013, the State Department allocated an additional $202 million in FY2013 ESF for an “Egypt Initiative,”
which was intended to support a loan guarantee program. Fol owing the President’s review of Egypt assistance in
summer 2013, the Administration made a decision to no longer pursue a loan guarantee. Programmatic decisions
about this funding are still being determined.
Military Aid and Arms Sales
Overview
Since the 1979 Israeli-Egyptian Peace Treaty, the United States has provided Egypt with large
amounts of military assistance. U.S. policy makers have routinely justified aid to Egypt as an
investment in regional stability, built primarily on long-running military cooperation and on
sustaining the treaty—principles that are supposed to be mutually reinforcing. Egypt has used U.S.
military aid through the FMF to (among other things) gradually replace its earlier Soviet-origin
equipment with U.S. defense systems.
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Frequently Asked Question: Is U.S. Military Aid Provided to Egypt as a Cash Transfer?
No. Al U.S. military aid to Egypt finances the procurement of weapons systems and services from U.S. defense
contractors.33 The United States provides military assistance to U.S. partners and allies to help them acquire U.S. military
equipment and training. Egypt is one of the main recipients of FMF, a program with a corresponding appropriations
account administered by the Department of State but implemented by the Department of Defense. FMF is a grant
program that enables governments to receive equipment and associated training from the U.S. government or to access
equipment directly through U.S. commercial channels.
Most countries receiving FMF general y purchase goods and services through government-to-government contracts, also
known as Foreign Military Sales (FMS). According to the Government Accountability Office, “under this procurement
channel, the U.S. government buys the desired item on behalf of the foreign country (Egypt), general y employing the
same criteria as if the item were being procured for the U.S. military.” The vast majority of what Egypt purchases from
the United States is conducted through the FMS program funded by FMF. Egypt uses little of its own national funds for
U.S. military equipment purchases.
Under Section 36(b) of the Arms Export Control Act (AECA), Congress must be formal y notified 30 calendar days
before the Administration can take the final steps to a government-to-government foreign military sale of major U.S.-
origin defense equipment valued at $14 million or more, defense articles or services valued at $50 million or more, or
design and construction services valued at $200 million or more. In practice, pre-notifications to congressional
committees of jurisdiction occur and proposed arms sales generally do not proceed to the public official notification
stage until issues of potential concern to key committees have been resolved.
Special Military Assistance Benefits for Egypt
In addition to substantial amounts of annual U.S. military assistance, Egypt has benefited from
certain aid provisions that have been available to only a few other countries. For example:
• Early Disbursal and Interest Bearing Account: Between FY2001 and FY2011,
Congress granted Egypt early disbursement of FMF funds (within 30 days of the
enactment of appropriations legislation) to an interest-bearing account at the Federal
Reserve Bank of New York.34 Interest accrued from the rapid disbursement of aid
has allowed Egypt to receive additional funding for the purchase of U.S.-origin
equipment. In FY2012, Congress began to condition the obligation of FMF,
requiring the Administration to certify certain conditions had been met before
releasing FMF funds, thereby eliminating their automatic early disbursal. However,

33 For the relevant legal authorities, see §604 of the Foreign Assistance Act as amended (22 U.S.C. 2354) and §503 of the
Foreign Assistance Act as amended (22 U.S.C. 2311).
34 By law, Egypt and Israel are permitted to earn interest on congressionally-appropriated Foreign Military Financing
(FMF). During the late 1990s, the Clinton Administration (especially the U.S. Defense Department) and the Egyptian
government sought to increase U.S. military aid to Egypt. One proposal had been to grant Egypt a benefit already enjoyed
by Israel—the use of an interest-bearing account in which unspent FMF funds can accumulate interest to be used for future
purchases. During Senate consideration of legislation to provide Egypt access to an interest-bearing account, Senator
Mitch McConnell remarked that “In the State Department briefing justifying the request, U.S. officials urged our support
because of Mubarak’s need to address the requirements of ‘his key constituents, the military.’ Frankly, I think Mr.
Mubarak needs to worry less about satisfying the military and spend more time and effort shoring up democratic
institutions and civic society.” See, Congressional Record-Senate, S5508, June 21, 2000. In October 2000, Congress
passed P.L. 106-280, the Security Assistance Act of 2000, which authorized FY2001 FMF funds for Egypt to be disbursed
to an interest-bearing account in the Federal Reserve Bank of New York. The law required that none of the interest accrued
by such account should be obligated unless first notified to relevant congressional appropriations and oversight
committees. In November 2000, Congress passed P.L. 106-429, the FY2001 Foreign Operations Appropriations Act,
which included an interest-bearing account for Egypt in appropriations legislation. Since then, this provision has remained
in annual appropriations legislation, most recently in P.L. 112-74, the Consolidated Appropriations Act, 2012.
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Congress has permitted Egypt to continue to earn interest on FMF funds already
deposited in the Federal Reserve Bank of New York.
• Cash Flow Financing: Section 23 of the Arms Export Control Act (22 U.S.C.
§276335) authorizes the President to finance the “procurement of defense articles,
defense services, and design and construction services by friendly foreign countries
and international organizations, on such terms and conditions as he may determine
consistent with the requirements of this section.” Successive Administrations have
used this authority to permit Israel and Egypt to set aside almost all FMF funds for
current year payments only, rather than set aside the full amount needed to meet the
full cost of multi-year purchases.36 Known as “cash flow financing,” this benefit
enables Egypt to negotiate major arms purchases with U.S. defense suppliers and
acquire defense systems with payments scheduled over a longer time horizon. In
recent years, as public scrutiny over U.S. military aid to Egypt has increased, some
observers have criticized the provision of cash flow financing to Egypt. Critics
argue that the financing of expensive conventional weapons systems is based on an
assumption of future appropriations from Congress. If Congress were to alter its
approach to Egypt and possibly cut or rescind military aid, future payments to U.S.
defense contractors could be in question. According to Senator Patrick Leahy, then
chairman of the Senate Appropriations Subcommittee on the Department of State,
Foreign Operations, and Related Programs, “It has gotten us into a situation where
we are mortgaged years into the future for expensive equipment.... It is not a
sensible way to carry out U.S. policy toward a country of such importance, where
circumstances have changed, our interests and needs change, our budget is under
stress, and yet we’ve been stuck on autopilot for more than 25 years.”37

35 Section 23(g)(1) of the AECA requires congressional notification of Letters of Offer and Acceptance (LOAs),
Amendments, and commercial contracts for $100 million or greater that are partially or totally funded with cash flow
financing.
36 In the past, other countries such as Greece, Portugal, and Turkey have been granted the benefit of cash flow financing
but only for specific purchases, such as F-16 aircraft. See, General Accounting Office, “Military Sales, Cash Flow
Financing, Report #GAO/NSIAD-94-102R, February 8, 1994.
37 “In Debate over Military Aid to Egypt, Contractual Issues loom large for U.S.,” New York Times, July 25, 2013.
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Figure 5. The Military Aid “Pipeline”

Source: Information from Defense Security Cooperation Agency. Graphic created by CRS.
FMF to Egypt and Existing Defense Contracts
In recent years, as some critics have become increasingly vocal in demanding an end to U.S. military
aid to Egypt, many observers have questioned what would happen to existing U.S. contracts if U.S.
military aid is cut, suspended, or rescinded, or if Egypt terminates a contract.
Within the U.S.-held Foreign Military Sales trust fund account for Egypt (see above), a specific
amount of money is held in reserve to pay to the U.S. contractor if Egypt terminates a contract early.
This is called the termination liability reserve or management reserve. The actual amount in the
account fluctuates depending upon the dollar value and life of each contract, but at any given time
the usual approximate value of the reserve can reach several hundred million dollars.
If Congress cuts, suspends, or rescinds FMF to Egypt, then due to the fact that Egypt is granted cash
flow financing and can stretch payments for defense equipment over several years, a funding
shortfall on existing U.S. defense contracts may occur. In that event, the Egyptian government could
pay the shortfall from its own national funds. There are clauses in foreign military sales contracts
that stipulate that Egypt must accept responsibility for the cost of purchased defense systems even if
it no longer receives FMF grants. However, if Egypt does not make up the shortfall and payments to
U.S. companies are not made, then the U.S. government may be liable and forced to pay contractors
termination liability fees. According to another observer, “Although Washington could pay the
contractors from existing funds in the Fed [FMF] account, assume the contracts, take possession of
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the equipment, or even sell it to other countries via direct Foreign Military Sales, these options are
not optimal.”38
U.S.-Supplied Weapons Systems
FMF aid to Egypt is divided into three general categories: (1) acquisitions of new equipment, (2)
upgrades to existing equipment, and (3) follow-on support/maintenance contracts. According to the
Egyptian Defense Office (a branch of the Egyptian military) in Washington, DC, 39% of FMF is
allocated for upgrades to existing weapons systems, 34% of FMF is allocated for follow-on support,
and 27% is used for acquisitions. Egypt also receives Excess Defense Articles (EDA) from the U.S.
Defense Department.39 Gauging the financial benefit of U.S. aid for Egypt’s defense procurement
needs is difficult due to the lack of verifiable figures on total Egyptian military spending. Moreover,
some observers suggest that the military uses its “own off-budget revenue from their vast economic
enterprises to buy arms from other suppliers in Europe and Asia.”40 According to the International
Institute for Strategic Studies (IISS), in 2013 Egypt’s total defense budget was approximately $5.28
billion.41 Based on this estimate, annual FMF grants to Egypt would account for about 24.5% of
Egypt’s total defense spending.
One perennial problem for the Egyptian military is the lack of funding dedicated to maintaining
existing equipment procured from the United States. According to the Defense Department, Egypt
has usually set aside 30% of annual FMF grants for follow-on-support. U.S. military planners
recommend a much higher allocation of funds, totaling 50% of Egypt’s annual FMF ($650 million)
appropriation.
Over the years, the United States has provided the Egyptian military with several major weapons
systems. Since 1980, under the Peace Vector Foreign Military Sales Program, Egypt has acquired
over 224 F-16s. It is the fourth-largest operator of the F-16 after the United States, Israel, and
Turkey. U.S.-Egyptian coproduction of the M1A1 Abrams Battle tank, which began in 1988, is one
of the cornerstones of U.S. military assistance to Egypt.42 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.43 To date, 1,087 M1A1 tanks have been coproduced.

38 David Schenker, “Inside the Complex World of U.S. Military Assistance to Egypt,” The Washington Institute,
PolicyWatch 2130, September 4, 2013.
39 According to the Defense Department, Egypt has used EDA sales and grant transfers to acquire two PERRY class and
two KNOX frigates, numerous HAWK missiles and parts, mine rakes, helicopter spare parts,E-2C aircraft and support,
AN/TSM96 Chaparral shop vans, MIM-72G Chaparral missiles, an F-16 Advanced Avionics Intermediate Shop (test
station), assorted armored vehicles (M60 tanks and M113 APCs) and various types of munitions.
40 “US Military Aid to Egypt Lost Value,” Jadaliyya.com, July 25, 2013.
41 The International Institute for Strategic Studies, The Military Balance 2014, Routledge, February 2014.
42 On November 1, 1988, the United States and Egypt signed in Cairo a Memorandum of Understanding “Relating to the
Co-Production of the M1A1 Tank in Egypt.”
43 Congress was notified in July 2011 of a potential M1A1 agreement. The notification is listed here: http://www.dsca.mil/
PressReleases/36-b/2011/Egypt_10-67.pdf
Congress did not object to the sale, and an M1A1 contract was finalized thereafter. The following is information on the
contract from the Department of Defense: General Dynamics [GD] Land Systems has received a $395 million contract for
work under the Egyptian tank co-production program. The contract, issued by the Army TACOM Lifecycle Management
Command, has awarded the funds for production of 125 M1A1 Abrams tank kits for the 11th increment of the Egyptian co-
production program. Since 1992, General Dynamics has provided components for kits used in the co-production program.
(continued...)
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Egypt also has acquired 45 AH-64D Block II Apache Longbow helicopters from Boeing using FMF
funds. By law, the Administration is required to report to Congress on its policy of ensuring that
sales of U.S. defense equipment to friendly states in the Middle East, including Egypt, is not
undermining Israel’s “qualitative military edge” (QME) over neighboring militaries. Further
discussion of this subject is available in CRS Report RL33222, U.S. Foreign Aid to Israel, by
Jeremy M. Sharp.
The Defense Security Cooperation Agency (DSCA) issues Major Arms Sales notifications to
Congress. After 2011, DSCA has notified Congress of one Major Arms Sale to Egypt.44
The following is a list of some recent Foreign Military Sales (FMS) contracts that include Egypt.
Each entry lists the prime contractor and its location, the contracting number, and the
equipment/service being purchased.
• Hellfire Systems LLC, Orlando, Florida, was awarded a $144,044,911 modification
(P00143) to foreign military sales contract W31P4Q-11-C-0242 (Saudi Arabia,
Qatar, Jordan, Iraq, Egypt, Australia) to exercise option for FY 14 Hellfire II Missile
production requirement consisting of 2,060 Hellfire II tactical missiles in containers,
Air-to Ground (AGM) missiles model AGM-114R, AGM-114R-3, AGM-114P-4A,
ATM-114Q-6 and AGM-114R-5. Fiscal 2014/2015 other procurement funds in the
amount of $144,044,911 were obligated at the time of the award. Estimated
completion date is Nov. 30, 2016. Work will be performed Orlando, Florida. Army
Contracting Command, Redstone Arsenal, Alabama, is the contracting activity.45
• United Technologies Corp. doing business as Pratt & Whitney, East Hartford,
Connecticut, has been awarded an estimated $16,663,785 for the second option to
previously awarded requirements for firm-fixed-price contract FA8121-10-D-0008.
Contractor will provide remanufacture of FI00-PW-I 00/200/220/220E/229 engine
modules. Work will be performed at Columbus, Georgia, and is expected to be
complete by April 22, 2015. This contract is 100 percent foreign military sales for
Chile, Egypt, Jordan, Thailand, Taiwan, Greece and Indonesia. This award is the
result of a sole source acquisition and one offer was received. Air Force Space
Command, Tinker Air Force Base, Oklahoma, is the contracting activity.46
• BAE Systems Information and Electronic Systems Integration Inc., Nashua, New
Hampshire, has been awarded a $221,000,000 indefinite-delivery/indefinite-quantity
contract for F-16 support equipment and related services. Work will be performed at
Nashua, New Hampshire and Ft. Worth, Texas, and is expected to be complete by
Feb. 4, 2020. This award is the result of a sole-source acquisition and is 100-percent
foreign military sales to multiple countries including Morocco, Egypt, Oman,

(...continued)
The parts are shipped to a production facility near Cairo, Egypt, where the tanks are manufactured for the Egyptian Land
Forces. This latest increment will increase the number of Egyptian co-production-built tanks to 1,130. Work on the
components is to be performed in Anniston, AL; Tallahassee, FL; Sterling Heights, MI; Lima, OH; and Scranton, PA, by
existing General Dynamics employees. Deliveries are to begin in July 2013 and continue to January 2016.
44 This notification was for a $69 million contract to DynCorp for personnel support services in support of 140 U.S
Government and contractor representatives in Egypt. See, http://www.dsca.mil/major-arms-sales/egypt-personnel-support-
services
45 Contracts for February 24, 2015, Department of Defense Documents.
46 Contracts for February 13, 2015, Department of Defense Documents.
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Pakistan, Indonesia and Portugal. Air Force Life Cycle Management Center, Hill Air
Force Base, Utah, is the contracting activity (FA8232-15-D-0001).47
Economic Aid
Overview
Although Egypt still receives economic assistance from the Economic Support Fund (ESF), the
nature of U.S. support has changed significantly over the years. In the early to mid-1970s, as the
United States sought to expand its relationship with Egypt, encourage peace with Israel, and promote
a capitalist economy, U.S. loans and grant aid helped Egypt modernize its national infrastructure.48
When Egypt made peace with Israel and subsequently became politically and economically isolated
from the rest of the Arab world, a large-scale U.S. assistance program helped offset the losses from
Egypt’s diplomatic isolation while building Cairo’s sewer system, a telecommunications network,
and thousands of schools and medical facilities.49
However, beginning in the mid to late 1990s, as Egypt moved from an impoverished country to a
lower-middle income economy, the United States and Egypt began to rethink the assistance
relationship, emphasizing “trade not aid.” In 1994, then Vice President Al Gore and former Egyptian
President Hosni Mubarak formed the U.S.-Egypt Partnership for Economic Growth, a bilateral
forum designed ultimately to boost the Egyptian private sector and promote U.S.-Egyptian trade.
The Egyptian government had hoped that high-level U.S. attention on bilateral economic issues
would ultimately lead to a possible Free Trade Agreement (FTA) with the United States.50 However,
as bilateral relations somewhat soured during the Bush Administration, an array of political and
economic U.S. concerns (e.g., Egypt’s poor human rights record, lack of protection for intellectual
property) hampered any momentum for a U.S.-Egypt FTA.51

47 Contracts for February 9, 2015, Department of Defense Documents.
48 In the late 1970s, U.S. aid to Egypt was substantial when compared to both the size of the Egyptian economy and the
government’s budget. According to former U.S. Ambassador to Egypt Edward S. Walker Jr., “In terms of Egypt’s non-
recurring expenditures in 1979, that is excluding salaries and so forth, the AID infusion was equal to about two thirds of
Egypt’s discretionary budget at that time. Today the program hardly makes the chart.” See, Statement by Ambassador
Edward S. Walker, Jr. President, Middle East Institute, “U.S. Economic Aid To Egypt,” Committee on House International
Relations, June 17, 2004.
49 In 1978, the United States and Egypt signed a bilateral Economic, Technical, and Related Assistance Agreement, which
states in clause one that “the furnishing of such assistance shall be applicable to United States laws and regulations. It shall
be made available in accordance with arrangements agreed upon between the above-mentioned representatives.” See,
Agreement between the United States of America and Egypt, signed at Cairo, August 16, 1978, Treaties in Force, U.S.
State Department, Office of the Legal Adviser, 9481.
50 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.
51 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. Egypt did not enter the QIZ program until 2004,
seven years after the offer was formally extended by Congress. In March 2013, nearly a decade after Egypt entered the
QIZ program, the USTR announced an expansion of the QIZ program (a) to include two new QIZ areas.
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In Congress, lawmakers began to scale back
U.S. Funding for Democracy Promotion
economic aid both to Egypt and Israel due to a
10-year agreement reached between the United
U.S. funding for democracy promotion activities and good
governance has been a source of acrimony between the
States and Israel in the late 1990s known as the
United States and Egypt for years. Though the two
“Glide Path Agreement.” In January 1998,
governments have held numerous consultations over the
Israeli officials, sensing that their economic
years regarding what Cairo might view as acceptable U.S.-
growth had obviated the need for that type of
funded activities in the democracy and governance sector,
U.S. aid at a time when Congress sought to
it appears that the sides have not reached consensus.
Using the appropriations process, Congress has acted to
reduce foreign assistance expenditures,
ensure that “democracy and governance activities shall not
negotiated with the United States to reduce
be subject to the prior approval by the government of any
economic aid and increase military aid over a
foreign country.”52
10-year period. A 3:2 ratio that long prevailed
The FY2015 Consolidated Appropriations Act also
in the overall levels of U.S. aid to Israel and
contains several provisions on U.S. democracy assistance,
Egypt was applied to the reduction in economic
including Section 7041(a)(C)(i) which mandates that the
aid ($60 million reduction for Israel and $40
Secretary of State withhold an amount of ESF to Egypt
determined to be equivalent to that expended by the
million reduction for Egypt), but Egypt did not
United States Government for bail, and by
receive an increase in military assistance. Thus,
nongovernmental organizations for legal and court fees,
Congress reduced ESF aid to Egypt from $815
associated with democracy related trials in Egypt until the
million in FY1998 to $411 million in FY2008.
Secretary certifies that Egypt has dismissed the convictions
issued by the Cairo Criminal Court on June 4, 2013,
The Bush Administration, whose relations with
In 2014, the Egyptian government mandated, per law 84 of
then-President Hosni Mubarak suffered over the
2002, that al civil society groups must register with the
latter’s reaction to the Administration’s
Ministry of Social Solidarity. Article 78 of the Egyptian
penal code also was amended to mandate life
democracy agenda in the Arab world, then
imprisonment for anyone who receives funds from foreign
requested that Congress cut ESF aid by half in
entities in the context of counterterrorism; though
FY2009 to $200 million. Congress appropriated
democracy activists fear that this amendment will be used
the President’s request. Upon taking office in
to silence dissent.53
2009, President Obama sought a $50 million
increase in economic aid to Egypt for FY2010, which Congress then passed. From FY2010 to
FY2013, Congress appropriated ESF to Egypt at the $250 million Administration-requested level. In
FY2014 and FY 2015, Congress provided up to $200 million and $150 million respectively in ESF
to Egypt, of which not less than $35 million was specified for higher education programs and
scholarships.
The FY2016 Administration request seeks to maintain ESF at the $150 million level. Presently, there
is no bilateral agreement between the United States and Egypt on overall levels of economic
assistance. U.S. economic aid to Egypt is divided into two components: (1) USAID-managed
programs (public health, education,54 economic development, democracy and governance); and (2)

52 Originally referred to as the Brownback amendment, this legislative language began in reference to Egypt, but was
expanded in FY2008 to include “any foreign country.” See, P.L. 110-161. This provision has been retained in Section 7032
of P.L. 113-235, the FY2015 Consolidated Appropriations Act.
53 “Egyptian Activists fear new Penalties for Foreign Funding, Al Monitor, October 10, 2014.
54 USAIDs Higher Education Initiative (HEI) has received the most programmatic ESF assistance from USAID for Egypt
since 2011. According to USAID, the HEI provides funding for “scholarships to Egyptian women for Master of Business
Administration degrees in the United States; 2) scholarships to Egyptian women for Bachelor’s degrees in the United
States in the fields of science, technology, engineering and math; 3) Fulbright scholarships to disadvantaged youth for
Master’s degrees in the United States, through a transfer to the Department of State’s Bureau of Educational and Cultural
Affairs; 4) scholarships to Egyptian civil servants for Master’s degrees in the United States; and 5) scholarships to
economically disadvantaged men and women to pursue Bachelor’s degrees at select, high-quality Egyptian public and
private universities that provide instruction in English. The HEI will also fund partnerships between Egyptian and U.S.
(continued...)
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the U.S.-Egyptian Enterprise Fund. The $150 million FY2016 request is the eighth-largest bilateral
ESF request to Congress behind Afghanistan, Pakistan, West Bank/Gaza, Jordan, South Sudan,
Ukraine, and Syrian opposition.
The Enterprise Fund
In late 2011, when Congress passed P.L. 112-74, the Consolidated Appropriations Act, 2012, it
authorized the creation of an Enterprise fund for Egypt, Jordan, and Tunisia.55 The goal of such a
fund is to further develop Egypt’s private sector, particularly in the agricultural sector, by making
equity investments in small to medium-sized businesses or providing entrepreneurs with start-up
loans and technical assistance. In 2012, The Egyptian-American Enterprise Fund (EAEF) was
formally incorporated in Delaware and in November 2012, the State Department notified Congress
of its intent to obligate $60 million in FY2012 ESF aid to capitalize the fund. A second notification
of an additional $60 million obligation in ESF was notified to Congress in October 2013. The fund
is chaired by fund manager James A. Harmon.56 According to one report, “Harmon developed a plan
to buy control of a financial institution in Egypt that could get financing from the Ex-Im Bank and
dozens of other institutions around the world—leveraging the U.S. commitment of $60 million
annually over five years to produce a much bigger lending operation.”57
However, since the fund was formally launched during the rule of the former Morsi administration,
some Members of Congress were concerned about plans to expand U.S.-Egyptian economic
cooperation. In the fall of 2012, then Chairwoman of the House Foreign Affairs Committee
Representative Ileana Ros-Lehtinen placed an informal hold on the initial $60 million ESF
obligation (it was eventually lifted). In 2013, after the military’s ouster of Morsi, Senator Lindsey
Graham placed a hold on the second obligation of $60 million in ESF, with a spokesman for the
Senator saying “Senator Graham has placed a hold on these funds and until he sees Egypt moving
toward democracy, he will continue to restrict funding.... Additionally, he believes American
taxpayers deserve a much clearer explanation of what exactly is President Obama’s policy toward

(...continued)
universities.” Implementing partners for the HEI are: World Learning, Inc., American University in Cairo (AUC), Institute
of International Education (IIE), Bi-national Fulbright Commission. See Congressional Notification #101, May 2, 2014,
USAID Country Narrative, Egypt.
55 See Section 7041(b) of the act that states: “Up to $60,000,000 of funds appropriated under the heading ‘Economic
Support Fund’ in this Act and prior acts making appropriations for the Department of State, foreign operations, and related
programs (and including previously obligated funds), that are available for assistance for Egypt, up to $20,000,000 of such
funds that are available for assistance for Tunisia, and up to $60,000,000 of such funds that are available for assistance for
Jordan, respectively, may be made available notwithstanding any other provision of law, to establish and operate one or
more enterprise funds for Egypt, Tunisia, and Jordan, respectively.” The law also states that “each fund shall be governed
by a Board of Directors comprised of six private United States citizens and three private citizens of each country,
respectively, who have had international business careers and demonstrated expertise in international and emerging
markets investment activities.... The authority of any such fund or funds to provide assistance shall cease to be effective on
December 31, 2022.” Section 7034(r) of P.L. 113-235, the FY2015 Consolidated Appropriations Act authorized FY2015
ESF funds to operate the enterprise fund for Egypt (and Tunisia).
56 The fund’s board of directors includes: Sherif Kamel, Dean of the School of Business at the American University in
Cairo (AUC), Hani Sari-El Din, head of the Middle East Institute for Law and Development (MIDL), Neveen El-Tahri,
Regional Director of Delta Shield for Investments, Jim Owens, the Chairman of the Board of Directors of Caterpillar Inc.,
Haytham Al-Nather, Head of TA Stock Investment Corporation, Tarek Abdul Majid, Chairman of the international
investment banking sector at Morgan Stanley, and Dina Powell, President of the Goldman Sachs Foundation. See,
http://www.wamda.com/2013/05/egyptian-american-enterprise-fund-launches-to-support-egyptian-startups
57 David Ignatius, “An Egyptian Aid Package, Stuck in a D.C. Labyrinth,” Washington Post, July 19, 2013.
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Egypt.”58 Senator Graham lifted his hold in early December 2013 just as a draft copy of Egypt’s
amended constitution was made public in preparation for a national referendum on its adoption.
In February 2015, the Government Accountability Office (GAO) released a report on the status of
the Egyptian and Tunisian Enterprise Funds. The report found that:
“The Egyptian-American Enterprise Fund (EAEF) has not yet made any investments in
Egypt.... EAEF has not made any investments in Egypt as its initial investment did not proceed
as planned. EAEF’s attempt to purchase a bank in Egypt that would lend money to small and
medium-sized enterprises (SME) was rejected by the Egyptian Central Bank.”59
Figure 6. The Egyptian-American Enterprise Fund

Source: Government Accountability Office, GAO-15-196
Egypt and the FY2015 Consolidated Appropriations Act
P.L. 113-235, the FY2015 Consolidated Appropriations Act, contains a number of provisions and
conditions on U.S. assistance to Egypt similar to what Congress included in FY2014 (P.L. 113-76)
with one significant exception: Section 7041(a)(6)(C) authorizes the Secretary of State to provide
assistance to Egypt, notwithstanding the certification requirements specified both in the FY2015
Act60 and in the FY2014 Act,61 if the Secretary determines that it is important to the national security
interest of the United States to provide such assistance. As of February 2015, the Secretary of State
has not made a determination.

58 “U.S. Aid to Egypt Stuck in Limbo,” CQ News, October 28, 2013.
59 Government Accountability Office, GAO-15-196, February 2015.
60 These requirements are specified in Section 7041(a)(6)(A) and include, among other things, that the Secretary of State
certify that Egypt has taken steps to advance the democratic process, protect free speech, protect the rights of women and
religious minorities, and release American citizens who are determined to be political prisoners before specific sums (two
tranches of $725.85 million) of economic and military assistance are obligated.
61 The certifications requirements in the FY2014 Act, among other things, required that the Secretary of State certifies that
Egypt has held a constitutional referendum, is taking steps to support a democratic transition, has held parliamentary and
presidential elections, and is taking steps to govern democratically.
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The FY2015 Act provides $1.3 billion in FMF and $150 million in ESF. Like the FY2014 Act, it
requires, among other things, that:
• FY2015 funds may only be made available if the Secretary of State certifies that
Egypt is sustaining the strategic relationship with the United States and is meeting
its obligations under the 1979 Egypt-Israel Peace Treaty.
• FY2015 funds are provided to Egypt “notwithstanding any other provision of law,”
an exemption that would allow aid to continue despite Section 7008 of 113-235,
which prohibits foreign assistance to a country whose elected head of government is
deposed by military coup d'etat or decree.
• For FY2015, if the Secretary of State either cannot certify the conditions mentioned
in the Act or if the Secretary chooses not use the national security waiver, then
military aid may be made available at the minimum rate necessary to continue
existing contracts, except that defense articles and services from such contracts shall
not be delivered until the certification requirements are met.
• FY2015 funds may be made available without certification (and if the Secretary of
State determines62 it is in the interest of U.S. national security) provided that they
are used for counterterrorism, border security, nonproliferation programs in Egypt,
and for development activities in the Sinai.
The FY2015 Act contains a new provision. It requires the Secretary of State to report on any defense
articles withheld from delivery to Egypt. This report must include a detailed description of the
conditions the Government of Egypt must meet to resume the delivery of such defense articles, and
any actions by the Government of Egypt to meet such conditions. The report shall also include a
description of the cost incurred for each category of defense article withheld, including the cost of
storage and subsequent delivery of such articles. Another new reporting requirement in the FY2015
Act requires the Secretary to consult Congress on plans to restructure military assistance for Egypt,
including cash flow financing.
Chronology: Recent U.S. Action on Foreign Assistance to Egypt
Date
Event
January 17, 2014
The President signs into law P.L. 113-76, the FY2014 Consolidated Appropriations Act.
Under the law, Congress provides $1.3 billion in FMF and $250 million in ESF, though
the full release of the funds is conditioned on certifications that first must be made by
the Secretary of State.
March 4, 2014
The Administration releases its FY2015 Congressional Budget Justification, which seeks
$1.3 billion in FMF for Egypt, but only $200 million in ESF, or $50 million below the
appropriation for the last six fiscal years.
April 22, 2014
The Obama Administration announces that it will resume delivering 10 Apache
helicopters to Egypt of which it had suspended delivery in October 2013. In addition,
the Administration certifies to the Appropriations Committees, as mandated in the
FY2014 Appropriations Act, that Egypt is “sustaining the strategic relationship with the
United States; and meeting its obligations under the 1979 Egypt-Israel Peace Treaty.”
However, Secretary of State John Kerry, in a phone call to the Egyptian Foreign

62 Section 7041(a)(5) [Egypt: Security Exemptions] of the FY2015 Omnibus Appropriations Act differs from the previous
year’s legislation in that funds may be provided only if “the Secretary of State certifies and reports to the appropriate
congressional committees that to do so is important to the national security interest of the United States.”
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Minister, indicated that he is not yet able to certify that Egypt is taking steps to support
a democratic transition, as required by P.L. 113-76, in order to release two separate
tranches of military aid.
April 25, 2014
The State Department notifies Congress of its intent to obligate $650 million in
FY2014 FMF to Egypt under the authorities provided to it by Congress in Section
7041(a)(3) and (a)(5) of P.L. 113-76.
April 28, 2014
An Egyptian judge, who a month earlier had sentenced 529 men to death for killing a
police offer, sentences another 683 men to death for a similar crime.
April 29, 2014
Senator Patrick Leahy stated that “I am extremely disturbed by the Egyptian
Government’s flouting of human rights and appalling abuse of the justice system, which
are fundamental to any democracy. I am not prepared to sign off on the delivery of
additional aid for the Egyptian military until we have a better understanding of how the
aid would be used, and we see convincing evidence that the government is committed
to the rule of law.”
May 13, 2014
In report language accompanying H.R. 4435, the National Defense Authorization bill
for FY2015, House Armed Services Committee Members note their support for the
President's decision to provide Apache aircraft to the Government of Egypt. According
to the report, “The committee further believes that the United States should provide
necessary security assistance to the Government of Egypt, specifically focused on areas
of mutual security interest. The committee remains concerned that if the United States
does not engage through security assistance with the Government of Egypt and the
Egyptian military, then other countries, such as the Russian Federation, may fill this gap,
which would work at cross-purposes with vital U.S. national security interests.... The
committee is concerned by reports that there may have been human rights violations
that have occurred in Egypt. The committee encourages the next President of Egypt to
address the economic and political needs of the Egyptian people, including the
protections for individual freedom and human rights reflected in the new Egyptian
constitution.”
May 21, 2014
In an interview in Brussels, seemingly intended to allay some observers’ concerns,
General Martin Dempsey, Chairman of the U.S. Joint Chiefs of Staff, remarks that he
believes the Egyptian military would use U.S. weapons for their intended purpose and
that the U.S. military has oversight mechanisms in place to ensure Egyptian compliance
with U.S. law. According to General Dempsey, “If they were to use them for purposes
that violated the end-use agreement, then we have the ability to interdict the supply
chain and that system would not be much use to them any longer.”63
June 3, 2014
According to one press report, 10 Apache helicopters remain in storage six weeks
after the Administration announced their release to the Egyptian government.64
According to one unnamed State Department official, “The aircraft are in storage at
Fort Hood, Texas.. .We are making decisions with respect to our assistance to Egypt
in consultation with Congress, and are working to determine when the Apaches would
be shipped.”
December 16, 2014
Congress passed the FY2015 Consolidated Appropriations Act, which included up to
$1.45 billion in military and economic aid for Egypt.
December 20, 2014
Within days of the arrival of new U.S. Ambassador to Egypt Robert Stephen Beecroft,
the Administration delivered the previously-suspended ten Apache helicopters to
Egypt.

63 “U.S.-Egypt Military ties will Depend on Egypt's Actions -U.S. general,” Reuters, May 21, 2014.
64 “Obama Administration holding up Apache Helicopters to Egypt,” Al Monitor, June 3, 2014.
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Current Status of U.S. Aid
For FY2014, the Obama Administration has notified Congress of its intent to spend all $1.3 billion
in appropriated FY2014 FMF for Egypt. It has done so in two separate tranches of $650 million
each. The first $650 million tranche was notified in April 2014. In January 2015, the State
Department notified Congress of an obligation of another $650 million in FMF.
For FY2015, as of February 20, no funds have been obligated, and the Administration has not
exercised any waiver allowing it to provide aid to Egypt “notwithstanding” other conditions found in
the law. Egypt still has several hundred million dollars in its account at the Federal Reserve Bank,
which the Defense Department has used to make payments on outstanding cash flow-financed
purchases for major procurements, such as F-16s, M1A1 tank kits, Harpoon missiles, Fast Missile
Craft, and Apache helicopters.
How Valuable is U.S. Aid to Egypt?
Underlying the debate over U.S. assistance to Egypt is the question of how much leverage U.S.
bilateral aid provides the U.S. government with Egyptian counterparts. Some argue that the military
aid still matters a great deal to the Egyptian military and that when Congress seriously considers
altering the traditional annual appropriation, of which about $1.3 billion is military aid, it compels
Egypt to address items of stated U.S. interest.65 A related point is that the dollar value of U.S. foreign
assistance is less meaningful than the actual military partnership it helps foster. The Egyptian
military, largely for reasons of regional prestige, values the symbolism associated with its
relationship with the U.S. military.66
Others posit that current U.S. aid gives the United States limited leverage.67 In relative terms, when
adjusting for inflation, $1.3 billion in 2014 has the same buying power as $620 million in 1987,
meaning that annual FMF to Egypt, which has been unchanged since 1987, can purchase and sustain
U.S. military equipment at less than half the value of what it could 28 years ago.68 Moreover, it is
unlikely that policymakers would consider asking Congress to match the recent financial support the
Gulf Arab monarchies have provided to Egypt, a figure close to $23 billion.69 Other observers argue
that when it comes to perceived existential threats such as Islamist terrorism, Egypt’s national
security establishment is simply not willing to ease its crackdown against Islamist and secular
opposition alike in exchange for improved U.S. relations.
Egypt seems to be searching for new international partners in order to both diversify its military-to-
military relationships and signal its displeasure with recent U.S. policy. As previously mentioned,
Russia has pledged to sign a $3.5 billion arms deal with Egypt and expand trade in agricultural
goods.70 During a recent visit to Egypt, Russian President Vladimir Putin pledged to help Egypt
construct a nuclear power plant and increase bilateral trade in Russian and Egyptian national
currencies rather than the dollar. France also is negotiating with Egypt over a possible $6.88 billion

65 “Threat To Cut U.S. Aid Opens Rift With Egypt,” The Jewish Daily Forward, January 9, 2008.
66 “How to Get Egypt’s Generals Back on Our Side,” ForeignPolicy.com, January 15, 2015.
67 “America Has No Leverage in Egypt,” New York Times, August 19, 2013.
68 Bureau of Labor Statistics, Consumer Price Index Inflation Calculator.
69 “Egypt got $23 bln in aid from Gulf in 18 months –Minister,” Reuters, March 2, 2015.
70 Egypt is the second largest importer of Russian wheat, and Russia purchases Egyptian fruits and vegetables.
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sale of 24 Rafale fighter jets71 and a naval frigate to Egypt.72 In 2014, France sold Egypt four other
naval frigates in a deal worth $1.35 billion. Some longtime supporters of the U.S.-Egyptian
relationship may lament the possibility of diminished U.S. influence in Egypt while others may see a
U.S.-Egyptian “rebalancing” as necessary and ultimately healthier for both governments.
Other Foreign Aid Considerations for Congress
The intense focus on foreign aid to Egypt since 2011 has resulted in a number of proposals for
broadly restructuring U.S. assistance. Even among supporters of continued military aid to Egypt,
there appear to be two basic objections to maintaining the status quo (i.e., military aid subsidizing
Egyptian purchases of conventional weaponry like tanks and jet fighters). One is that it doesn’t line
up with the current threats facing Egypt. The other is that it doesn’t help stabilize Egypt politically if
it is seen as indirectly perpetuating the control of society by the military-guided state. There are a
number of proposed changes to how the United States could reform its aid to Egypt. Possible options
for Congress include the following:
• Mandate Administration reporting requirement to Congress on an overall U.S.
assistance strategy for Egypt, including possible bilateral agreements on future aid
levels subject to the approval of Congress.
• Mandate Administration reporting requirement to Congress outlining how Egypt is
supporting U.S. national security goals, such as countering terrorism and promoting
regional peace.
• Authorize the Government Accountability Office to audit and review existing aid
accounts in order to monitor and evaluate current spending to ensure programs are
in line with current U.S. priorities.
• Redirect portions of FMF to finance U.S.-Egyptian counter-terrorism cooperation
and border security.
• Leverage influence of foreign aid to encourage security sector reform, such as
training in best practices and human rights awareness for internal police forces.
• Re-channel military assistance for civilian purposes, such as funding democracy and
governance and/or economic development.
• Further condition the release of U.S. aid on specific policy benchmarks, such as
cooperation with Israel and maintenance of the 1979 peace treaty, economic reform,
tolerance of religious minorities, and freedom of action for foreign and domestic
NGOs working on democracy and human rights inside Egypt.
• Encourage more U.S.-Egyptian democratic dialogue and people-to-people
exchange, such as inter-parliamentary exchange, study abroad, and scholarships for
Egyptian/American students to institutions such as the American University in Cairo
(AUC).

71 The United Arab Emirates also has offered to provide Egypt an undisclosed number of French Mirage 2000-9s. Because
French-supplied fighter aircraft are relatively expensive to buy, operate, and maintain, Egypt may need Gulf financing for
larger French purchases currently under consideration. Egypt first purchased French Mirage fighters in 1981.
72 “France and Egypt negotiating Rafale fighter jet deal,” Reuters, February 5, 2015.
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• Appropriate economic development funds for specific use in the Sinai Peninsula,
conditioned upon the government’s commitment to improving residents’ legal rights
and political representation.
• Expand funds for existing programming, such as the Egyptian-American Enterprise
Fund and USAID programs in public health, agriculture, and education.
• Authorize bilateral debt relief and/or loan guarantees for the Egyptian government,
conditioned on economic reforms in preparation for a loan facility with the
International Monetary Fund.
• Reinstitute P.L. 480 U.S. food assistance to Egypt or expand U.S.-Egyptian trade in
wheat and other commodities.

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Figure 7. U.S. Foreign Assistance to Egypt
$s in millions

Source: Created by CRS.
a. In FY2009, Egypt received $200 mil ion in ESF from P.L. 111-8, the FY2009 Omnibus Appropriations Act. It
then received an additional $50 mil ion in ESF from P.L. 111-32, the FY2009 Supplemental Appropriations Act.
b. Reduced due to sequestration.


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Table 1. U.S. Foreign Assistance to Egypt, 1946-1997
($ in millions)
Misc.
Military
Military
IMET
Econ
DA
DA
ESF
ESF
PL.
PL.
Year Total Loan
Grant
Grant
Grant
Loan Grant
Loan
Grant
480 I
480 II
9.3
Surplus
1946 9.6
— —
—
0.3
— — —
— — —
UNWR
A
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 4.0 — —
— —
—
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 — —
— —
—
0.7 — —
—
0.3
1958 0.6 — —
— —
—
0.0 — —
—
0.6
1959 44.8 — —
— —
—
2.0 — —
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 — —
— —
20.0
2.2 20 —
114.0
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
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
—
— — — — 5.4 150.0 102.8
201.7 4.4
TQ 552.5 — —
— —
—
—
429.0
107.8
14.6
1.1
1977 907.8 — —
— —
—
—
600.0 99.2
196.8
11.7
1978
943.2 — —
0.2
0.1
— — 617.4 133.3
179.7
12.5
Narc.
1979 2,588.5 1,500
— 0.4 — — — 250.0 585.0
230.7 22.4
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Misc.
Military
Military
IMET
Econ
DA
DA
ESF
ESF
PL.
PL.
Year Total Loan
Grant
Grant
Grant
Loan Grant
Loan
Grant
480 I
480 II
1980 1,167.3 —
— 0.8 — — — 280.0 585.0
285.3
16.1
1981 1,681.2 550 —
0.8 — — — 70.0 759.0
272.5
28.9
1982 1,967.3 700 200.0
2.4 — — — — 771.0
262.0
31.9
1983 2332.0 900 425.0
1.9 — — — — 750.0
238.3
16.8
1984 2,470.8 900 465.0
1.7 — — — — 852.9
237.5
13.7
1985
2,468.7 —
1,175.0
1.7 —
—
— —
1,065.1
213.8
13.2
1986
2,539.1 —
1,244.1
1.7 —
—
— —
1,069.2
217.5
6.6
1987
2,317.0 —
1,300.0
1.8 —
—
— —
819.7
191.7
3.9
1988
2,174.9 —
1,300.0
1.5 —
—
— —
717.8
153.0
2.6
1989
2,269.6 —
1,300.0
1.5 —
—
1.5 —
815.0
150.5
1.2
1990
2,397.4 —
1,294.4
1.6 —
—
— —
898.4
203.0
—
1991
2,300.2 —
1,300.0
1.9 —
—
— —
780.8
165.0
52.5
1992
2,235.1 —
1,300.0
1.8 —
—
— —
892.9
40.4
—
1993
2,052.9 —
1,300.0
1.8 —
—
— —
747.0
—
4.1
1994
1,868.6 —
1,300.0
0.8 —
—
— —
561.6
35.0
6.2
1995
2,414.5 —
1,300.0
1.0 —
—
0.2 —
1,113.3
—
—
1996
2,116.6 —
1,300.0
1.0 —
—
— —
815.0
—
0.6
1997
2,116.0 —
1,300.0
1.0 —
—
— —
815.0
—
—
Total
4,114.
45,669.4 4,550
17,803.5
27.3.0 11.2 80.7 82.8
2,620.7
15,923.8 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 Section 416 food donations.
TQ = Transition Quarter; change from June to September fiscal year
* = less than $100,000
IMET = International Military Education and Training
UNRWA = United Nations Relief and Works Agency
Surplus = Surplus Property
Tech. Asst. = Technical Assistance
Narc. = International Narcotics Control
DA = Development Assistance
ESF = Economic Support Funds
PL 480 I = Public Law 480 (Food for Peace), Title I Loan
PL 480 II = Public Law 480 (Food for Peace), Title II Grant


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Author Contact Information

Jeremy M. Sharp

Specialist in Middle Eastern Affairs
jsharp@crs.loc.gov, 7-8687


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