In recent months, the Trump Administration and Congress have taken various steps toward reducing U.S. foreign military and economic assistance to Egypt. Although lawmakers have debated the merits of U.S. foreign aid to Egypt for years, executive and legislative branch action may be tied to specific U.S. concern over Egypt's new legal restrictions on non-governmental organizations (NGOs) and its reported ties to the Democratic People's Republic of Korea (DPRK, or North Korea). For more, see CRS Report RL33003, Egypt: Background and U.S. Relations.
In May 2017, Egyptian President Abdel Fattah el Sisi signed Law 70 of 2017 on Associations and Other Foundations Working in the Field of Civil Work into law. The Parliament had ratified this bill six months earlier, and both the ratification and signing drew widespread international condemnation. The new law (which replaced a 2002 NGO law) requires NGOs to receive prior approval from internal security before accepting foreign funding. It also increases penalties for violations, including imprisonment for up to five years. In 2013, an Egyptian court convicted and sentenced 43 people, including employees of the National Democratic Institute (NDI) and the International Republican Institute (IRI), for spending money from organizations that were operating in Egypt without a license.
Some Members called on President Sisi not to sign the law. In December 2016, Senators John McCain and Lindsey Graham cautioned that "Should President al-Sisi sign into law this draconian legislation, we will endeavor to strengthen democratic benchmarks and human rights conditions on U.S. assistance for Egypt in fiscal years 2017 and 2018." After President Sisi signed the NGO law, a bipartisan group of Senators sent a letter to President Trump warning that Congress will take the Egyptian government's recent actions into consideration when reviewing U.S. assistance policy.
According to one report, while successive Administrations have privately raised concerns regarding Egypt's civilian and military links to North Korea, such pressure may be increasing. On July 5, 2017, President Trump called President Sisi and, according to a White House readout, "discussed the threat from North Korea" with President Trump stressing "the need for all countries to fully implement U.N. Security Council resolutions on North Korea, stop hosting North Korean guest workers, and stop providing economic or military benefits to North Korea." The President's focus on Egyptian-North Korean cooperation could relate to allegations that Egypt may have violated various United Nations-imposed sanctions on trade with North Korea as well as a prohibition on arms transactions with North Korea.
On August 22, 2017, various news sources reported that the Trump Administration, having felt (in the words of one unnamed official) "blindsided" by President Sisi's approval of the new NGO law, planned to take several actions regarding U.S. foreign assistance to Egypt. Various outlets characterized these actions as a delay or diversion of up to $300 million in U.S. foreign assistance. The following is a summary of the Administration's actions.
As of late September 2017, the Administration has not yet cut or redirected any FMF funds to Egypt, despite signaling its intent to do so. USAID has indicated that it is spending $111.75 million in FY2016 ESF out of a total of "up to" $150 million.
It appears that the Administration has modified U.S. assistance policy to Egypt to signal displeasure both with the NGO law and Egypt's relationship with North Korea. The modifications, which the Egyptian government decried as punitive, have prompted extensive speculation over how they might impact U.S.-Egyptian relations. In an official statement, the Egyptian Foreign Ministry announced that it "regrets the decision of the United States of America to reduce some of the funds allocated under the US assistance program to Egypt ... "
In mid-September 2017, South Korean news reported that during a recent visit to South Korea, Egyptian Defense Minister Sidki Sobhi told his South Korean counterpart that Egypt had "already severed all military ties with North Korea." Several weeks later, President Trump responded to a media inquiry on the status of restarting U.S. aid to Egypt stating, "We're going to certainly consider it."
In Congress, some continue to express concerns about governance and human rights in Egypt. S. 1780, the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018, allocates up to $1 billion in FY2018 FMF for Egypt, while stipulating that 25% of that amount (as opposed to 15% in previous annual appropriations legislation) shall be withheld until the Secretary of State certifies and reports to the Committees on Appropriations that the Government of Egypt is taking effective steps to advance democracy and human rights in Egypt. A waiver for this certification is included in the bill. Congress has appropriated $1.3 billion in FMF to Egypt each year since FY1987.