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Does Egypt deserve U.S. economic support?

Question submitted by Gamal Khalifa, from Cairo, Egypt, May 8, 2013

Answered by: Isobel Coleman, Senior Fellow and Director of the Civil Society, Markets, and Democracy Initiative; Director of the Women and Foreign Policy Program

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Outside of a humanitarian crisis—such as a famine or a natural disaster—it is hard to make the case that any country deserves another's economic support. To paraphrase Britain's Lord Palmerston, countries do not have permanent friends, only permanent interests. Recasting the question as, "does the United States have an interest in seeing Egypt's transition succeed"—meaning that the democratic and economic aspirations of the Egyptian people are fulfilled—and, "should Washington provide economic support to promote positive outcomes in Egypt," the answer is a resounding yes.

With its large population of nearly ninety million people, strong cultural influence, geostrategic location, control of the Suez Canal, and role in promoting regional peace, Egypt is an important partner of the United States. In return for making peace with Israel at Camp David in 1978, the United States has provided Egypt with considerable military aid—roughly $1.3 billion annually since the late 1980s. It has also provided economic assistance, but that has gradually declined from a high of over $1 billion in the mid-1980s to $250 million today, a relatively insignificant impact on an economy that is more than $250 billion.

Given the United States' own budget woes, and concerns in Congress (which controls the purse strings) about the current Egyptian government's commitment to the institutions of democracy and foreign policy intentions, Washington is unlikely to increase outright economic aid substantially. Arguably, other forms of assistance, including increased foreign direct investment and trade, and technical and financial support for continued economic reform (particularly on transitioning away from costly and inefficient subsidies), stand to have a bigger positive impact on Egypt's economy and democratic transition than more monetary aid to the Egyptian government.