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How Much Does Foreign Money Affect Leverage in Egypt?

August 20, 2013 at 12:00 AM EDT
With U.S. officials debating cutting Egyptian military aid while regional allies have offered to send money, what kind of influence over the interim government and political uncertainty will other nations have? Gwen Ifill gets analysis from Tarek Masoud of Harvard University and Hisham Melhem of Al Arabiya.
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GWEN IFILL: For more on how much influence the United States and other funder nations have on the uncertain situation in Egypt, I’m joined by Tarek Masoud, assistant professor of public policy at Harvard University’s John F. Kennedy School of Government, and Hisham Melhem, Washington bureau chief at Al-Arabiya news channel.

Hisham, who holds the financial leverage in all of this? We have heard the tale of UAE and of Qatar and of the U.S. and Saudi Arabia. Who is Egypt relying on?

HISHAM MELHEM, Al-Arabiya Television: You are watching new dynamics in the region, after the Arab spring and after the way the United States dealt with the regional — the thorny issues of the region.

Now you have a coalition of three Arab states in the Gulf who are providing Egypt with the most financial assistance, $12 billion. This is some sort of a Marshall Plan, if you will, from the Gulf to Egypt. And this is essentially unconditional aid, unlike the American aid, which is very conditioned, and for a variety of legal reasons, in this country.

But what you see here is a function of the way the administration has been dealing with the regional issues for a while, even before the Arab spring. The administration is hesitant, it’s reluctant and rarely decisive on any issue, even when it affects its own security or its own interest and its own reputation.

We have seen that, for instance — I want to you give an example related to Egypt, the NGO issue. It was the military, by the way, not the Morsi government, that initiated the legal harassment, if you will, against international NGO’s, non-governmental organizations, including a number of American ones.

But, instead of raising hell, the administration — the administration of President Obama raised questions. And now, because we alienated many Egyptians over the years, people say we didn’t criticize Mubarak when we should have — and they are correct — they say we didn’t criticize the military when we should have — and they are correct — we didn’t criticize Mohammed Morsi’s government — they are correct — now we alienated everybody.

And the only real power in Egypt now, which is the military, and we are trying desperately almost not to really alienate them completely.

GWEN IFILL: Tarek Masoud, how much does Egypt rely on this international aid? Why is it essential?

TAREK MASOUD, Harvard University: Well, I think, as was noted in your report, first of all, the aid from the United States, about $1.5 billion goes to the Egyptian military. About 80 percent of that 1.5 billion takes care of the Egyptian military’s arms purchases. And so it’s very important for the Egyptian military’s readiness.

And then, of course, the aid that the Saudis and the Emirates have been given obviously helps the Egyptians meet their current needs, including their subsidy program, et cetera.

But just to come back to the question that animated all of this, Gwen, how much leverage does any of this aid buy anybody, I think it doesn’t — it doesn’t really — none of this aid could compel the Egyptian military to do something it doesn’t want to do.

You have got to remember in February 2011, when the military was trying to figure out whether to depose Mubarak in response to popular pressure, you can bet that the Saudis and the Emirates and other Gulf countries were making quite lavish promises to the Egyptians that, if they just continued to support Mubarak, they would provide aid, and yet that didn’t sway the military, just as I don’t think that losing the potential $1.5 billion in aid, the potential loss of that would sway the Egyptian military now in what it sees as a fight, an existential fight against internal foes in the Muslim Brotherhood and Islamists who they think want to destroy the Egyptian state.

GWEN IFILL: Well, we know that there was a National Security Council meeting at the White House today. And there are questions on the table about what to do about this aid leverage or lack thereof.

Hisham, what are the questions?

HISHAM MELHEM: I think there will be some sort of a suspension of some aid, military aid. And they will probably play different — in a different way with the economic aid.

But I don’t think in the long run they are willing at this stage to make a decisive decision to really boycott the Egyptian military. They will continue to send spare parts, but they will withhold helicopter attack — attack — planes, and as we have seen with the suspension of the F-16.

But in the end, this is not a legal issue for the Egyptians. This is a political issue. And I doubt very much that, even if you have a total suspension of the aid now to the Egyptian military, they can live without the American military aid for a year or two, and this will not change their basic calculus, their decision-making process when it comes to the Muslim Brotherhood.

There’s a decision by them, supported by the Gulf states, Saudi Arabia, UAE, and Kuwait, to crush — and I underline crush — the Muslim Brotherhood. And what happened to the Muslim Brotherhood is the biggest blow that they have suffered since 1928, when they were established.

The Muslim Brotherhood is down. I doubt that it is out. And these people have a long history of working underground. And, therefore, Egypt now has entered a long, dark tunnel where you are going to see not necessarily a civil war a la Algeria in the ’90s or a la Syria today, but you’re going to see a long, protracted civil strife.

GWEN IFILL: Tarek Masoud, pick up on that. To what degree is what happens with money coming from all of these different nations affect the potential for instability in Egypt, and how little control outsiders may have on that?

TAREK MASOUD: Well, you know, you said it in your question, Gwen.

I think that outsiders have very little control. The Egyptian military, as I said, thinks that it’s engaged in a kind of existential struggle with the Muslim Brotherhood and with the Islamists. And they point to the burning of churches and other acts of violence that they attribute to the Islamists.

And so I think it’s unrealistic for us to expect any amount of American pressure to knock the Egyptian military off of this course that it has chosen for itself.

GWEN IFILL: Is that because other people will step in and fill any gap left by the U.S.?

TAREK MASOUD: Gwen, even if nobody stepped in to fill any gap left by the U.S., even if there was no Saudi or Emirate aid, the Egyptian military would still be pursuing this course.

I think we shouldn’t underestimate the extent to which they legitimately believe that the Muslim Brotherhood, the year of Muslim Brotherhood governance imperiled that country’s security.

GWEN IFILL: Hisham?

HISHAM MELHEM: I agree.

I think the Egyptian military would have thought carefully before they embarked on this crackdown if they were not assured by the Gulf states that there would be economic aid. Egypt is a country on the verge of bankruptcy. They have huge international debt. This is the third year they don’t have income from tourism. So, the Egyptian economy is really on the verge of collapse.

But I agree. Sometimes, international powers have very little influence on parties when they are involved in a civil strife or a civil war or in a struggle that they see as existential, as Tarek said. And I fully agree that.

And that’s why our ability and the ability of the Europeans, for instance, to influence the decision is limited. And also beyond that, let me say quickly it is also a function of America’s diminishing influence throughout the Middle East.

One of the reasons why the Gulf states are angry with the United States, not only because of what happened today in Egypt. It’s because they see that the president was weak on Iran, was weak on Syria, was weak on Israeli settlements. And now — and he dumped Mubarak quickly. And now they feel that the United States…

GWEN IFILL: So, all the leverage is gone.

HISHAM MELHEM: All the leverage is gone. And now they are stepping in and they have the means to do it. This is something new.

GWEN IFILL: Hisham Melhem of Al-Arabiya and Tarek Masoud at Harvard’s JFK School, thank you both very much.

TAREK MASOUD: Thank you.