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Al-Ahram Weekly 3 - 9 June 1999 Issue No. 432 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 3 - 9 June 1999 Issue No. 432
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Interview Travel Sports People Time Out Chronicles Cartoons Letters Who benefits from US aid?
By Aziza SamiEgyptian public opinion remains sceptical about funding from the US Agency for International Development (USAID), repeatedly posing the question: what has more than 20 years of US economic assistance worth some $20 billion brought to Egypt's economy, and what direction is it taking at present? Although aid to Egypt is being reduced by a rate of five per cent annually over 10 years ending in US fiscal year 2007-2008, it remains among the most important bilateral links between Egypt and the US, and as such never fails to generate attention and controversy.
Veteran diplomats, students and media representatives directed some fundamental questions about US economic assistance to USAID Director Richard Brown at Cairo University last week.
Probably the most important question asked was who has benefited the most from USAID funds -- is it the Egyptian economy, American exporters, or an over-inflated USAID apparatus operating in Cairo? Another key question was why are Egypt and Israel not placed on an equal footing when it comes to the amount of aid allotted to each, as well as the principle of accountability which requires that the recipient gain approval for projects to which USAID funds are directed? (Since 1978, Egypt has received $815 million in assistance annually, against $1.2 billion for Israel. These amounts were decided following the conclusion of the 1978 Camp David peace accords. Egypt also receives $1.2 billion annually in military assistance, while Israel gets $1.8 billion).
The questions also included the following: Why has USAID not assisted Egypt's textiles sector to create more jobs and become globally competitive (the two latter objectives being top policy objectives for the American aid agency); and why have its programmes neglected this ailing but strategic sector of the Egyptian economy? What has USAID contributed to the Egyptian economy by way of value-added productivity?
The interchange revealed how, in Brown's words, "The study of determinance of aid levels is equivalent to a study of the US government and the political environment." Brown was referring to pressure groups and lobbying inside the US Congress.
He admitted that USAID funds to Israel could, for all practical purposes, be going into the building of Jewish settlements or housing projects.
Unlike the case of Egypt, for which Congress must approve USAID's programmes and the way funds are allocated, "no restriction exists for Israel except the prerequisite that the funds be used to buy US products," said Brown, responding to a question by former Ambassador Omran El-Shafei.
"You must realise that there is an Israeli interest group in the US which is quite significant and strong in terms of the way that these resources are distributed," said Brown.
In stark contrast, not only must Congress approve Egypt's method of using USAID funds, but a substantial part, through the cash transfer programme, is disbursed to ensure that Egypt liberalise its strategic economic sectors, after the US consults with the Egyptian government. Presumably this is done in accordance with US interests and within a rough time span advocated by the US.
"Cash transfer must be linked to significant economic reforms which was not the case in the past," said Brown. "The benchmarks are still there. We intend to increase the number of activities for which cash transfer would be made so that we can get past the difficulty we sometimes have because of tensions arising between Egypt and the US on whether these reforms have been carried out or not."
Despite a video tape shown to the audience, portraying USAID's achievements in infrastructure, health and services, a poignant question from veteran diplomat Tahseen Bashir was whether USAID has contributed to the economy's value-added productivity. A case in point, said Bashir, is Egypt's textiles sector which, though an important industry in Egypt, does not seem to have been given a high priority by USAID.
Brown admitted that the powerful textiles lobby in the US determines the means by which aid funds may be allocated in recipient countries like Egypt (whose textiles products could potentially pose a competitive threat to the US textiles sector).
"We are aware of the very important role which the textile industry in the US plays," said Brown "They have been a major opponent of the World Trade Organisation's (WTO) directives on liberalisation of the textiles sector (which requires opening up the US market to foreign textile products). So they are quite sensitive about how USAID is spending its funds (regarding other countries' textiles sectors). What USAID is trying to do is to encourage Egypt's high quality end of the textile industry. This is an area where Egypt's textile quotas to the US have not been met, and there are Egyptian companies taking advantage of this (USAID encouragement)," said Brown. "By the year 2000, all quotas on textiles will have been lifted, in accordance with the General Agreement on Tariffs and Trade (GATT), and Egypt will by then have positioned itself to compete with the Sri Lankas and the Indias of this world," he added.
Brown seemed to ignore the fact that one year's time would not be sufficient for the Egyptian textiles industry to upgrade itself for what will be a fierce global competition. USAID has been, on the other hand, very active in promoting bilateral projects between Egypt and Israel, especially in the horticultural and fresh fruits sector. It might not be a coincidence that it is these products which USAID is promoting for export.
A cornerstone of USAID's strategy in Egypt in the next five to 10 years, according to Brown, is to promote "better governance and non-governmental organisations (NGOs)."
The statement inspired Mustafa Kamel El-Sayed, director of the Centre for the Study of Developing Countries, which hosted the meeting, to ask, "What can your government do when another government restricts civil organisations' activities and limits the autonomy of NGOs?" El-Sayed was clearly referring to the law passed by the Egyptian parliament last week, which is currently being protested by Egyptian NGOs as being too restrictive.
Brown was non-committal on specifics and commented in general terms. "There is continuous encouragement to be able to provide a space where NGOs can function effectively. In some countries the situation is very delicate. In others, where NGOs have been embraced, our relationship has been very productive," he said.
