BACK WITH A VENGEANCE: It's June '74, and US President Richard Nixon (facing disgrace and impeachment charges at home) is given a hero's welcome in Cairo. Under the leadership of Anwar El-Sadat, the region's closest Soviet ally was making a dramatic shift in direction, and the people seemed to enthusiastically welcome it. The so-called 'American era' was launched with great fanfare and high expectations. One year later, USAID would resume its operation in Egypt. But even while Nixon was embarking on his history- making visit to Egypt, people on the street were exchanging rumours of massive shipments of American food aid. The hardships of the war years would soon be over; a new age of peace and prosperity would be born, and in a great many people's minds, it had an American midwife.
photo: Al-Ahram Archives

From fanfare to phase-out

No aspect of bilateral economic relations inspires as much controversy, or is subject to such intense political scrutiny in both Egypt and the US, as the $24 billion in economic assistance extended by the US Agency for International Development to Egypt over the past quarter of a century. Initiated in 1975, following the thaw in Egyptian-US relations and, significantly, President Anwar El-Sadat's expulsion of Soviet experts, USAID quickly became the largest donor programme operating in Egypt.

USAID funds, as stipulated within the Camp David Peace accords ($815 million to Egypt annually; $1.2 billion to Israel), directed to the two countries became America's largest overseas assistance programme and a prime tool of US foreign policy in the Middle East, aimed at consolidating peaceful relations between the two countries.

But whereas aid extended to Israel was in the form of cash transfers to be used at its government's discretion, that directed to Egypt has been structured around specific programmes identified -- especially over the past two years according to US ambassador Daniel Kurtzer -- by a process of consultation between the two sides.

USAID programmes became increasingly pervasive as funds were directed across an enormous range of activities, including infrastructural projects, agriculture, population, education, environment, NGO's and civil society, small and medium enterprises and, in its current and final phase, to the promotion of a market-based economy.

In 1998 Washington began to downsize its overseas assistance programmes. As part of this downsizing, allocations to both Egypt and Israel have been reduced and, within ten years, will have been phased out. Economic assistance to Egypt, which last year amounted to $695 million, is being reduced at a rate of five per cent annually, which means that by 2009 it will have shrunk to $450 million. Israeli economic assistance is witnessing a ten per cent annual reduction, though half of this amount is being redirected in military aid. For Egypt, no reduction in military expenditure is envisaged at present, according to Ambassador Kurtzer.

Successive US administrations have justified aid to Egypt in terms of Cairo's continued commitment to peaceful ties with Israel. Wherein lies one of the paradoxes that has dogged USAID for two and half decades: such aid is provided to Egypt as "economic support funds", the political underpinnings of which are more than apparent in their origins at Camp David. How, then, does it become possible to assess the impact of a quarter of century of American aid to Egypt divorced from the political context within which such aid was originally conceived and continues to be offered?

/Despite vast sums injected into the Egyptian economy, and despite major achievements in the domain of infrastructure development, USAID in Egypt has remained politically unpopular. Nor have its success stories received especial publicity: compared to the nationalist symbolism that accrued to the High Dam, the Soviet project par excellence, USAID's programmes were always going to fall in the shadows. Aware, perhaps, of the propaganda potential of the Dam, USAID ploughed $140 million into renovating its 12 turbines.

USAID's involvement in agriculture started early, and the impetus of its programmes was always to push towards liberalisation of the sector. The move towards liberalisation became, if anything, more obvious in the early eighties through Cash Transfer and Sector Policy Reform programmes which were explicitly designed to operate as rewards for implementing liberalising policies.

To attempt an impartial assessment of US economic assistance for the length of time in which it has operated in Egypt has proven difficult for many reasons. Press coverage of USAID has tended to oscillate between condemning it on political grounds, to virtually replicating its brochures. There are no available reports in which either USAID or the Egyptian government presents strategic assessments of how the programme has performed in one sector or other.

"We do not operate as a development agency, so that we may compile such reports. We act more in the manner of a contractor, executing one project and then moving on to the next," is how one USAID director responded to this matter. Such is the lack of documentation that save for the most recent seven directors, no one at USAID can remember, or provide, a full list of the agency's directors in Egypt, thereby leaving a yawning gap in the history of the organisation between 1975 and 1981. For their part, USAID officials prefer to talk about the positive aspects of individual programmes, though even then the tendency is to adopt an extremely cautious tone. Broader policy issues tend to be left to the US ambassador, and in this respect Daniel Kurtzer has been somewhat more outspoken on political and economic issues than any of his predecessors.

The controversy that has always dogged USAID activities in Egypt continues. There is enthusiasm for the tangible benefits that have accrued from the programme; there are suspicions that programmes have undermined the economic well-being.

The opinion writers in this supplement, the majority independent academics, attempt to present a strategic overview of USAID, addressing both the political and economic considerations related to the programme.

What emerged, in compiling this supplement, is a broad consensus: to judge the impact of the programme's policies on the national economy it is necessary, most commentators argue, to assess the success of the Egyptian government in presenting an autonomous vision of development alongside any analysis of the imperatives of US foreign policy. It is a difficult juggling of classic cost-benefit analysis, and in order to keep all the balls in the air it becomes necessary to address how internal political and economic circumstances impeded or advanced the potentials provided by USAID's programme.

By Aziza Sami

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		Al-Ahram Weekly Online 21 - 27 June 2001 Issue No.539
Published in Cairo by AL-AHRAM established in 1875		Current issue \| Previous issue \| Site map