Sayed Attia* sheds light on the role played by USAID in the development process in Egypt Egyptian-American relations are currently undergoing a process of reshaping after some lean years under the previous US administration. One of the hot issues that arises every now and then within the framework of the Egyptian-American relationship is US assistance to Egypt. This has been the case since 16 August 1978, the date on which the government of the United States of America and the government of the Arab Republic of Egypt agreed on the issue, while focusing in particular on the following: "The Government of the United States of America furnishes economic, technical, and related assistance. The furnishing of such assistance should be subject to the applicable Laws and Regulations of the United States of America. These assistances would be made available based upon the arrangements agreed upon between the two governments. The Government of Egypt makes the full contribution permitted by its manpower, resources, facilities, and general economic conditions to support the purposes for which the assistances are designated. It takes the necessary measures to make sure of the effective use of such assistance. Egypt cooperates with the States in assuring that the procurement takes place at reasonable prices and on reasonable terms. Egypt will permit without restriction a continuing observation of programs and operations and provide the States with complete information on programs and operations." Since this agreement was signed three decades ago, the role played by USAID in Egypt has been subject to debate on both sides. Of course the assessment has not taken place in a one-way direction; on the contrary, any real assessment involves at least two points of view. On the American side, there are two viewpoints, for example. On the one hand, some consider that American assistance to Egypt has not achieved what the Americans wish to see, and such observers point to the large number of situations in which the Egyptians have opposed American policy, particularly at regional and international levels. Egypt violated the American embargo imposed on Libya after the Lockerbie plane disaster, for example, and Egypt kept the door open to the Gaddafi regime on the military, economic and political fronts. Egypt has also voted against resolutions supported by the United States at the United Nations for 61 percent of the time. Yet, there is also another, more positive camp on the American side, those who look positively on American assistance to Egypt, such as the former Deputy Assistant Secretary of State Daniel C. Kurtzer, who stated many years ago that Egypt had played a key role in lobbying the Arab states to take a firm stance towards the Iraqi aggression against Kuwait. Furthermore, Kurtzer stated, Egypt will continue to be a key partner of the US in maintaining stability in the Middle East. Indeed, Egypt is one of the best allies of the United States in the Middle East, and Egyptian and American interests are in agreement with respect to views about any settlement of the Arab- Israeli conflict, the establishment of a unified and legitimate Palestinian government, and combating terrorism. Turning to the Egyptian side of the relationship, Egyptian officials sometimes criticise the "conditionality" of USAID, particularly when it is linked to internal affairs such as human rights and democracy. Nevertheless, USAID has played a crucial role in Egypt's economic growth through making the environment conducive to trade and investment, which in turn has tended to spur further economic growth. Take the Technical Assistance for Policy Reform (TAPRII) programme that aims to enhance the environment for trade and strengthen investment. In order to have the maximum benefit, the programme has focused on institutional reform, as well as on coordination and integration. Modernising customs services to bring them into line with international standards has been crucial to sustained revenue collection, and this has been achieved through the installation of automated systems, the training of staff, and the facilitation of cross-border trade. The impact of these reforms has been reflected in reductions in the time spent on importing and exporting procedures, and this has positively affected Egypt's trade performance. Furthermore, USAID has effectively participated in modernising the country's financial sector; in bringing about macroeconomic stability; in facilitating services for the private sector; in reforming inspections procedures; and in preparing a national food-safety system. Most importantly, in addition to improving the formulation and administration of preferential and non- preferential rules of origin, a detailed plan to strengthen intellectual property rights in Egypt and to amend the regulations governing them has been introduced. Nevertheless, despite this range of significant accomplishments brought about as a result of USAID to Egypt, there are policies that Egypt's government should implement in order to get the maximum benefit from the reforms promoted by USAID. The first of those has to do with modernising Egyptian industry to bring it in line with global standards and to help it compete in international markets. Reforms made in customs and trade facilitation will be of limited benefit unless there are highly qualified industries."Qualified" industries are those that can compete with imported goods both in the Egyptian domestic market and in foreign markets. Furthermore, it is imperative that the country's manufacturing sector becomes more diversified, in order to produce a greater number of industries that have a high added value to the Egyptian economy. Future USAID programmes must give due attention to modernising the production base in Egypt. USAID alone does not have the resources for the task, so the Egyptian private sector and government must participate in securing the resources needed. Furthermore, collaboration and coordination is recommended between the USAID and other donors such as the European Union (EU), who also provide some assistance to modernising Egyptian industry, as well as the Egyptian government and the private sector. And since the primary declared aim of any foreign aid is to reduce or participate in eliminating poverty in the recipient country, USAID should give more attention to the vulnerable segments of Egyptian society and in particular to the informal economy. This absorbs a large number of poor people who have limited resources and skills, and it should be feasible to invest in such people in order to bring them into the country's formal economy, or at least to allow them to maximize their contributions. While USAID continues its participation in bringing about economic growth in Egypt, we should not restrict our assessment of it to its percentage of Egypt's GDP. Instead, we need to look at the cumulative effects of such aid over the medium and long term. Under the new understanding between Egypt and the United States forged by presidents Mubarak and Obama, US economic assistance to Egypt will now enter a new chapter, and one in which this economic aid will continue at its historical levels, while helping to open new avenues for trade between the two countries. * The writer is a senior international trade policy researcher at the Trade Agreements and Foreign Trade Sector in the Egyptian Ministry of Trade and Industry
