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US aid cut won't dent economy, says expert
Published in Daily News Egypt on 03 - 03 - 2009

CAIRO: Despite a $200 million cut in economic aid to Egypt approved by the United States House of Representatives on Feb. 25, analysts say it is not likely to make a dent in Egypt's economy.
The cut was part of the 2009 Omnibus Appropriations Act, a bill designating federal funding for the remainder of the fiscal year. The bill, which is yet to be debated by the Senate, allocated a total of $1.5 billion of assistance to Egypt, of which $1.3 billion was appropriated for military assistance and the remaining $200 million for economic aid, down from approximately $412 million in the last fiscal year.
"American economic assistance is worthless within the Egyptian economy, said Ahmed El-Sayed El-Naggar, economic analyst at the Ahram Center for Political and Strategic Studies, explaining that Egypt's GDP, calculated in purchasing power parity, is approximately $354 billion. "What's $200 million out of 354 billion?
"Egypt pays an exaggerated price for this assistance, continued El-Naggar. The objective of American assistance is not to help developing countries, he said, but to achieve political goals.
The bill stipulates that out of the $200 million economic aid, up to $20 million should be used to promote democracy, human rights and good governance programs and at least $35 million for education programs, including $10 million for scholarships for Egyptian students who demonstrate high financial need.
According to El-Naggar, US conditional aid often results in the deviation of funds from those projects desperately needed by Egypt.
The most likely reason for the cut in economic aid is the global financial crisis and a desire by the United States to cut down on spending, particularly since they have already secured Egypt's political position, he said.
In January, Democrat Congressman Anthony Weiner had proposed a bill calling for an end to US military aid to Egypt because it had allegedly not complied with the Camp David Accords. Among the reasons cited by Weiner were failure to stop weapons smuggling through tunnels into Gaza and continued membership of the Arab League, which boycotts Israel.
The bill, like another before it, was referred to the House Committee on Foreign Affairs, while analysts doubted its success.
Both Egypt and Israel have been top recipients of US aid since the conclusion of the Camp David Accords in 1979. In the same bill, approximately $2.4 billion were appropriated for Israeli military assistance, in addition to $170 million in emergency funds.
According to El-Naggar, US military aid to Israel is more significant because the weapons given to Egypt are not as advanced.
The bill specifies that a portion of the $1.3 billion in military assistance to Egypt should be allocated to border security programs and activities in Sinai. Meanwhile, it provides that upon request from the Israeli government, the approximately $2.4 billion allocated to Israel may be used for advanced weapons systems, including defense services and research and development.


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