Egypt Daily Update: FY17 Funding Bill Renews Conditions, Cuts Economic Aid

May 2, 2017

FY17 Funding Bill Renews Conditions, Cuts Economic Aid

IMF Publishes Economic Outlook Update for Egypt

Cartoon of the Day: Corruption

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FY17 Funding Bill Renews Conditions, Cuts Economic Aid

Late Sunday night, Democrat and Republican congressional leaders came to an agreement on a $1.07 trillion omnibus bill to fund the U.S. government until September 2017. With regards to Egypt, the bill allocates $1.3 billion in foreign military financing (FMF) and $112.5 million for the economic support funds (ESF). While the FMF level is consistent with previous years, the ESF level is its lowest in decades—reached as a compromise between the Senate’s proposal of $75 million and the House of Representatives’ proposal of $150 million. As in FY16, all of this aid is conditioned upon Egypt sustaining its strategic relationship with the United States and continuing to uphold its 1979 peace treaty obligations with Israel. Fifteen percent of Egypt’s FMF will be conditioned on a certification by the Secretary of State that the Egyptian government is advancing democracy and human rights, by protecting fundamental freedoms, allowing NGOs and media to function without interference, releasing political prisoners, holding Egyptian security forces accountable, and providing U.S. officials access to areas where the assistance is used. However, the Secretary may waive this requirement if he reports and submits a detailed written justification to the Appropriations Committees as to why these requirements cannot be met. The explanatory report also provides new transfer authority to the Secretary of State to reprogram Egypt’s ESF elsewhere if the “Government of Egypt is prohibiting, or otherwise interfering with, the conduct or operations of programs supported by such funds,” as has occurred in the past.

In a Senate Appropriations Subcommittee hearing last week, expert witnesses Elliott Abrams, Michele Dunne, and Tom Malinowski recommended reassessing U.S. assistance to Egypt and possibly increasing the 15 percent FMF withholding ratio to 20 or 25 percent. At the end of the hearing, Subcommittee Chairman Lindsey Graham (R-SC) stated that these recommendations would be taken into account for FY 2018.

In other news, Enterprise interviewed Middle East Institute experts Paul Salem and Gerald M. Feierstein earlier this week, who reportedly claimed that the White House is no longer considering designating the Muslim Brotherhood as a foreign terrorist organization. This corroborates a Washington Times report from March that the administration had put the issue on the backburner.

IMF Publishes Economic Outlook Update for Egypt

The International Monetary Fund (IMF) published its May 2017 Regional Economic Outlook Update for the Middle East, North Africa, Afghanistan, and Pakistan today. The report states that oil-importing countries in the region, including Egypt, “need to continue their fiscal consolidation efforts while protecting much-needed social spending and public investment. Broad-based, job-rich growth will also require the implementation of structural reforms that improve the business climate and boost productivity.” Inflation, according to the report, is also an issue with which regional governments must contend. In the case of Egypt, rising inflation “reflects reductions in energy subsidies, implementation of a value-added tax, rising food prices, and the pass-through of recent exchange rate depreciation.” The IMF predicts that inflation will “moderate over the medium term.” There is currently an IMF delegation visiting Cairo in preparation for disbursing the second tranche of its $12 billion loan to Egypt.

In other news, militants killed three policemen and injured five others in a drive-by shooting in Cairo’s Nasr City late on Monday. An Interior Ministry statement [Ar] identified the victims as Captain Mohamed Adel Wehbe al-Sayed, Captain Ayman Hatem Abdel Hamid, and Police Secretary Shaban Mohamed Abdel Hamid. Hasm, a group that—according to the Egyptian government—is loosely affiliated with the Muslim Brotherhood, claimed responsibility for the attack.

Cartoon of the Day: Corruption

Politician: “Since we can’t get rid of it, we figured we’d turn it into a tourist attraction!”
Large letters: “Corruption”Abdullah
Al-Masry Al-Youm – 05/01/2017

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