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Obama Push to Aid Egypt Remains Stalled in Congress

The Obama administration is trying to push ahead with efforts to help shore up Egypt’s crippled economy but continues to be stymied by House Republicans, a stand-off that appears unlikely to be resolved this year.

U.S. officials are hoping to time their economic aid to the release of a $4.5 billion loan that Egypt and the International Monetary Fund are currently negotiating, which could be finalized as early as this month.

But despite the administration’s stepped-up outreach to the Hill in recent days, senior House Republicans are still blocking a $450 million cash transfer the administration has proposed to bolster Cairo’s dwindling cash reserves, and they have made clear that they do not support additional money for an “enterprise fund” aimed at stimulating private investment in Egypt, House staffers say.

Rep. Kay Granger, R-Texas, the chairwoman of the Appropriations Subcommittee that oversees foreign aid, and House Foreign Affairs Chairwoman Ileana Ros-Lehtinen, R-Fla., both have placed holds on the cash transfer, which the administration notified Congress of in September. It is part of a $1 billion debt-relief package the United States has been negotiating with the Egyptian government, which stalled amid the attack on the U.S. Embassy in Cairo in September and during the U.S. election season.

U.S. officials wanted to move ahead quickly with the $450 million cash transfer, given the precarious state of the Egyptian economy and the risk of an economic collapse, which would have ripple effects on the region.

According to one Hill staffer briefed on the matter, the U.S. Agency for International Development is prepared to notify Congress that it wants to channel other existing funds to the Egypt Enterprise Fund, which was set up last year. The fiscal 2012 spending bill passed last December (PL 112-74) seeded the fund with $60 million. The fund, modeled after similar investment vehicles set up in Eastern Europe after the collapse of the Soviet Union, aims to invest in small and medium-sized Egyptian businesses and startups.

However, the staffer said that USAID officials have held off making the formal request because they anticipate that Ros-Lehtinen will put a hold on the money.

Ros-Lehtinen made clear in an Oct. 4 letter that she opposed “increased economic assistance, debt forgiveness or enterprise funds without stringent conditions and tangible deliverables on the part of the Egyptian government.” Her position remains unchanged, and she is expected to maintain her holds on Egypt aid for the duration of her chairmanship, which ends with the close of this Congress.

The administration could override her, as it has done in the past — such holds are not legally binding but rather are established practice and a show of respect to Congress.

But Granger also has a hold on the cash transfer. “Nothing has changed on our end,” her chief of staff, Matt Leffingwell, said late last week.

And given that Granger will be returning as chairwoman of Appropriations Subcommittee on State and Foreign Operations in the new Congress, she is someone the administration would not want to alienate.

The concerns expressed by both Granger and Ros-Lehtinen center on Egypt’s conservative Islamist government and its direction. The Islamist Muslim Brotherhood tightened its control over the civilian government this summer. That gave the IMF and the United States a negotiating partner to help iron out economic assistance but also raised alarms among conservatives over Egypt’s potential anti-Western, anti-Israel tilt. The government’s tepid initial response to the attack on the U.S. embassy only heightened those concerns.

Middle East experts, however, argue that stabilizing the Egyptian economy is in America’s interests; economic stagnation, as much as the absence of civil liberties, motivated protesters to first take to the streets as part of the Arab Spring. And the economy has only gotten worse for Egyptians since, particularly because the tumultuous security environment has scared away foreign visitors and strangled the tourism sector.

The Egyptian government and American officials alike recognize that prolonged economic trouble could jeopardize the new democracy and spark another round of uprisings.

As the Arab world’s most populous country, Egypt is now a bellwether for the democratic transitions taking place elsewhere, and any reversal would have reverberations around the region. Its stability is also crucial for Israel’s security.

Administration officials plan to continue making those arguments on the Hill in the coming weeks.

U.S. officials also hope to leverage the IMF loan and bilateral U.S. economic aid and debt relief to convince other countries, particularly wealthy Gulf states such as Saudi Arabia, Qatar and the United Arab Emirates, to pitch in with assistance.

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