Gulf Kingdoms Throw Cash at Egypt, No Matter U.S. Aid Cuts

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Ahmed Gomaa / AP

Egyptian security forces clear a sit-in camp set up by supporters of ousted Islamist President Mohamed Morsi in Cairo on Aug. 14, 2013

In the weeks following the military-backed ouster of Egyptian President Mohamed Morsi, amid violent clashes between security forces and supporters of Morsi’s Muslim Brotherhood, the Obama administration was scrutinized for its continued support of a government brought into power by an alleged coup. Egypt has long been a geopolitical lynchpin for American strategy in the region. After the U.S. ushered in the Camp David Accords, the 1979 framework that normalized relations between Egypt and Israel, it sent to Egypt about $1.3 billion every year in aid, most of which has gone to the country’s politically powerful military.

On Oct. 9, the U.S. State Department confirmed that it was withholding delivery of both large-scale military equipment and cash aid until Cairo makes “credible progress” toward restoring an inclusive democracy in the country.

With Egypt’s economy staggering, any cut in aid might seem dire. But a few wealthy Gulf nations—wary of the influence of populist, pro-democracy Islamist groups like the Muslim Brotherhood and fond of Egypt’s toppled autocrat Hosni Mubarak—have stepped in to back the new, military-authored status quo in Cairo, to the tune of nearly $12 billion this year alone. They watched the 2011 revolution that led to Mubarak’s departure with dismay and—with the conspicuous exception of regional upstart, Qatar—bridled at the Brotherhood’s electoral ascension in 2012. The military’s July 3 removal of Morsi from power and its ongoing crackdown on his supporters, to many Gulf kingdoms, was a welcome restoration of things as they had been.

Saudi Arabia alone pledged several times the annual U.S. aid package since July. The Kingdom deposited $2 billion in Egypt’s central bank, pledged $2 billion worth of oil and gas and offered a $1 billion grant (aid other than direct cash). This week, the famously reclusive Saudi King Abdullah appeared on state television alongside Egypt’s interim President Adly Mansour.

Kuwait offered $4 billion–$2 billion in cash, $1 billion in oil and a $1 billion grant. The United Arab Emirates gave $3 billion in the form of a $1 billion grant and a $2 billion no-interest loan. The cash injections were particularly crucial to keeping the Egyptian central bank afloat. In July, the AP reported that Egypt had less than $15 billion in foreign reserves, which are crucial to keeping the country’s currency stable on the open market and credit flowing.

Even though the Gulf states dwarf U.S. annual aid, the American-Egyptian relationship remains an important one. U.S. National Security Council spokeswoman Caitlin Hayden denied the U.S. was ceasing all assistance, saying that the American assistance relationship will continue. In an interview with the Cairo newspaper Al-Masry al-Youm, Egypt’s military chief Gen. Abdel-Fattah al-Sisi, one of the architects of Morsi’s ouster, said the relationship with the U.S. was “strategic,” but that Egypt would not bow to pressure, “whether through action or hints.”