U.S. Pressure Helped Prompt Egypt’s Call for Competitive Race

Egyptian President Hosni Mubarak’s dramatic decision to allow a competitive presidential election comes amid a behind-the-scenes struggle by the Bush administration and Congress to require Cairo to spend part of its annual $2 billion in U.S. aid on political and economic reform.

Because the Egyptian government has been unwilling to accede to U.S. demands, administration officials said, $1 billion in U.S. aid for financial reform and $80 million to foster democracy have gone unspent.

In addition to putting conditions on the aid, the White House has been sending increasingly pointed signals to Mubarak that President Bush is serious about the need for democratic reform in Egypt. But officials said they did not believe that U.S. pressure alone forced Mubarak’s hand.

“U.S. pressure was certainly material,” said an official who spoke on condition of anonymity. “But [Mubarak’s] people are sitting watching TV. You’ve seen free elections in Palestine, free elections in Iraq, hundreds of thousands of people demonstrating on the streets in Lebanon, illegitimate elections overturned in Georgia, illegitimate elections being overturned in Ukraine.... It’s a combination of all these things.”

The State Department appeared to be as surprised as anyone by Mubarak’s announcement Saturday that he would open up the constitutional process to allow other candidates to run for president in the fall election. Since the monarchy was overthrown in 1952, Egyptian presidential elections have involved only voting “yes” or “no” on a single candidate nominated by parliament.

“I’m not aware we had any advance warning on it,” a senior State Department official said. “There may have been a late cable [from Cairo] Friday that I don’t know about.”

The official said Assistant Secretary of State William J. Burns spoke by telephone last week with Nabil Fahmy, Egypt’s ambassador to the U.S., after Cairo canceled plans for a joint meeting of the Arab League and the Group of 8 nations to discuss reforms.

Egypt and the United States had clashed over the agenda for that meeting.

A subsequent decision by U.S. Secretary of State Condoleezza Rice to cut Egypt and Saudi Arabia from a trip this week merely added to tensions between Washington and Cairo. Rice will now travel only to London for the launch of a conference on Palestinian reform.

It is still unclear whether Mubarak will control who can be a presidential candidate, and the U.S. response will depend on how free the election is, officials said. In public, the Bush administration has always denied using aid as leverage with Egypt, saying that threats and heavy-handed tactics would be counterproductive.

But behind the scenes, the State Department has been battling internally and with Congress over how hard to push Mubarak and how to respond when Cairo failed to live up to its timetables for reform.

“It’s a contentious policy issue; of course there’s going to be a struggle over this stuff,” the administration source said. “People are generally concerned that if you go too far, you could have Mubarak do [to the Americans] what Sadat did to the Soviets: kick them all out in one day.”

Egypt is one of the largest recipients of U.S. aid -- about $2 billion a year as a reward for making peace with Israel in 1978 and signing the Camp David accords.

After revelations that some of the plotters of the Sept. 11, 2001, attacks were Egyptian, the administration decided it was “no longer enough to be shoveling $2 billion out the door in return for Camp David,” the official said. “We’ve really got to receive something for it.”

As a result of that review, the United States and Egypt decided to focus on two areas of reform: the banking sector, which is state-controlled and nearly insolvent, and funding for civic groups to promote democracy.

After several years of struggle, the official said, Egypt agreed to privatize one of its four state-owned banks, with other financial reforms to follow. For its part, the Bush administration agreed to give $1 billion in aid for financial sector reform, of which Egypt would receive $200 million in cash immediately. The rest of the money would be released if Egypt met specific goals.

That aid package was scheduled for signing Jan. 23, but no action has been taken amid escalating tensions, which include Egypt’s jailing last month of opposition leader Ayman Nour.

Separately, for the last four years Washington has annually withheld $20 million in aid for nongovernmental civic organizations because the Egyptians refused to allow the United States to fund pro-democracy groups directly. Instead, Cairo placed the minister of social affairs and labor on a board overseeing the distribution of U.S. aid for democracy and governance, in effect vetoing any aid to groups that might challenge Mubarak’s hold on power.

“We felt we were complicit in a government of Egypt attempt to exercise veto power,” the Bush administration source said. “The dead hand of the government was squeezing all the oxygen out of the room for civil society and political debate.”

Egyptian officials have justified their actions by citing fears that U.S. aid could end up helping radical Islamic movements. The Americans, arguing that they had no intention of funding extremists, insisted on providing aid directly.

As a result of the unsettled dispute, the $80 million to promote democracy remains unspent, the U.S. official said.

In addition, the House International Relations Committee held up $200 million in development aid for nearly a year because of the “slow pace” of financial reform, a House leadership aide said.

It was finally approved late last summer after pressure from the State Department.

Administration officials “pleaded for it to be released,” the aide said.

Some U.S. officials have thought that Egypt’s support is too crucial to the Mideast peace process to jeopardize relations -- and the Egyptians have figured that into their calculations.

The aide confirmed a sense of frustration on Capitol Hill that “after $40 [billion] to $50 billion [in U.S. aid] they still have a one-party state, rampant corruption, favoritism, while a good number of Egyptians seethe in anger for what they see as the United States propping up their illegitimate regime.”

As the White House watches to see whether Mubarak is in fact taking a significant step toward political pluralism, the debate inside the administration over how hard to push for democratic reform is likely to continue.

“I can comfortably predict to you there will be a faction that’s going to press to give them the money ... and there will be those who will say no,” the administration official said.