US aid to Egypt ends up in US contractors' pockets

Critics question billions in aid routed back to US contractors
By Farah Stockman
Globe Staff / February 3, 2011


WASHINGTON — United States taxpayers have funneled more than $60 billion of aid into Egypt since President Hosni Mubarak came to power in 1981, but more than half of the money has been spent supplying weapons to the country’s military, an arrangement that critics say has benefited American military contractors more than ordinary Egyptians.

About $34 billion of the aid to Egypt has come in the form of grants that Congress requires Egypt to spend on American military hardware, according to statistics from the Congressional Research Service. Those contracts include helicopter engines built by GE Aviation in Lynn and transmitters for Egypt’s Navy built by Raytheon in Tewksbury.

“Egypt has a real need for foreign aid, but not the kind of foreign aid they are getting,’’ said Geoffrey Wawro, history professor and director of the Military History Center at the University of North Texas. “They need more butter than guns. They need development aid, but development aid does not serve as a stimulus plan for American factories.’’

Military aid to Egypt became a cornerstone of US foreign policy in 1979, when Egypt signed a landmark peace deal with Israel that bought some measure of stability in the tumultuous region.

But in recent years the large amount of aid earmarked for the military, and the relatively low sums supporting civilian aid, have attracted scathing criticism from Egyptians, some of whom argue that US aid has gone to entrench a military dictator at the expense of the fledgling democracy activists.

Now that protesters have taken to the streets in Egypt against Mubarak’s regime, questions are being raised about whether the massive aid package — and the emphasis on military support — should continue under whatever government comes next in Cairo.

Massachusetts Senator John Kerry, a Democrat who heads the Senate Foreign Relations Committee, is among those who have called on Congress to focus more on providing support to ordinary Egyptians civilians, and require more accountability for the military aid.

“Congress and the Obama administration need to consider providing civilian assistance that would generate jobs and improve social conditions in Egypt, as well as guarantee that American military assistance is accomplishing its goals,’’ he wrote in an op-ed in Tuesday’s New York Times.

The Egyptian military, which has close ties to the Pentagon, appears to remain a popular institution in Egypt and there is no evidence that tanks have fired on protesters. But during the early turmoil, protesters were the target of tear gas canisters that read “made in the USA,’’ fueling debate about the aid.

Edward Djerejian, a former senior State Department official whose specialty was the Middle East, said the special military relationship with Egypt should continue, as long as a new government abides by democratic process and respects its international obligations, including the peace treaty with Israel.

“We don’t know what the composition of the next government will be, so it’s difficult to make any decision on US aid until we see it,’’ Djerejian said. “I think it is critically important that our aid to the Egyptian military continue, because the military, as we have seen, is really the pillar of law and order and stability in Egypt.’’

Shifting away from the massive military aid package to Egypt would be an uphill battle on Capitol Hill, because billions of dollars for the US defense industry, and American jobs, are at stake.

“When you think about the aid, a large portion of it is very self-serving. It gets funneled right back to the United States,’’ said Bill Allison, editorial director at the Sunlight Foundation, a nonprofit organization geared toward government accountability.

Last year, Egypt was the fifth-largest recipient of US aid, getting $1.6 billion. That was not the case in the 1950s and 1960s, when Egypt’s fiery leader, Gamal Abdel Nasser, leaned toward the Soviet Union instead of the United States. He nationalized the strategically located Suez Canal and went to war with Israel, a US ally.

But in 1979 Egyptian president Anwar Sadat changed course and signed a peace accord brokered by President Jimmy Carter, whose administration wrote letters to both countries promising strategic military assistance.

Congress soon authorized major aid packages to both countries, using an informal formula — not enshrined in the peace treaty — that gave Egypt $2 for every $3 that Israel received. Israel quickly became the largest recipient of US aid, and Egypt the second-largest — rankings that were only recently overtaken by wars in Afghanistan and Iraq, and last year, the disaster in Haiti.

In the early years, the aid was distributed evenly between assistance to Egypt’s military and civilian economic support for its people. Most of the military support came in the form of a loan. But in 1985, as the United States beefed up its support to Israel, the military assistance to Egypt also increased, and became a grant that the Egyptians had to spend on US defense contractors.

The Egyptians bought tanks from Sterling Heights, Mich., which are viewed today on television amid the throngs of protesters; high-speed boats from Gulfport, Miss., Hellfire missiles from Orlando, Fla.; and Black Hawk helicopters from Stratford, Conn.

In Massachusetts, the deal with Egypt helps keep 3,200 people employed in Lynn at GE Aviation, one of three companies to win a $820 million contract to make helicopters for Egypt. Spokesman Richard Gorham declined to say whether the company is worried that military aid to Egypt will be cut.

Waltham-based Raytheon has also reaped huge benefits from the military aid to Egypt. It is one of 18 companies involved in a $3.2 billion deal to make 24 F-16 aircraft.

Raytheon Integrated Defense Systems, in Tewksbury, has a separate $77 million contract to make transmitters for Egypt’s Navy. Jon Kasle, a spokesman for Raytheon, said he did not have a comment about how the turmoil in Egypt might impact the company.

Allison, of the Sunlight Foundation, said attempts to curb military aid to the Egyptians, or condition it on democratic reforms, have been met with opposition from powerful lobbyists on Capitol Hill.

“You have foreign agents for Egypt lobbying for it, and the US defense contractors lobbying for it, and in some cases they are the same people,’’ Allison said.

The strong interest of US companies could help explain why US military assistance to Egypt has remained at $1.3 billion a year, while its civilian economic assistance has steadily shrunk, from $815 million a decade ago to $250 million requested for 2011. The decline began in 1998, when Israel arranged for a reduction in economic support and an increase military aid. As Israeli’s economic aid shrunk, so too did Egypt’s, at a rate of $40 million per year every year, according to a report by the Congressional Research Service.