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$50 billion later, taking stock of US aid to Egypt

Egyptian President Hosni Mubarak meets with President Bush Sunday in Crawford, Texas.

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"[USAID] is distributed by the Egyptian government in an anarchic way, through personal contacts and political influence," Abdallah says.

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Each year USAID gives $200 million to the Egyptian government in cash handouts to do with as it pleases. The money is theoretically conditional upon economic reforms in problem areas such as deregulation, privatization, and free trade.

Most Egyptian economists and businessmen, however, agree that few positive economic reforms have occurred.

"The role of the state in Egypt is still very similar to the role of the state in Eastern Europe in the 1960s," says Tarek Heggy, the former head of Shell Oil in the Middle East, and a prolific writer on Egyptian society. "I am not aware of much economic reform."

USAID has been ineffective at changing economic policy here because Cairo knows that in the end it will get the US money regardless of its economic policy, according to Walker, who since leaving the State Department has become head of the Middle East Institute in Washington.

"Egypt remains as anti-investment as it has ever been because we have never made our aid program conditional," says Walker.

At Sunday's meeting in Crawford, Texas, geopolitics may temper any US push for Egyptian reform as Bush seeks cooperation from Mubarak on Iraq and Israel's plan to withdraw from the Gaza Strip.

Ellis, who has been in Cairo for eight months, disagrees with the critics of USAID. The Egyptian government is making slow progress toward economic and democratic reform, he says. The doomsday prognoses are coming from those frustrated with the pace of reform, but they do not reflect the reality on the ground, according to Ellis.

"I think Egypt has made significant progress in economic reform," he said. He later added, "I don't accept the fact that [Egypt] is stagnating, and I don't accept the fact that the government of Egypt doesn't want to change."

But Ellis does concede that there is more to be done in Egypt. The country is dominated by the ruling National Democratic Party, which uses a 23-year-old emergency law to restrict civil liberties. There are strict limitations on the establishment of newspapers and political parties, and presidential elections are single-candidate referendums.

Top recipients of US aid each year

IrAQ - In 2004, it will become the largest recipient of US aid, receiving $18.4 billion.

Israel - The largest recipient of US largesse in 2003, getting $2.1 billion in military aid annually; $600 million in economic aid.

Egypt - Out of a US foreign aid budget of about $14 billion in 2003, Egypt was the second largest recipient with $1.3 billion in military aid; $615 million for social programs.

Colombia - Got $540 million to battle the drug trade, and local terrorist groups.

Jordan - Got $250 million in economic support; $198 in military financing.

Peru, Ukraine, Russia Received approximately $200 million each in economic and military aid annually.

Source: Council on Foreign Relations

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