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Why Egypt may not care about losing US aid

Some say that Egypt's military rulers may be willing to forgo $1.3 billion in aid if it means a boost in popularity.

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“They do buy hardware and munitions from other places, but it's still supplies and spare parts and training and lots of other stuff – that's a big deal. It would be a dislocation if the relationship was cut,” he says.

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And it’s not just a matter of physical weaponry or maintenance, but of the symbolic importance of Egypt’s partnership with the US. “As with Camp David, this relationship is important for what it signifies of Egypt's place in the world,” he says. Severing the relationship would send negative messages to allies in Europe and the Gulf as well.

For the US, cutting aid could mean losing the expedited transit through the Suez canal and access to Egyptian airspace that its aid buys. Many in the US worry that ending the aid might endanger the Egypt-Israel peace treaty. And it could mean losing the access to and leverage on Egypt’s military leadership that the aid, and the military relationships it built, have bought. “Washington doesn’t want to be cutting its most reliable link with the Egyptian authorities at a time of real turbulence,” says Mr. Hanna.

Egypt pushes US to the brink

Yet critics wonder what kind of leverage or influence that aid has bought over the past year, as the military generals have killed peaceful protesters while shrugging off US reprimands, delayed a transition to civilian government, and even refused to take the US defense secretary's calls while protesters attacked the Israeli embassy.

Egypt's targeting of the nongovernmental organizations, some of which are funded by and have close ties to Congress, has pushed the US to the brink. Among the US citizens banned from leaving Egypt and accused of a crime that carries a five-year prison sentence is Sam LaHood, son of Ray LaHoodPresident Obama’s transportation secretary and an influential Republican politician.

While threats of cutting the military aid have proven useless in changing Egypt’s behavior, a more effective point of leverage could be Egypt’s dependence on loans from the IMF and other donors. Egypt is facing an enormous budget deficit and its foreign currency reserves fell by half last year. Leaders are in the process of negotiating a $3.2 billion loan from the IMF to push down soaring borrowing costs and ease the pressure on reserves.

With Egypt desperate for the loan, the US could push its ally to drop the case against the NGO workers by urging the IMF to put the brakes on a loan deal.

“Were the US to decide to impede that flow, then Egypt is in big trouble,” says Springborg. “This is Egypt's vulnerability now. So if the SCAF pushes so hard that it jeopardizes that, then it's got real problems. It depends on how Washignton plays it. If they focus just on the NGOs and military aid, they're playing into SCAF's hand. If they're a bit quieter and playing behind the scenes, then they've got SCAF in a corner.”

Yet even that line of pressure has its limits. The US has no interest in seeing an economic collapse in Egypt, which would have spillover effect in the region, says Hanna. “Maybe Egypt does see a sort of protection regardless of what it does with respect to the fact that it is too big to fail and everybody is going to be loathe to take steps to push Egypt to the end state.”

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