It wouldn't take an economist, or even anyone who's studied economics at any level to tell you that right now Egypt is certainly a risky place for investment. However, that doesn't seem to be stopping the government of Qatar from developing a plan to buy $3 billion dollars in Egyptian bonds (Al-Jazeera). This deal was announced just over a week ago. Many people might be wondering what Qatar's endgame in this is, though they claimed that they didn't expect anything in return. This is in addition to numerous other aid pledges Egypt has received in the last six months. Notably, the United States has also pledged $450 million in aid to Egypt, hinting at more if the Egyptian government can reach a deal with the IMF for a $4.8 billion loan (BBC News). What's more, the EU, which promised $6.4 billion last November (BBC News), is threatening to stop aid to Egypt unless Egypt can meet conditions with regard to not only human rights and the rule of law, but also a mention of a "social safety net, [ensuring] macroeconomic stability and [strengthening] public finances, as well as [working] toward a free-trade deal with the EU," (Reuters).
All of this kind of makes a person wonder... why so much aid to Egypt? Is this purely an issue of Egypt's neediness and the beneficence of more wealthy countries in the wake of Egypt's revolution, or is there a strategic end to this? What the motivations behind aid are is one of the questions we've discussed in class, and it would seem that one would have to be quite foolish to assume that the aid is simply wealthy countries being friendly. Given the strategic importance of having Egyptian and Israeli relations toward one another be peaceful, one would think that the US and EU are attempting to secure some sort of favorable situation in the region. Plus, it seems unlikely that the EU would suggest a free-trade deal unless it had some sort of ulterior motive, or that the US would desire Egypt to reach a deal with the IMF (an institution so famous with regard to structural adjustment) if it didn't have some design on the situation. So it seems clear that Western governments want something in return, and since that's the case it makes you wonder what Qatar actually wants in return (other than "nothing").
Since 1950s United States had allocated economic, military, and political aid across the world in a form of foreign aid to many countries. Part of the reason why United States gave foreign aid to so many countries was to promote U.S interest such as regional stability, access to natural resources and also hoping for long term goal of advancing freedom and democracy aboard. I think it is time to stop or cut foreign aid spending in general to countries especially Egypt right now. US and European nations are pouring in so much money but nothing really has changed in Egypt. I guess we keep on giving more money to Egypt became we still see them as a great ally in fighting against terrorism. Most of the money in foreign aid is suppose to go towards development especially economic, children's health and such but in Egypt case the money mostly seem to go towards military aid. From 1982 to 2009 ISrael remained number one in terms of receiving foreign aid at $117.6 billion and Egypt $83.7 billion dollar. Even with all the aid pouring in unlike other countries such as Brazil or South Korea Egypt hasn't become a economic develop country. It will be interesting to see the future outcome of foreign aid in Egypt.
ReplyDeleteWe are committed to giving aid to Egypt due to the Camp David Accords for their part in keeping peace with Israel. Although I generally agree that in many areas our Aid contributions are not used as they should be, Aid to Egypt should be kept where it is. Since the Arab spring there have not been huge turn arounds in countries where dictators were ousted. For this reason I believe our main goal is to not only help Egypt get back on its feet, but if we can give them what they need to establish a STRONG democracy then we will be able to create more allies in the area and foster good will among Muslims in general. I think this would be what the EU may be striving for also, but they have so many issues going on with Greece and Cyprus this seems a little foolish... And honestly, who know what Qatar really wants.
ReplyDeleteAfter reading an article in the NY Times about John Kerry announcing that the US would pledge $250 million in US Aid for Egypt, it seems as if the main motivation for so much aid is to promote and advance Egypt's democratic revolution. The announcement of US aid came at a significant time in March with Egypt's parliamentary elections scheduled for April. Kerry and President Mohamed Morsi discussed the need to ensure the freeness and fairness of Egypt’s coming elections. The first installment of 190$ million in aid will go to what Kerry has classified as the country's 'extreme needs' and the second installment of 60$ million will go to the "creation of a fund to support small businesses, which will provide 'direct support to key engines of democratic change in Egypt, including Egypt’s entrepreneurs and its young people'".
ReplyDeletehttp://www.nytimes.com/2013/03/04/world/middleeast/kerry-announces-millions-in-us-aid-for-egypt.html?_r=0
I don't think that it's entirely unrealistic that the EU may want a free trade agreement just to expand trade. Free trade between the two entities would certainly serve European interests. As far as the aid goes, it is very likely that the US has an interest in keeping Egypt and Israel at peace. This could certainly be accomplished by having the US play a heavier hand in Egypt's finances. Qatar's move, however, seems very interesting. Perhaps they want to hold some sort of influence over Egypt as well.
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ReplyDeleteThis is a very interesting post Eryn. Egypt certainly is a risky place for economic investment at the moment so it is a logical conclusion that countries such as the US and and Qatar have strategic rather than strictly financial aims in mind. Perhaps Qatar is developing a plan to purchase 3 billion dollars in Egyptian bonds as a way of ensuring stability in the future and promoting economic growth. As as been noted in this discussion, the United States is primarily interested in keeping the peace between Egypt and Israel. Financial aid will continue to flow to Egypt from the US in the hopes that there will be an enduring peace between these two countries. Aid from the US and EU to Egypt is based on conditions preferable to their own interests and following this logic it would seem that Qatar has its own reasons such as financial returns and geopolitical advantages.
ReplyDeleteEgypt is one of the strongest allies in the MIddle East for the United States and it is in America's interest to keep Egypt stable. Though it is also in America's best interest to remain uninvolved in more conflicts. I would consider this increase in aid a way of America supporting its ally and to avoid its descent into further instability which could warrant a military intervention that would be even more costly. I wouldn't say that is necessarily to support a democracy as many sources say that Egypt has moved closer to be an autocracy, yet the US continues to support them which suggests that the US just wants stability.
ReplyDeletehttp://www.thedailybeast.com/articles/2013/04/11/qatar-sends-aid-money-to-help-egypt.html
In terms of Qatar, I would agree that it is using economic aid as a way to increase their influence globally. It is a small country and has historically been a non-player in terms of Arab politics, but if heavy player Arab countries like Egypt are dependent on Qatar for economic growth then Qatar is going to have more of an influence on Middle East activities.
There is a saying that there is "No war without Syria, no peace without Egypt." Israeli-Egyptian relations are important, without a doubt, but the key for countries like Qatar and the US is getting Egypt actively involved in Syria. Aid comes with strings attached. Qatar has been an active participant in arming Syrian rebel groups, and it could certainly use the influence of the most populous Arab country in the region. Military aid to Israel, on the other hand, is nothing new. Should Syria collapse, the fallout would engulf Lebanon, spill over into Jordan and into Iraq. Israel needs secure borders now more than any other time in recent years.
ReplyDeleteIt is obvious that the United States desire to give aid to Egypt stems from a strategic desire to maintain peace between Egypt and Israel as well as maintain the strategic location that Egypt gives. As for Qatar, pulling Egypt into an alliance will also strengthen cross-regional ties which will become very important as the Arab world recovers from the revolts. In addition, Egypt's oil reserves and its importance within the energy producing economy plays a large role in garnering aid.
ReplyDeleteIt is obvious that the United States desire to give aid to Egypt stems from a strategic desire to maintain peace between Egypt and Israel as well as maintain the strategic location that Egypt gives. As for Qatar, pulling Egypt into an alliance will also strengthen cross-regional ties which will become very important as the Arab world recovers from the revolts. In addition, Egypt's oil reserves and its importance within the energy producing economy plays a large role in garnering aid.
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ReplyDeleteThe Arab Spring is one of the coolest examples of a positive unanticipated consequence of technology!
ReplyDeleteRepressive governments beware!
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ReplyDeleteAn international blog found on policymic.com discusses this topic in detail advocating that if Egypt continues to under-perform, the U.S. should shift some of its military aid to promote economic growth.
ReplyDeleteMilitary aid ensures that the U.S. can continue to reap the strategic benefits of an alliance with Egypt – priority access to the Suez Canal and Egyptian airspace, and Egyptian-Israeli peace. Results-based aid would show that the U.S. will not support an authoritarian government, but is willing to stand with any government that legitimately works for the Egyptian people. Congress is currently expected to determine aid based on whether the newly elected government shares our ideals. Instead, In the long term, a stable and prosperous Egypt would provide more security benefits to the U.S. than an ideologically friendly government. The wars in Iraq and Afghanistan, fought almost entirely to deal with unstable political conditions after regimes were toppled, will cost the U.S. at least $4 trillion – we cannot afford many more interventions to stabilize countries. Additionally, trade ties will develop with an increasingly open and productive Egyptian economy. Most importantly, this policy poses no costs to U.S. tax-payers, as the total amount of aid would remain the same even if the allocation were to shift.
It seems like the plethora of aid going to Egypt is a result of many developed countries wanting to develop a good political relationship with Egypt. This is obviously strategic due to Egypt geographic location. The Suez canal is extremely important to international trade and oil supply for Europe. Additionally, its proximity to other middle eastern countries makes it an important ally for many developed countries looking to increase their influence there. Egypt is extremely volatile and i am unsure on the stability of their government so this aid could potentially increase corruption and could potentially increase Egypt's dependance on foreign aid which would benefit those giving aid looking to increase their influence but it could potentially harm Egypt's economy.
ReplyDeleteI'm not sure how I totally feel about this situation. I understand that everyone wants their hand in Egypt primarily I believe for the reason of the Suez Canal. As mentioned it is extremely important to international trade and stability, and access to this region would easily be beneficial to both the United States and the EU. Other than economic reasons and development I do not see a real hidden agenda behind the money going to Egypt, it is to help them develop, hopefully stabilize, and if this happens then the possibility of economic gains for the United States or the EU is substantially greater.
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