U.S. hesitates on the $1 billion bailout of Egyptian Debt

The U.S. has plans to supply to Egypt one billion dollars in aid that would take the form of a cash transfer into Egypt’s budget. The transfer has been stalled however by uncertainty on the part of the U.S. as to how Egypt would use this money. Egypt has in the past, to include prior to the revolution, taken exception to the fact that the U.S. places conditions on funding. Disputes over the allocation of the debt relief has played a role in American envoys currently negotiating for less than the one billion dollars.

The revolution has brought about new people into the political main stream and with it, new political priorities. There is some concern as to where the new President of Egypt’s loyalties would lie. Washington is concerned that Egypt may renounce the peace treaty with Israel and wary of recent use of political power by the President’s political party law makers. Those law makers replaced the heads of state owned newspapers with more government friendly editors-in-chief. Recently however, Egypt’s President has been public about his criticism of Syria’s regime and that has brought some balance to the situation.

The U.S. has pushed that although Egypt has an Islamic government, they should be including all aspects of Egyptian society. The U.S., along with its negotiation of the one billion dollars, is sending a delegation of 50 American business leaders to Egypt.

With the massive budget shortfall that Egypt has, amounting to nearly 25 billion dollars and the fact that Egypt’s banks have bled through about two thirds of their foreign currency reserves, it seems clear than Egypt is in serious need of foreign aid. It also seems clear that the U.S. is using that to their advantage in order to push a foreign political agenda.



1) Should the U.S. be putting conditions on how the money that they give to an ally should be used? If so and the U.S. claims that one of those conditions were not met, what court should hear the case?

2) With other countries like China looking to invest heavily in Egypt in order to gain a foothold in the Middle East and the U.S. sending their own private business leaders to Egypt, could the U.S. legally bar Egypt from doing business with other countries in order to accept the aid? What court would have jurisdiction to hear the complaint if Egypt, after receiving the funding, ignores that condition and claims that that particular condition was illegal in the agreement and thus unenforceable?


Jay Solomon, U.S. Hones Plans for $1 Billion Bailout of Egyptian Debt, Wall St. J., Sept. 4, 2012, at A1.

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