Egypt vs. Israel: How Congress Weighs the Risks of Cutting Our Aid to Cairo

As more Congressmen threaten to withhold money from a backsliding Egypt, do they understand what it could mean for Israel and the three-decade peace treaty?

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U.S. Chairman of the Joint Chiefs of Staff General Dempsey meets with head of Egypt's ruling military council Field Marshal Tantawi in Cairo / Reuters

The indictment of 16 American NGO workers in Egypt last week has led a number of Congressmen to call for reexamining and possibly revoking the billions of dollars in annual U.S. aid to the country -- the fifth-greatest recipient of American funds in the world after Afghanistan, Pakistan, Iraq, and Israel. "Not one more dollar should flow to the government of Egypt until the secretary of state can assure the American people that this issue is resolved," said Rep. Kay Granger, the chairwoman of the foreign operations subcommittee of the House Appropriations Committee. Senator Patrick Leahy, chairman of the Senate Appropriations Committee's subcommittee on the State Department and foreign operations, put it starkly: "We want to send a clear message to the Egyptian military that the days of blank checks are over." So did Senators John McCain, Joseph Lieberman, and Kelly Ayotte in a joint statement last week: "Congressional support for Egypt -- including continued financial assistance -- is in jeopardy."

In a joint letter, 40 members of Congress issued this threat directly to the head of Egypt's military, Mohamed Tantawi: "The absence of a quick and satisfactory resolution to this issue will make it increasingly difficult for congressional supporters of a strong U.S.-Egypt bilateral relationship to defend current levels of assistance to Egypt -- especially in this climate of budget cuts in Washington," they wrote. Anther letter to Tantawi last month, from 11 senators, had conveyed a similar sentiment. Senator Rand Paul is pushing for a floor vote this week on his amendment that would bar any aid for Egypt until the government there drops its prosecutions of the American workers.

But there's something more at stake in U.S. funding to Egypt, something that has gone largely un-discussed: what would be the affect of cutting aid on the Egypt-Israel peace treaty? This absence is particularly surprising given the active support for Israel exhibited by many of the same members of Congress leading the charge against Egypt's aid package.

U.S. aid to Egypt has historically been conditioned on Egypt meetings its obligations under the 1979 Camp David treaty, which ended three decades of intermittent war with Israel. As relations between the two countries have vacillated over the three and a half decades since, with particular nadirs since the overthrow of Hosni Mubarak last year, the funding has been seen as one of the chief protectors of the treaty. With the Egyptian economy in shambles and its new rulers struggling to prove to its citizens that they can run the country effectively, losing U.S aid would be a disaster for Egypt. So much so that even though some Egyptian political actors have threatened to annul the treaty, most Egypt-watchers are confident that such threats are likely empty as long as U.S. aid is tied to the treaty. "[The Egyptians] would definitely say that the treaty is premised on the aid," said one top Hill staffer who works closely on the issue.

Cutting aid to Egypt could thus mean trouble for the treaty. "The aid was one of the commitments of the parties that signed the peace agreement so if there is a breach from one side it gives the right of review to the parties," Essam el-Erian, the deputy leader of the Muslim Brotherhood's Freedom and Justice Party, the biggest group in the newly elected parliament, said this week.

The recent incident with the American NGO workers puts the U.S. government, and particularly members of Congress, in a difficult position. "We're acutely aware of the fact that cutting off aid to Egypt is a major threat to the treaty, and it makes it a particularly difficult and scary situation to think what a withdrawal of aid could mean for Israel and the region as a whole," said a senior Democratic staffer. "But if we see pictures of American citizens in handcuffs or behind bars, all bets are off. Nobody could stop Congress from withholding the funding."

With so much foreign policy legislation on Capitol Hill viewed through the lens of the U.S.'s strategic partnership with Israel, it is perplexing that this dimension has not played more of a role in the discussion. One explanation offered by Hill staffers involved in the discussions is that members of Congress simply did not grasp the connection right away. Tensions on the Hill were quickly ignited by the fact that one of the arrested workers was the son of U.S. Secretary of Transportation Ray LaHood, and that the situation escalated the same week that representatives of Egypt's Supreme Council of Allied Forces (SCAF) were in DC to discuss the funding. The inflammatory responses from Fayza Abul Naga, the Egyptian minister of planning and international cooperation, made things even worse.

Many attribute the toned-down rhetoric on the issue over the past week or two to the dawning realization that such a move might seriously imperil one of Israel's most important alliances in the region. "There is definitely a newfound nuance and hesitancy in our discussions," another staffer said. McCain tempered his earlier statements this week, saying that a cutoff in aid "is something that is the final measure, and we're a long way from there yet."

Others argue that discussing the Israel dimension publicly could exacerbate the situation. "It's certainly in the back of people's minds, but I don't think it would be productive to have people out there saying you have to fix this so we can save the treaty with Israel," the Democratic staffer said. "The relationship with Israel is not popular in Egypt right now, and with the politics there now largely street-driven, no Egyptian wants to feel forced into the corner because of Israel, and we don't want to telegraph the message to Egyptians that the only reason we care about the country is their relationship with Israel."

Some members who are aware of the possible consequences to Israel feel comfortable pushing hard on this issue anyway because they are confident that the Egyptians will cave. "Congress is being so aggressive because the ask is so concrete, there is something that Egypt can do about this," said one staffer for a Congressman who has been particularly vocal on the issue. "Unlike other demands that some members of Congress have made in the past, this is a demand that they can fulfill. Egypt is not going to elect [AIPAC Executive Director] Howard Kohr as their president, but once they get the aid workers back, we're good."

These members are confident that a compromise could be reached that would allow the Egyptians to save face as well. Informal proposals on the table include sending the indicted Americans back home but allowing other Americans to replace them, or cutting a deal that would allow these NGOs to be officially registered with the Egyptian government but not hamstrung by onerous restrictions.

Other members seem ready to fundamentally reevaluate the entire U.S. relationship with Egypt. "There are some who are dismissive of the SCAF's influence, know their hands are tied, and their role in the country once the new government is formed in six to eight months is a big unknown," said a high-level Hill staffer working on the issue. "Some of those folks on the Hill are saying that, looking at the way elections are going, and with people like Abul Naggah running things, these are the folks we are going to be dealing within Egypt in the future, so might as well send them a message now."

This sentiment -- that Egypt could be turning against the West -- is being echoed across Washington. "The fact is that the Camp David Accords aren't necessarily safe even if we maintain our military aid to Egypt ... [since] the [Muslim] Brotherhood will soon hold power," said Eric Trager, a fellow at the Washington Institute for Near East Policy, who testified this week before a subcommittee of the House Foreign Relations Committee. "The aid is no longer an effective tool, which is why the military believes that it can prevent the son of a cabinet secretary from traveling without impunity. Making aid to Egypt a tool for leverage now will better position that aid to be used for leverage later, whether we're talking about a crisis in Israeli-Egyptian relations or another crackdown on U.S.-funded NGOs."

Efforts to restrict funding are also complicated by the intricate power dynamics in post-Mubarak Egypt. While the vast majority of U.S. funding goes to the Egyptian military, mid-level government minister Fayza Abul Naga -- rumored to be a presidential hopeful -- is responsible for the indictments against U.S. workers. "If we cut off funding, it may not solve the problem, and it will only hurt the folks both we and Israel have built a strong relationship with for years," said one veteran Hill staffer.

The State Department is working frantically to avoid such a showdown. To be sure, withholding the aid wouldn't guarantee the end of the treaty. "The Egypt-Israel peace is unlikely to be too affected directly by our assistance crisis because it remains in the profound national interest of all parties," a State Department official said. "And even the Muslim Brotherhood needs tourists and investors to come back, which they can't have by escalating tensions with Israel."

That said, there is certainly reason for concern. "The problem would be if something bad happened -- say another border incident, something bad in the Sinai, something bad in Gaza -- that sparked major controversy, the Egyptian public would be very mad, and the new parliament would have no interest in flying in the face of public opinion," the State Department official said. "We might have reduced leverage to try to help tamp things down -- not that we would necessarily succeed in any event -- as a result of this crisis."

Congressional staffers have been receiving messages that "the Israelis are majorly concerned that if aid stops flowing, the treaty may break down," according to one. They have also been hearing the counter-argument: If the U.S. allows Egypt to break the democracy provision of the funding, what is to stop them from breaking the treaty provision? This would support Congress taking a strong line sooner rather than later.

The timeline for withholding funding is not as clear as it might have been in previous years, when the money was put into an account almost immediately at the start of the fiscal year. That process was eliminated this year, in favor of more directed disbursements. So any hold on funding "would not be done proactively," according to the senior Hill staffer, but rather "when the administration decides it wants to begin moving money out the door," which the administration has assured members of Congress that it does not intend to do until the issue is resolved.

According to Congressional committee staffers, Egypt still has money in its account from the 2011 appropriations. "The pressure point will come when Egypt runs out of money to pay its contractors, which are American companies who need the money, especially during the current economic situation," the high-level staffer said, estimating that it would come to a head in the next few months if not weeks.

The relative quiet on the issue on the Hill right now is probably a sign that most members are waiting to see what happens in Egypt; the aid workers have been indicted, but no arrests have been made -- yet. "Do I think the people calling for aid cutoff are serious? I do," the senior staffer said. "Do I think they will win out? That really depends on what Egypt does." If the situation does indeed escalate, members of Congress will find themselves having to choose between defending American citizens and democracy in Egypt or protecting its most important leverage in the tumultuous country, particularly as it relates to the Egypt-Israel peace treaty. As one congressional aide put it, "The funding is one of the very few arrows left in our quiver."