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Egypt needs help for democracy and economy

by Cesar Chelala

The overthrow of the democratically elected government of Mohamed Morsi by the Egyptian military is not the end of a critical period in that country. It is only a transition period that needs special attention so as not to end as an even bloodier conflict than what it has been so far.

The United States, more than any other country, can help Egypt sail through the dire straits in which it finds itself.

At present, U.S. aid to the Egyptian military amounts to $1.3 billion in annual aid to the Egyptian military, which is about 20 percent of its funding. Egypt is the third-largest recipient of U.S. military aid after Afghanistan and Israel. Between 1948 and 2012, the U.S. provided Egypt with a total of $72.9 billion in bilateral aid.

Since 1979, Egypt has been the second-largest recipient, after Israel, of U.S. bilateral foreign assistance.

Sen. Patrick Leahy, chairman of the Appropriations Committee’s Subcommittee on the State Department and Foreign Operations, stated that aid to the Egyptian military should be cut off because of the military takeover. U.S. federal law states that nonhumanitarian aid must be cut off to “the government of any country whose duly elected head of government is deposed by military coup d’etat or decree or, after the date of enactment of this Act, a coup d’etat or decree in which the military plays a decisive role.”

Some Egyptian military officials have stated that the military’s actions do not constitute a coup d’etat, since the military didn’t intend to have an enduring role in Egypt’s politics. However, experience shows that in very few occasions will a military relinquish power voluntarily.

Morsi made some serious mistakes during his tenure as president. He refused to include a wide array of opposition figures in government and was unable to redress the economy, which had been badly battered as a result of the prolonged upheaval to depose Hosni Mubarak, who had ruled the country for almost 30 years. It was probably the economic woes that triggered the popular demonstrations against Morsi’s rule.

Egypt is now going through a process called “stagflation,” a combination of inflation and very slow growth. During 2011, real GDP grew by 1.78 percent and only increased to 2.2 percent in 2012, a figure that slightly exceeds the country’s population growth. At the same time, the cost of living will probably increase substantially in 2013, a situation that may provoke additional unrest.

For the U.S., there should be two priorities in dealing with that country’s present situation: to help ensure the return to a democratic government, and to help alleviate the country’s considerable economic problems.

The naming of a transitional civilian government is a right step toward that first goal. As Edward Derejian, a former State Department official told CNN, “This situation creates the possibility for a political transition in Egypt to a pluralistic government system.”

Inflation is now 7 percent overall and the country’s foreign exchange reserves went down from $36 billion in 2011 to $13.6 billion in February 2013. President Barack Obama could name a group of experts to help Egyptian economists design a pro-growth economic package — including a public works component — to help that country come out of the morass it is now in.

At the same time, the U.S. could allow wheat exports to support a subsidized bread program to keep bread prices low and help finance grain storage facilities.

The U.S. could also facilitate “debt swaps” so that money earmarked for paying down that country’s foreign debt could instead be used on training and infrastructure projects. To help Egypt now is to contribute in avoiding new popular revolts of dire consequences in the immediate future.

Cesar Chelala, M.D. and Ph.D., is a co-winner of the Overseas Press Club of America award.