Egypt’s new leaders are lashing out at Israel and the United States, prompting Washington politicians to ask just what their $65 billion in aid has bought the United States. Since a 1979 peace treaty between Egypt and Israel, Washington has given Cairo economic and military aid that has exceeded $1.5 billion per year.

Congress believes that the funds help keep Egypt afloat, and that they should buy Washington some goodwill and gratitude. But the reality is that the military assistance is largely an economic lifeline for America’s defense industry, which is the chief beneficiary of the aid program. And in a country where many are too young to remember the reasons behind the aid, generations have been reared to believe it is a sacrosanct privilege. As a result, American threats to cut aid ring hollow and attempts to link it to foreign policy objectives are futile.

Egypt is the second-largest recipient of foreign aid, after Israel. Of the $1.56 billion in aid the Obama administration asked Congress to approve for Egypt in 2012, only $250 million was earmarked for economic assistance. The lion’s share of the request - $1.31 billion – was for military and security purposes. Almost all of that aid is allocated to Egyptian weapons purchases from American defense contractors, such as General Dynamics and Honeywell.

“In America the aid is seen as a gift to Egypt,” Sayf al-Yazl, a former general and director of the Jumhuriyya Center for Strategic Studies told The Media Line. “But Americans always forget that it is American defense companies that are the chief beneficiary of the aid. We only get to spend the money in your military supermarkets.”

More than thirty years after Egypt signed a peace treaty with America’s key ally, Israel, solidifying Washington’s role as the region’s major power-broker, Egyptians feel under-appreciated. They have watched as American aid has shrunk from $2.1 billion per year to less than $1.6 billion, even as the cash transfers have been eroded by inflation. As the Egyptian economy has grown by more than 300%, the added value of American assistance has shriveled considerably. And when Washington and Jerusalem signed an agreement in 2007 to increase Israel’s aid by more than $600 million per year, Cairo was shut out of the party. “The aid itself is of much less importance than when it commenced in the wake of the Camp David Accords,” notes Professor Robert Springborg of the Naval Postgraduate School.

At the same time, military officials here have never been pleased that Israel receives more technologically advanced weaponry than Egypt does. To entice Israel to sign a peace agreement, Washington promised to ensure Jerusalem would have a qualitative edge over Egypt. While Egypt’s air force is packed with F-16 fighter planes, Israel has the more sophisticated F-15.

“The aid does not keep us on par with Israel,” Karim Yahya, a journalist with Egypt’s largest newspaper, Al-Ahram, told The Media Line. “Israel is the first priority for American policy, not Egypt.”

Though Washington politicians perceive the assistance as a sign of American benevolence that should buy it some foreign policy influence, Egyptian leaders view it as an entitlement. “(Former) President (Hosni) Mubarak and military leaders view our military assistance… as “untouchable compensation” for making and maintaining peace with Israel,” American Ambassador to Egypt Margaret Scobey wrote in a 2009 diplomatic cable released by Wikileaks. This view is not confined to Egypt’s officer class. “Many Egyptians view American aid as a right,” Bashir Abd al-Fatah, a researcher at the Al-Ahram Center for Political and Strategic Studies told The Media Line.

Nevertheless, some Egyptians would like to dispense with the aid all together, believing that only a narrow clique of senior military officers benefit from it. These people point to American-funded projects such as the International Medical Center hospital facility as indicative of the corruption American aid has sown. Billed as an in-patient complex to treat soldiers, the military transformed it into a commercial enterprise that ministered to paying civilians. “Corrupt generals benefit from these projects,” says Yahya. “The average Egyptian does not. There is a whole industry in this country that uses the aid to enrich some people while the population suffers.”

As a result, American talk of reducing aid or even eliminating it does not scare Egyptians. “There is a big exaggeration about need for this aid. Who benefits?” asks Yahya. According to Ambassador Scobey’ cable, Washington is at the front of the line. “The US military enjoys priority access to the Suez Canal and Egyptian airspace” in exchange for American assistance, she wrote. Others note how Cairo helps Washington in quiet ways even as it overtly criticizes America’s regional initiatives. During the US occupation of Iraq, which Mubarak opposed, Cairo allowed American jets returning from Baghdad to refuel at Egyptian airbases.

In the wake of the Egyptian revolution, which has increased anti-American sentiment, think tank analysts such as the Washington Institute for Near East Policy’s Eric Trager and the Brookings Institution’s Shadi Hamid have advocated eliminating the aid. But the view from shiny Washington office suites and marble houses in Qatar looks very different than from the squalid slums of Cairo. The principal loser of such a gambit would be America and its Egyptian friends. Local analysts say Washington would lose its remaining leverage with the new Egyptian government headed by Mohammed Morsy.

That could jeopardize the fiscal viability of its defense contractors who benefit from Cairo’s military purchases and transform the US-Egyptian relationship into the litmus test by which post-Mubarak politicians are judged.

“Egyptians are still feeling their way around the revolution,” Saeed Okasha, a researcher at the al-Ahram Center for Political and Strategic Studies told The Media Line. “They still don’t know what their views toward America are. They genuinely like (President Barack) Obama. But if America starts to play with the aid, it will only backfire and place it on center stage.” And with a new government beholden to its electorate rather than to Washington, any move to tamper with the aid could irreparably damage bilateral ties rather than coerce Egypt into line.

For more stories from The Media Line go to www.medialine.org

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