new anchors for u.s.-egypt relations

8/9/2019 New Anchors for U.S.-Egypt Relations

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New Anchors forU.S.-Egypt Relations

Looking to the Future and Learningfrom the Past 4 Years After Egypts Revolution

By Brian Katulis and Mokhtar Awad January 2015


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New Anchors forU.S.-Egypt RelationsLooking to the Future and Learning

from the Past 4 Years After Egypts Revolution

By Brian Katulis and Mokhtar Awad January 2015


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1 Introduction and summary

5 New security challenges and the need

for comprehensive security-sector reform

8 Political stability requires advancing

pluralism and freedom

12 Generational economic challenges require

complete economic overhaul

14 New anchors for U.S.-Egypt relations

19 Conclusion

21 Endnotes

Contents


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1 Center for American Progress | New Anchors for U.S.-Egypt Relations

Introduction and summary

In he pas year, he figh agains he Islamic Sae o Iraq and Al-Sham, or ISIS,

and he nuclear negoiaions wih Iran have dominaed U.S. policy oward he

Middle Eas. Bu Egyp, as he mos populous Arab counry, remains a cenral

es in he broader batle o achieve sabiliy and progress in he region. Four years

afer he sar o he Arab uprisings, Egyp coninues o ace many o he same

challenges ha sparked he iniial proess.

Te Unied Saes and Egyp should ry o work ogeher o build a se o newanchors or progress and sabiliy a his urbulen ime o ransiion in he Middle

Eas. 2015 offers poenial opporuniies, bu i will require Egyp and he Unied

Saes o learn some lessons rom he pas our years and o look o he uure. Te

wo counries need o move beyond he old way o doing businessa heavy ocus

on convenional miliary cooperaionand look o a uure where he bilaeral

relaionship includes expanded economic cooperaion and a new, more consruc-

ive diplomaic and poliical dialogue.

Doing so will be difficul or he Unied Saes absen a major course correcion

by he new Egypian governmen on is poliical ransiion. Effors o enhance

cooperaion beween he wo counries will likely remain limied, and relaions are

likely o be srained as long as Egyp coninues down is curren pah o resricions

on basic reedoms and poliical pluralism. Given he uncerainy o he momen,

he Unied Saes should prepare or a wide range o possible scenarios emerging in

Egyp in he nex year. Bu i should make a deermined effor o work wih Egyp

o build new anchors or he relaionship over he nex our years.

Egyp remains in he mids o unfinished poliical and economic ransiions.

Muliple waves o proess, leadership changes, and crackdowns have raumaizedEgypians. Te overall poliical climae in Egyp is a complicaed mix o anxiey,

ension, exhausion, and hope ha he counry will achieve more progress in he

nex our years han i did in he pas our.


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I Egyp can build a oohold o sabiliy and achieve economic and poliical prog-

ress, i has he poenial o offer immense resources o he cause o regional and

global sabiliy. Bu he only way or Egyp o achieve long-erm, susainable secu-

riy is by updaing is securiy and economic secors and ushering in a compeiive

poliical environmen where basic liberies are proeced.

In he pas year-and-a-hal, many Egypians overriding ocus has been securiy

boh basic law and order and economic sabiliy. Ongoing violence in Egyps

Sinai Peninsula, Libyas ragmenaion o he wes, and Syrias ongoing bloody civil

war are seen as vivid examples o avoid. Te rise o ISIS and he growh o exrem-

is groups across he region have had an enormous impac on hrea percepions

inside Egyp. Nex o securiy, Egyps dauning economic roubles are a op prior-

iy; here is a dire need o produce economic growh and creae jobs.

While Presiden Abdel Fatah al-Sisi1appears o enjoy broad poliical suppor

rom an exhaused populaion, imporan segmens o Egypian sociey have graveconcerns abou consrains on basic reedoms and he closure o poliical space.

How Sisi governs and handles his counrys momenous challenges will redefine

wha Egyp sands or as a counry and is role in he region. Since he sar o he

21s cenury, Egyp has seen is regional influence wane, held back by he sheer

weigh o is inernal challenges and mismanagemen o naional asses.

Te pas our years have aken a serious oll on U.S.-Egyp ies. Te Egypian

view o he Unied Saes is perhaps he wors i has been in recen hisory. Many

Egypians hink he Unied Saes backed he Muslim Broherhood, or MB, when

i was in power, and ohers believe he Unied Saes helped suppor ormer

Presiden Mohamed Morsis removal o samp ou Islamiss. Tere are widespread

conspiracy heories ha embrace he noion ha he Unied Saes wans o

undermine and weaken Egyp.

In he Unied Saes, op policymakers increasingly speak o Egyp as a problem

o be managed, heir atenion ocused on avoiding he wors-case oucomes o

sae collapse. oday, he Unied Saes looks less o Egyp and more o counries

such as Jordan and he Unied Arab Emiraes or regional securiy cooperaion

effors such as he ani-ISIS coaliion. Moreover, he cenral sraegic raionale orU.S.-Egypian ies or he pas 35 yearshe role o he Unied Saes as guaran-

or o peace beween Egyp and Israelseems o have been undercu. Israeli and

Egypian leaders now ou ha heir bilaeral relaions are sronger wih each

oher han wih he Unied Saes, sending he message ha Egyp upholds he

peace reay wih Israel ou o naional sel-ineres, no because o U.S. assisance.2


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A he governmen level, Egyps curren leaders say ha hey are conused by U.S.

policy, which coninues o hold back delivery o some weapons sysems because

o Americas concerns abou Egyps poliical ransiion and human righs record.3

Te Egypian governmen argues ha is acions agains he MB and oher

Islamis groups are par o Egyps figh agains he same erroriss he U.S.-led

coaliion agains ISIS is fighing.4

Te coninued rif beween Egyp and he Unied Saes has moivaed Sisi o

seek o diversiy Egy ps oreign suppor.5Egyp remains in dire need o exer-

nal assisance. I has received more financial suppor rom Gul Cooperaion

Council, or GCC, counries in he pas year han i received rom he Unied

Saes over he pas decadea leas $20 billion rom Gul parners in he

pas year-and-a-hal compared wih he less han $1.5 billion per year rom he

Unied Saes, or nearly $15 bi llion in he pas decade. Sisi has raveled o pars

o Arica and o Europe, Russia, and China during his firs seven monhs in

office in an effor o boos suppor and srenghen ies.

Ye Egyp and he Unied Saes coninue o share common, long-erm ineress

in sabiliy and economic prosperiy. o build new anchors or he relaionship,

Washingon and Cairo should use he upcoming sraegic dialogue planned or

his year6o oser more consrucive conversaions and o look o build a new

ramework or bilaeral relaions by 2020. Te counries should seek o develop

orward-looking join approaches on hree rons:

1. Security: comprehensive security-sector modernization to meet new threats.

Te evolving hrea rom milian erroris groups challenging sae sover-

eigny requires Egyp o updae is overall securiy approach. Acknowledging

ha curren U.S.-Egyp securiy cooperaion was buil in a differen era, he

wo counries should use he proposed sraegic dialogue o ouline a pro-

gram or securiy cooperaion ailored o mee odays hreas. In hese uure

sraegic dialogues, he Unied Saes should offer he prospec o delivering

securiy assisance currenly being held back, as well as he resar o join

miliary exercises coningen upon opening a dialogue on subsanial reorms

o Egyps securiy insiuions.


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2. Countering violent extremism: an open dialogue about pluralism and political

reform. Egyps governmen has jusified resricions on basic reedoms and

closing off poliical space in is ani-errorism batle, bu guaraneeing hese basic

liberies is needed o ensure poliical sabiliy and he ulimae poliical deea o

exremiss. Egyp needs a more susainable poliical environmen o implemen

massive economic reorms, and i requires an environmen ha allows poliicalacors o maure and a new specrum o voices o emerge ha denies space or

exremis ideologies o hrive. Te limied effors o he Obama adminisraion

o influence Egyps poliical rajecory by holding back some ypes o assisance

have no succeeded. Bu hese issues are imporan o discuss, as sensiive as

hey are. Te Unied Saes and Egyp should seek o expand people-o-people

conac, educaional exchanges, and more hones discussions on he need or

pluralism, counering exremism, and poliical reorm due o hese issues impac

on Egyps overall sabiliy and he healh o he bilaeral relaionship.

3. Economy: organized international and multilateral support for Egypts eco-nomic reform.Egyp and he Unied Saes should work ogeher and in closer

collaboraion wih regional powers in he Gul o reorm Egyps economy

o spark inclusive growh and o creae jobs, breaking he cycle o oreign-aid

dependency and crony capialism o he pas decades. Te Unied Saes has

already gradually begun o reduce is economic assisance o Egyp, and as i

coninues his shif, i should look o oher avenues, including he privae sec-

or, o help srenghen economic ies wih Egyp.

Tis repor is based on he Cener or American Progress ongoing analysis o

regional rends and a rip o Egyp in lae Ocober 2014 ha included iner-

views wih more han hree dozen Egypian governmen officials, poliicians,

economiss, businessmen, religious leaders, civil sociey aciviss, journaliss,

and independen analyss.


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New security challenges and

the need for comprehensive

security-sector reform

Egyp remains erile erriory or Islamis erroris neworks. Te cener o graviy

in he regional and global batles wih exremiss remains in Syria, Iraq, Yemen, and

Libya. Bu Egyps large populaion, geographic locaion, and hisorical role as an

incubaor o radical Islamis groups mean ha i is an imporan ron in he effor o

couner violen exremiss. Te key lesson rom Egyps pas our years o insabiliy

is ha he siuaion requires comprehensive securiy-secor reormspecifically,

he policecoordinaed wih key economic, poliical, and jusice-secor reorms o

advance susainable securiy and o couner he appeal o exremis groups.

Instability on Egypts periphery

One o he greaes challenges acing Egyp is he rise o milian erroris hreas

challenging sae sovereigny. Egyp is surrounded by havens o insabiliy on is

borders and ouside is main urban areas.

o Egyps wes, he chaos inside Libya is a major poenial source o insabiliy. As

conflic in Libya coninues ollowing he ouser o ormer Libyan leader Muammar

el-Qaddafi, Egyps wesern ronier has become more dangerous.7In response o

he deerioraing securiy condiions, Egyp allegedly cooperaed wih an air cam-

paign by he Unied Arab Emiraes agains Islamis groups in Libya in 2014. 8

In easern Egyp, violence in he Sinai Peninsula has grown over he pas decade.

Since he early 2000s, a brewing jihadis insurgency in he Sinai has increased in

sophisicaion and lehaliy. Te deadlies o hese Sinai-based jihadis groups is

Ansar Bay al-Maqdis, or ABM, which is now he Egypian chaper o he Islamic

Sae o Iraq and Al-Sham under he name o Wilaya Sinai, or Sinai Province.

Sinai jihadiss primarily arge Egypian securiy orces and someimes engage in

cross-border atacks agains Israel. Hamas, he Palesinian Islamis group, conrols

he Gaza Srip and plays a role in desabilizing he region due o he smuggling o


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fighers and weapons, according o Egypian securiy officials.9In recen monhs,

Egyp has moved o creae a buffer zone in he own o Raah, which has quickly

escalaed o razing he own and relocaing amilies ha lived here.10

Violence in he Sinai Peninsula coninues. Presiden Sisi blamed wha he called

exernal orces or a major atack in all 2014 ha killed more han 30 soldiers.11

In inerviews wih Egypian securiy officials, some direcly blamed Palesinian

groups, and one even accused Israelalong wih Qaar and urkeyo involve-

men in Sinai erroris atacks.12Securiy officials also blamed he previous govern-

men headed by Presiden Morsi or he siuaion.13

Threats in Egypts heartland

Ouside o he Sinai Peninsula and closer o major populaion ceners, Islamis

youhgalvanized by he ongoing crackdown agains he Muslim Broherhoodha has resuled in more han 1,000 deahs, an esimaed 40,000 deained, and

he sysemic use o police orure14have engaged in increasingly violen so-

called revenge atacks, blocking roads, burning police cars, and planing rudi-

menary improvised explosive devices.15Tese ypes o acors, however, are sill

largely inchoae; some do no even have names. For insance, youh mainly rom

working-class areas in Cairo and Giza operae under he name o he Popular

Resisance Movemen, wih local chapers ha arge police officers and inra-

srucure such as elecriciy ransmission owers and subway cars.16A more lehal

homegrown jihadis group by he name o Ajnad Misr emerged las year and has

carried ou increasingly lehal atacks agains he police;17he U.S. Deparmen

o Sae recenly designaed Ajnad Misr as a oreign erroris organizaion.18Such

groups represen a se o challenges ha differ rom he globally linked and expe-

rienced jihadiss o ABM operaing in he remoe Sinai Peninsula and hereore

require differen capaciies and sraegies rom Egyps securiy services.

Limitations of Egypts terror threat analysis

In inerviews wih several Egypian securiy officials, he main endency was ocombine erroris groups as Islamiss wihou offering deails on how hey were

linked ogeher. One official indicaed ha he acs hemselves did no mater as

much as wha he believes and knows is righ.19Tis perspecive presens a pos-

sible weakness in collecing and analyzing he concree inormaion necessary o

accuraely arge operaions, pinpoin acual hreas, and isolae violen exremiss.


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Among Egypian officials, here is a widespread percepion ha hey are vicims o

conspiracies o undermine hem, wih veiled reerences o U.S. involvemen due

o he adminisraions delay o some miliary aid. One Egypian securiy official

underscored he gap beween Egyp and he Unied Saes on he issue o error-

ism, rheorically asking, Who is errorism? We say ha he Muslim Broherhood

is errorism, [and] you [America] say i is ISIS.20

Heavy dependence on the military and

deficiencies in the police and justice systems

Te Egypian governmen is heavily dependen on convenional miliary orces

and a orce srucure buil in he 20h cenury o respond o 21s cenury hreas.

A imes, he police and jusice sysems sruggle o effecively comba errorism

and o keep he peace. Over he pas ew years, incidens in areas such as Por

Said,21Minya,22and Aswan23have demonsraed he governmens shaky gripon key pars o he counry. Law and order in Egyp is Sisis op prioriy, and i is

indeed an essenial building block or poliical and economic sabiliy. Bu i is

unlikely o be achieved wihou subsanial reorms in he securiy insiuions and

he linking o hose reorms o increased capaciy o he jusice secor.


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Political stability requires advancing

pluralism and freedom

In holding parliamenary elecions his spring, Egyp will reach he final elecoral

milesone on he poliical road map oulined in summer 2013 afer Presiden Morsis

ouser.24A key lesson rom he pas our years is ha he qualiy and naure o polii-

cal liberies are as imporan as reaching markers such as elecion imelines, so he

procedure o he elecions alone should no serve as evidence o poliical sabiliy.

Egypts uneven political trajectory from 2011 to 2014

Te muliple poliical ransiions since 2011 produced a polarized debae ha

raised sensiive quesions abou Egyps ideniy. Tis polarizaion is parly why

he sruggle beween Islamiss and naionaliss opposed o poliical Islam is now

viewed as exisenial.

Te popular proess o 2011 led o a disorganized and uneven poliical ransiion,

including hree consiuional reerendums, wo presidenial elecions, and wo

parliamenary elecionswhich include he upcoming elecion his springall in

jus a litle more han our years. In his dizzying sream o evens, muliple ceners

o power emerged wihin Egyp, boh wihin governmen insiuions and in he

broader poliical arena. Te Islamiss, or insance, overplayed heir hand and did

no ake sufficien seps o rule inclusively or effecively, unleashing resenmen

and pushback rom power ceners such as he judiciary and he police.

Todays polit ical environment

A he momen, Presiden Sisi sands as Egyps srongman, backed by heEgypian Armed Forces and a majoriy o Egypians who see him as he only capa-

ble leader ollowing his removal o Morsi. Unil he new parliamen is sworn in

his spring, Sisi enjoys he ull powers o he execuive branch and he legislaure.


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Noneheless, Egyps poliical environmen remains britle and consrained by

resricions imposed by auhoriies, he exclusion o a number o poliical orces

ha enjoy a measure o suppor, and he vague naure o poliical-pary pro-

grams poised o cones he upcoming parliamenary elecions. In inerviews

wih CAP, Egypian poliicians, inellecuals, and business leaders supporive o

Sisi expressed heir skepicism o he curren poliical rajecory shaped by heauhoriarian and heavily resriced environmen.

Since Morsis ouser in 2013, he ruling auhoriies in Egyp have enaced a series

o decrees ha imposed new boundaries on he basic reedoms o speech and

assembly, including he Proes Lawa demand o nongovernmenal organiza-

ions o regiser under a resricive 2002 lawand a draf errorism law ha pun-

ishes oreign financing deemed harmul o naional ineres wih lie in prison,

which a number o righs groups ear may be used agains hem.25Tese measures

have had a chilling effec on basic poliical reedoms, and as a resul, a culure o

ear and sel-censorship has emerged.

A more asserive police orce has cracked down on dissen and used orce

agains suden proesers.26For civil sociey aciviss and journaliss, any crii-

cism o he new regime has been me wih harassmen and arbirary deenion.

In muliple inerviews, Egypian poliicians and aciviss expressed concerns

ha he resricions esablished during he pas year may be more sringen han

hose in he era o ormer Presiden Hosni Mubarak. Te squashing o he very

civil sociey voices who opposed and criicized he Muslim Broherhood may be

undermining one o he mos imporan asses ha Egyp has o ideologically

and poliically couner exremis Islamiss.

Egyps governing auhoriies appear o be seting he conours o wha will be

defined as accepable in poliics. New rules are being esablished or he poliical

order, someimes explicily and someimes implicily. Some have called his pro-

cess he de-poliicizaion o Egyp;27ohers have called i reconfigured auhori-

arianism.28Several poliicians and inellecuals inerviewed who are sympaheic

o he curren regime warned ha Sisi could ace he ae o his predecessors i he

coninues down his curren pah.


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Political positioning in advance of parliamentary elections

In all 2014, even beore a dae was se or parliamenary elecions, poliical paries

began o negoiae elecoral liss and o discuss he ormaion o poliical alliances.

Te basis or negoiaions lacks much policy subsance and is insead cenered on

personaliies and he relaionships beween individual leaders.

I is no cerain wha he uure holds or poliical-pary lie in Egyp. A leader o

a poliical pary supporive o he curren regime cynically admited ha, [Sisi]

knows ha poliical paries are no represening anyhing in he counry. Tey are

scatered, weak, and no influenial.29Meanwhile, an Egypian universiy proes-

sor observed, Te poliical paries are compleely ouside he curren poliical

equaion. Tey ry o operae in he gaps and margins.30

Te Egypian Parliamen is perhaps he only avenue or hese civilians o pursue

influence, and is makeup wouldin he words o a liberal poliicianfiler ouhe weak poliical orces.31Egyps parliamenary elecions law esablishes a dual-

majoriarian sysem32in which he 567 seas will be divided beween abou 74

percen o, or 420, candidaes eleced in 237 majoriarian disrics; abou 21 per-

cen o, or 120, candidaes eleced hrough absolue closed pary liss across our

naionwide disrics; and he remaining 5 percen o, or 27, candidaes eleced

hrough presidenial appoinees.33Quoas ensure ha a leas 56 should be held

by women, 24 Copic Chrisians, 16 armers and workers, 16 youh, eigh people

wih special needs, and eigh by Egypian expas.34

Mos analyss expec hese elecions o resul in a ragmened poliical landscape,

wih independen candidaes who lack any ormal affiliaion wih a poliical pary

winning mos seas and he res o he seas spli among he various poliical par-

ies ha exis. Tis monh, Sisi called or poliical paries o uniy in one slae,

bu i is unclear how such a unified slae would allow sufficien space or debae

beween he diversiy o opinions ha exiss in odays Egyp.35

Political Islamists move to the fringe of the current political debate

Te MB appears deeaed and delegiimized in he view o many Egypians. I was

banned and declared a erroris organizaion ollowing Morsis ouser.36Te move-

mens leadership is scatered and is atemping o organize as he opposiion in

urkey, launching media channels and declaring a parliamen in exile.37In he pro-

cess, he lack o reasonable and cohesive MB leadership has mean ha many o is

members and sympahizers now suppor or engage in violence agains he sae,38


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even as he organizaion officially coninues o sancion innovaive nonviolence.

According o some Islamis aciviss, his ranslaes o cuting off roads, burning

governmen buildings, and exhausing he regime economically and poliically.39

Te Salafi Nour Pary, he ulraconservaive Islamis pary, is apprehensive o wha

is in sore or i in Sisis Egyp bu remains defian afer suffering a heavy hi inpopulariy wih is Salafis base due o is suppor o Sisi. Former MB allies in he

MB-spliner Wasa and Salafi Waan paries broke off rom he MB-dominaed

ani-coup alliance, largely due o ears ha hey may be held responsible or he

rudderless rajecory o MB decisions. Tese ani-governmen Islamiss have

disanced hemselves rom effors o opple he Egypian governmen, and in

inerviews wih CAP, hey expressed heir belie ha aking such a sance has

spared heir remaining members rom being argeed by auhoriies.

However, he radicalizaion o Islamis youh seems o be coninuing unchecked

as hese groups poliical leaders ail o deliver on promises o oppling he regime.Te leaders o he Wasa and he Salafi Waan paries noe ha angry youh have

los aih in nonviolence.40A Waan leader warned ha he siuaion in Egyp

could urn worse han ha o Syria or Iraq i he curren siuaion coninues. He

added, Te [Islamis] youh are beween a rock and a hard place, [and he choices

are] eiher go violen or emigrae. Tere is no oher alernaive.41


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Generational economic

challenges require complete

economic overhaul

Egyp needs o make a undamenal shif away rom decades o donor depen-

dency and inefficien sae welare oward having an economy ha produces

greaer value or is ciizens and he world. A key lesson rom he pas our years

o Egyp s ransiion is ha he counry requires comprehensive economic

reorm in order o produce he economic growh and jobs necessary o susain

a populaion wih a large youh bulge, wih 15- o 29-year-olds consiuing a

leas one-quarer o he populaion.42

An inernaional economic conerence43o encourage invesmen and suppor

or Egyp scheduled or his coming March offers an opporuniy o organize

inernaional suppor or Egyps economic reormsbu o succeed, i requires

subsanial poliical will on he par o Egyps leaders. Te major economic

reorms required o help Egyp ransorm is overall economic sysem are con-

siderable and involve measures ha are poliically sensiive; here is a close link

beween he poliical and economic reorm processes. Some Egypian leaders

expressed concerns abou he curren rajecory o he closed and resricive poli-

ics and wheher hey were synchronized wih he expansionis economic reorms

Presiden Sisi envisions. One ormer official said, I am no convinced ha you

can have an economic breakhrough wihou poliical progress.44

Encouraging first steps toward economic reform

Many in Egyp gave credi o Sisi or aking he firs seps in energy and ood subsidy

reorm effors, which helped cu he budge defici or his fiscal year. 45In addiion,

he governmen has also aken seps o generae revenue, such as he esablishmen

o a ax on capial gains and dividends, a ax on individual and corporae incomeearned abroad, amendmens o he real esae ax, and a emporary hree-year ax on

individual and corporae incomes ha exceed roughly $140,000.46


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Sisis governmen has hus ar pledged major projecs similar o he vision se ou

during his campaign, such as a mulibillion-dollar naional road nework projec o

repair exising roads and build a leas 3,200 kilomeers o new roads, as well as he

New Suez Canal developmen corridor.47Te Inernaional Moneary Fund, or IMF,

poins o he $8.5 billion in Suez Canal invesmen cerificaes colleced in he span

o dayswih many conribuions rom ciizens eniced by he high ineres-reurnraessaying ha i shows renewed domesic confidence in economic prospecs.48

Gul counries, including he Unied Arab Emiraes and Saudi Arabia, have pro-

vided more han $20 billion in massive injecions o shor-erm, sopgap financial

and energy assisance.49Tese acions have bough some ime or needed overall

economic resrucuring and fiscal reorms o be implemened. Bu like he Unied

Saes, hese Gul counries do no appear o have gained much leverage o influ-

ence Egyps decision making as o ye.

Long road of reform ahead

Some o he addiional major seps ahead o achieve economic sabiliy include

comprehensive energy reorm, public-secor reorm, ani-corrupion effors, and

he creaion o a more business-riendly environmen. Despie he subsanial

decline in global oil and gas prices, Egyp aces dauning long-erm challenges in

securing he energy resources needed or growh. Te public-secor bureaucracy

remains bloaed, a hangover legacy o he Gamal Abdel Nasser era o socialism

rom he 1950s hrough he1960s. Te Egypian governmen will need o ake

major seps o revamp invesmen laws, revise he ax code, and eliminae bureau-

craic red ape, as invesors hope or upcoming amendmens o he naions inves-

men law. In he coming year, he Egypian governmen will ocus on economic

developmen and invesmen by holding major conerences and hosing inerna-

ional business delegaions.50

Some inormed observers, however, worry ha Sisi is currenly rying o please

muliple consiuencies a he same ime and, as a consequence, is creaing a lack

o coherence in he rajecory o he overall economic reorm plans. Due o sheer

unavoidable budgeary pressure, he governmen has been orced o coninueeconomic liberalizaion and fiscal auseriy in some secors, while a he same ime

promisingor poliical reasonso increase welare in areas such as social secu-

riy. According o a ormer official, Te numbers simply don add up. Tere is

a arge or [he] defici o be 10 percen o [gross domesic produc], ye he gov-

ernmen coninues o ake on more liabiliies [o finance projecs and welare].51


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New anchors for

U.S.-Egypt relations

In 2015, leaders in boh counries should atemp o esablish a comprehensive,

coordinaed effor o build a more susainable oundaion or bilaeral iesan

effor ha posiions boh counries o successully mee he challenges o he

21s cenury and o incorporae he lessons learned rom he pas our years. Te

Unied Saes and Egyp should ry o build on he cenral ramework o mainain-

ing he peace reay wih Israel and expand i o include a broader paradigm or he

bilaeral relaionship.

Te naional securiy waiver passed by Congress in December 201452will provide

he Obama adminisraion he flexibiliy i needs or he possible release o mili-

ary aid, bu U.S. ineress will be bes served i miliary assisance is coningen

upon Egyp implemening he necessary securiy-secor reorms and he modern-

izaion o is counererrorism approach deailed in his repor. Tese measures

will help keep in check he immediae shor-erm securiy hreas.

Bu a wider reconfiguraion in he relaionship can only ake place i serious cor-

recive seps are made o improve Egyps human righs record, including releasing

journaliss and civil sociey aciviss rom cusody. Te closing o poliical space

and he crackdown on any dissen are a recipe or insabiliy.

As one par o is overall sraegy o engage Egyp in a new way, Washingon

should coninue o ocus on he qualiy o poliical lie, including he indepen-

dence o he new parliamen. Tese will be more effecive merics or progress in

Egyps poliical ransiion han simply he holding o elecions.

Tree key mechanisms can be useul in building new anchors or U.S-Egyp relaions:

1. A new strategic dialogue between the two governments.

Egyp and he Unied

Saes have been discussing a possible sraegic dialogue or 2015, and his could

be a useul mechanism or building new anchors or U.S.-Egyp relaions.


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2. Expanded contacts between citizens. I is equally imporan or Egyp and

he Unied Saes o seek ways o expand conacs o include various secors o

heir socieies. Te counries can do a grea deal more o connec heir socie-

ies hrough universiies, business associaions, and civil sociey groups. For

example, Presiden Barack Obama could ask ha he new leaders o Congress

designae represenaives and senaors o orm a group o engage wih key lead-ers in Egyps nex parliamen. In addiion, universiies and research insiues

in Egyp and he Unied Saes should work on cooperaive projecs o discuss

he counries uure relaions.

In addiion o expanded people-o-people conacs, Egypian leaders should work

o change he enor o public debae surrounding U.S.-Egyp ies. Egyps leaders

have an imporan role in shaping a more posiive percepion o he Unied Saes

and Americans. I is counerproducive when some Egypian leaders atack he

Unied Saes and accuse i o working o desabilize Egyps governmen.

3. Increased multilateral efforts to support Egypt.Te conversaion abou

srenghening relaionships should no end wih a bilaeral sraegic dialogue

bu should insead be broadened o include a mulilaeral componen. As Egyp

diversifies is sources o exernal suppor, he Unied Saes should welcome

he involvemen o oher counries in his conversaion. Egyp already has

sough he suppor o oher counries, and he Unied Saes should recognize

his and use is comparaive advanages on he miliary and economic rons o

help Egyp sand on is own. Te upcoming inernaional economic conerence

o suppor Egyp offers a possible opporuniy o creae a new inernaional

orum, such as a sanding Friends o Egyp group, o offer suppor o Egyp in

is economic, poliical, and securiy ransiions.

Three new anchors for the relationship

1. Comprehensive security-sector modernization to meet new threats.

Te need

or a major review o Washingons Foreign Miliary Financing, or FMF, pro-

gram wih Egyp is long overdue and especially pruden now ha he Islamic

Sae o Iraq and Al-Sham is operaing in Egyp. In he coming decades,Egyp will likely ace an expanding Islamis insurgency, and U.S.-Egyp

securiy cooperaion should be redesigned wih his realiy in mind. Egyp

will coninue o dedicae a porion o he FMF unds o service M1A1 anks


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and oher weapons in is arsenal, bu he remainder o he unding should be

applied oward weapons sysems bes suied o couner asymmerical warare.

Egyp has a need or sronger inelligence, surveillance, and reconnaissance,

or ISR; border conrols; and beter policing.

Te unique naure o he regional erroris hrea also calls or exploring newways o help shore up he capaciy o Egyps securiy services and ensure ha

hey have he necessary equipmen. FMF reorm may no ake place quickly

enough, or unoreseen uure circumsances may rigger major cus o he pro-

gram. Counries in he Gul, such as he Unied Arab Emiraes, own advanced

weapons sysems ha can help bolser Egyps counererrorism and ISR

capaciies; hese can be acquired independenly wih Gul financing. Alhough

Egyp has reporedly sealed a $3.5 billion arms deal wih Russia53and is looking

oward greaer miliary sales rom China54o acquire missile sysems and oher

big-icke iems denied by Washingon, such a scheme is likely unsusainable in

he long run due o high coss.

Tere is a cenral role or he Unied Saes o play in inelligence cooperaion

wih he Egypian General Inelligence Direcorae, or GID, and new avenues

should also be explored o direcly engage Egyps Minisry o Inerior and is

domesic inelligence arm o provide raining and/or he sale o equipmen on

boh he policing and domesic counererrorism rons. Tese insiuions are

criical or sabiliy and are key o denying space or insurgens. Egyps Minisry

o Inerior, or insance, recenly requesed he mos recen counererrorism

echnologies on he inerne [and] sophisicaed inelligence sharing [wih he

Unied Saes] ha is as and hones.55However, absen evidence o srucural

reorm or greaer ransparency, sharing hese echnologies has he risk o misuse.

Te more asserive role o he Minisry o Inerior and he GID also means ha

he Unied Saes should enhance is engagemen and cooperaion wih hese

imporan acors. However, seps oward greaer securiy-secor reorm should be

a necessary precondiion or increased U.S. cooperaion on hese rons.

A his poin, Egyp does no have much o offer miliarily in he figh agains

groups such as ISIS, due o a limied srike capaciy. However, one area or

poenial bilaeral cooperaion beween he Unied Saes and Egyp is joincounererrorism effors aimed a more effecively analyzing hreas and deal-

ing wih he roo causes o radicalizaion inside Egyp. Tis is o make sure

ha Egyp does no become a source o more ISIS recruisand ha ISIS

does no have a chance o urher expand is operaions here. Egyp needs o

develop sronger analyical ools in order o advance more effecive sraegies o


20/26


close off he openings or radicalizaion and exremism. Egyp may be making

unorced errors in how i pursues hese hreas, and any misseps will have an

impac on he U.S. broader regional effor o comba ISIS and Al Qaeda.

2. An open dialogue about pluralism and political reform.I remains o be seen

wheher Presiden Sisis governing syle can change and lead o a sable con-solidaion o power ha is viewed as legiimae and capable o ackling he

counrys long lis o problems, including dauning securiy and economic chal-

lenges. I he Sisi governmen coninues down he pah o closing off poliical

space and ailing o respec basic reedoms, he Unied Saes and oher coun-

ries will find i difficul o mainain posiive ies, le alone build a new ounda-

ion or relaions wih Egyp. Bu Washingon and Cairo mus find an avenue o

consrucively discuss hese concerns in a manner ha does no conribue o

urher diplomaic ricion or erosion o rus beween governmens.

Shorly afer he parliamenary elecions his spring, he Unied Saes andEgyp should resar heir sraegic dialogue, and ha conversaion should

include working discussions concerning he issues o pluralism, poliical

reorm, and counering violen exremism.

Consrucive cooperaion wih Egyp may very well lead o progress on a

regional Counering Violen Exremism or CVE, campaign primarily ocused

on a counernarraive o exremis ideologies.

3. Organized international and multilateral support for Egypts economic reform.

Egyp should srive o become an engine or economic growh ha creaes jobs

and provides a reurn on invesmen ha is atracive o U.S. companies and

links Egyp more closely o he global economy. Te curren U.S. economic

assisance effor has litle i any impac ha is el and seen by Egypians. Te

curren level o assisance is spread oo hinly across oo many porolios and is

a racion o wha oher counries provide. A new U.S.-Egyp parnership could

cener on rade, invesmen, and mechanisms or connecing Egyp wih he

broader Middle Eas, Europe, and he Unied Saes in rade and commerce.

Te only way or Egyp o creae he jobs o employ is nex generaion is oopen isel o greaer inegraion wih he global economy, rade, and oreign

direc invesmen. Tese seps oward inegraion are no likely o happen wih-

ou wholesale reorm o he counrys poliical economy and how he economy

is managed. Te Unied Saes can help in ha ransiion, which will in par

require i o ake a hard look a he curren assisance programs and align hem

wih policy ocused on enhancing and inegraing Egyps economy.


21/26


In he curren environmen, a counry such as Egyp is perhaps more in need o

greaer experise han dollars. Providing echnical experise and advice o he

Egypian governmen would be an arduous bu grealy beneficial ask, assum-

ing ha he Egypian governmen cooperaes. A ormer Egypian official said

wha Egyp needs mos is help figuring ou he conours o is economic reorm

vision.56

Tere are indicaions ha i i is offered, he Egypian governmen mighrespond o greaer echnical assisance o address he bureaucraic disorganizaion

and inepiude undermining progress. Inefficiency, wase, and corrupion con-

ribue o Egyps poliical and economic dysuncion. Te ranser o American

know-how and managemen pracices can enhance he abiliy o he Unied Saes

o orge srong relaions in differen aces o he Egypian civilian bureaucracy.


22/26


Conclusion

A he sar o 2015, Egyp seems o have achieved a enuous oohold on sabil-

iy. Bu he condiions ha led o he iniial revoluion in 2011 remain presen,

highlighing he ragiliy o Egyps siuaion. In he wors-case scenario, Egyp

could head oward greaer inernal violence wih growing hreas rom erroris

neworks, and he economy could ail.

Te Unied Saes mus, o course, be prepared or he wors-case scenario, bu

ormulaing plans or such a coningency should no be is primary ocus; Egyp issimply oo imporan o be lef o drif on is own. Srong U.S. and allied engage-

men is needed o ensure ha exreme scenarios do no come o pass.

Te bes-case scenario is ha he curren rajecory in Egyp leads o a more

secure siuaion, and he poliical and economic reorm process moves orward in

a way ha enhances poliical legiimacy and enables he economy o grow. In his

scenario, i is easier o imagine he Unied Saes moving oward building a new

oundaion or he bilaeral relaionship. Bu Egyp needs o work wih he Unied

Saes o make his a realiy.


23/26


About the authors

Brian Katulisis a Senior Fellow a he Cener or American Progress, where his

work ocuses on U.S. naional securiy policy in he Middle Eas and Souh Asia.

Kaulis has served as a consulan o numerous U.S. governmen agencies, privae

corporaions, and nongovernmenal organizaions on projecs in more hanwo dozen counries, including Iraq, Pakisan, Aghanisan, Yemen, Egyp, and

Colombia. From 1995 o 1998, he lived and worked in he Wes Bank, he Gaza

Srip, and Egyp or he Naional Democraic Insiue or Inernaional Affairs.

Mokhtar Awadis a Research Associae wih he Naional Securiy and Inernaional

Policy eam a he Cener. His work ocuses on Islamis groups, Middle Easern

poliics, and U.S. oreign policy oward he region. Prior o joining he Cener, he

was a junior ellow in he Middle Eas Program a he Carnegie Endowmen or

Inernaional Peace. He has been published in Foreign Policyand Te Washington

Postand is he auhor o Te Salafi Dawa o Alexandria: Te Poliics o A ReligiousMovemen, published in Current rends in Islamist Ideology.

Acknowledgments

Te auhors would like o hank heir colleagues Shlomo Brom, John Craig, Rudy

deLeon, Mary Beh Goodman, Peer Juul, Hardin Lang, Ken Soer, and Ariella

Viehe or heir houghul commens and edis.


24/26


Endnotes

1 The shorthand Sisi will be used in this report insteadof al-Sisi after the first mention.

2 Egyptian government official, interview with authors,Cairo, Egypt, October 2014.

3 Jonathan Broder, The Winter of Egypts Dissent, News-week, January 6, 2015, available athttp://www.news-week.com/2015/01/16/winter-egypts-dissent-296918.html.

4 Damien McElroy, Egypt demands war on Isilreaches other forces of Islamist terror, The Telegraph,October 27, 2014, available at http://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11191386/Egypt-demands-war-on-Isil-reaches-other-forces-of-Islamist-terror.html.

5 The Economist, Al-Sisi Ascendant, September 20, 2014,available at http://www.economist.com/news/middle-east-and-africa/21618908-general-has-good-first-100-daysat-cost-political-freedom-al-sisi.

6 U.S. government official, interview with authors, Wash-ington, D.C., January 2015.

7 One key example of this was a major attack by terroristgroups on a military ins tallation in the New Valley Gov-ernorate in Egypts western desert. See Aswat Masriya,Egypts presidency condemns New Valley terrorist at-tack, July 19, 2014, available at http://en.aswatmasriya.com/news/view.aspx?id=d37b73c0-47f6-4baf-afce-90ad6fae850a.

8 Patrick Kingsley, UAE and Egypt behind bombing raidsagainst Libyan militias, say US officials, The Guardian,August 26, 2014, available at http://www.theguardian.com/world/2014/aug/26/united-arab-emirates-bomb-ing-raids-libyan-militias.

9 Egyptian security officials in Ministry of Interior, inter-view with authors, Cairo, Egypt, October 2014.

10 Kareem Fahim, Egypt Moves to Eradicate Town Near

Gaza, The New York Times, January 8, 2015, available athttp://www.nytimes.com/2015/01/09/world/middlee-ast/egypt-moves-to-eradicate-town-near-gaza-strip.html?_r=0.

11 BBC, President Sisi says jihadists threaten Egyptsexistence, October 25, 2014, available at http://www.bbc.com/news/world-middle-east-29771099.

12 Egyptian security officials in Ministry of Interior, inter-view with authors.

13 Ibid.

14 Official government figures set the number lower,at 20,000 detainees. See Orla Guerin, Revolution adistant memory as Egypt escalates repression, BBC,December 9, 2014, available athttp://w ww.bbc.com/news/world-30381292; Human R ights Watch, Human

Rights Council should address human rights situationin Egypt, August 29, 2014, available at http://www.hrw.org/news/2014/08/29/human-rights-council-should-address-human-rights-situation-egypt. On the use oftorture, see Louisa Loveluck, Egyptian police usingrape as a weapon against activists, The Telegraph,January 22, 2015, available at http://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11361382/Egyptian-police-using-rape-as-a-weapon-against-activists.html.

15 For a detailed analysis of the earlier stages of thesedynamics, see Hardin Lang, Mokhtar Awad, and BrianKatulis, Fragmenting Under Pressure: Egypts IslamistsSince Morsis Ouster (Washington: Center for AmericanProgress, 2014), available at https://www.american-progress.org/issues/security/report/2014/03/05/85281/

fragmenting-under-pressure/.

16 The Popular Resistance Movement website is availableat https://www.prm-egypt.org/ (last accessed January2015). The Facebook page of a local chapter in Giza isavailable at http://goo.gl/jUy6Jd(last accessed January2015).

17 Mokhtar Awad, Ajnad Misr: The Rise of HomegrownEgyptian Jihadists, The Tahrir Institute for Middle EastPolicy, September 18, 2014, available at http://timep.org/commentary/ajnad-misr-rise-homegrown-egyp-tian-jihadists/.

18 U.S. Department of State, Terrorist Designations ofAjand Misr and Ibrahim al-Rubaysh, December 18,2014, available at http://www.state.gov/r/pa/prs/ps/2014/12/235386.htm.

19 Egyptian security official, interview with authors, Cairo,Egypt, October 2014.

20 Egyptian security official in Ministry of Interior, inter-view with authors, Cairo, Egypt, October 2014.

21 Mokhtar Awad, The troubles of Port Said,ForeignPolicy, March 12, 2013, available athttp://foreignpolicy.com/2013/03/12/the-troubles-of-port-said/.

22 Patrick Kingsley, Egyptian authorities recaptureIslamist-held town, The Guardian, September 16, 2013,available at http://www.theguardian.com/world/2013/sep/16/egyptian-police-recapture-islamist-town-delga.

23 Ali Omar, Aswan tribal clash death toll reache s 26,Daily News Egypt, April 9, 2014, available athttp://www.dailynewsegypt.com/2014/04/09/aswan-tribal-clash-death-toll-reaches-26/.

24 Ahram Online, Egypt Military Unveils TransitionalRoadmap, July 3, 2013, available athttp://english.ah-ram.org.eg/NewsContent/1/64/75631/Egypt/Politics-/Egypt-military-unveils-transitional-roadmap.aspx.

25 Ahram Online, Draft NGOs bill more repressive thanMubarak era law: CIHRS, February 7, 2013, available athttp://english.ahram.org.eg/NewsContent/1/64/64268/Egypt/Politics-/Draft-NGOs-bill-more-repressive-than-Mubarak-era-l.aspx.

26 Amnesty International, Egypt: Security forces useexcessive force to crush student protests, October17, 2014, available at http://www.amnesty.org/en/news/egypt-security-forces-use-excessive-force-crush-student-protests-2014-10-17.

27 Egyptian economist, interview with authors, Cairo,

Egypt, October 2014.

28 Nathan J. Brown and Katie Bentivoglio, EgyptsResurgent Authoritarianism: It s a Way of Life, Carn-egie Endowment for International Peace, October9, 2014, available at http://carnegieendowment.org/2014/10/09/egypt-s-resurgent-authoritarianism-it-s-way-of-life.
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ast-and-africa/21618908-general-has-good-first-100-daysat-cost-political-freedom-al-sisihttp://www.economist.com/news/middle-east-and-africa/21618908-general-has-good-first-100-daysat-cost-political-freedom-al-sisihttp://www.economist.com/news/middle-east-and-africa/21618908-general-has-good-first-100-daysat-cost-political-freedom-al-sisihttp://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11191386/Egypt-demands-war-on-Isil-reaches-other-forces-of-Islamist-terror.htmlhttp://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11191386/Egypt-demands-war-on-Isil-reaches-other-forces-of-Islamist-terror.htmlhttp://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11191386/Egypt-demands-war-on-Isil-reaches-other-forces-of-Islamist-terror.htmlhttp://www.telegraph.co.uk/news/worldnews/africaandindianocean/egypt/11191386/Egypt-demands-war-on-Isil-reaches-other-forces-of-Islamist-terror.htmlhttp://www.newsweek.com/2015/01/16/winter-egypts-dissent-296918.htmlhttp://www.newsweek.com/2015/01/16/winter-egypts-dissent-296918.htmlhttp://www.newsweek.com/2015/01/16/winter-egypts-dissent-296918.html


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29 Egyptian secular politician, interview with authors,Cairo, Egypt, October 2014.

30 Egyptian political science professor, interview withauthors, Cairo, Egypt, October 2014.

31 Leader in the liberal Free Egyptians Party, interviewwith authors, Cairo, Egypt, October 2014.

32 Moeed Sufi, Fida Nasrallah, and Eric Hodachok,Electoral System Changes in Egypt Spark Dialogue onPost-Revolution Future, International Foundation for

Electoral Systems,August 20, 2014, available at http://www.ifes.org/Content/Publications/Articles/2014/Electoral-System-Changes-in-Egypt-Spark-Dialogue-on-postRevolution-Future.aspx.

33 Aswat Masriya, Sisi ratifies Egypt electoral constitu-encies law, December 22, 2014, available at http://en.aswatmasriya.com/news/view.aspx?id=c7b29920-ad50-4e9e-90e5-ec636b9349a8.

34 Ayat Al Tawy, Q&A: Egypts upcoming parliamentarypoll, Ahram Online, January 4, 2015, available athttp://english.ahram.org.eg/NewsContent/1/64/118832/Egypt/Politics-/-QA-Egypts-upcoming-parliamentary-poll.aspx.

35 State Information Service, President Sisi: Upcomingparliament will have wide powers, January 18, 2015,available at http://www.sis.gov.eg/En/Templates/Ar-

ticles/tmpArticleNews.aspx?ArtID=86875#.VLtcrkfF-Yx.

36 Ahram Online, Egypt government declares MuslimBrotherhood terrorist group, December 26, 2013,available at http://english.ahram.org.eg/NewsCon-tent/1/64/90037/Egypt/Politics-/UPDATE--Egypt-govt-declares-Muslim-Brotherhood-ter.aspx.

37 Mohamed El Shaafy and Ahmad Al-Ghamrawi, Egyptcondemns Muslim Brotherhood calls to hold the dis-solved 2012 parliament in Turkey,Al-Sharq al-Awsat,December 20, 2014, available at http://aawsat.com/home/article/248196/

- - --

-

-

-2012-

-

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.

38 Lang, Awad, and Katulis,Fragmenting Under Pressure.

39 Mostafa Hashem, Sinai Campaign a Boon to theIslamic State, Sada,December 5, 2014, available

at http://carnegieendowment.org/sada/index.cfm?fa=show&article=57412&solr_hilite.

40 Senior leader in Wasat Party, interview with authors,Cairo, Egypt, October 2014.

41 Senior leader in Salafi Watan Party, interview withauthors, Cairo, Egypt, October 2014.

42 Danielle LaGraffe, The Youth Bulge in Egypt: AnIntersection of Demographics, Security, and the ArabSpring,Journal of Strategic Security5 (2) (2012): 6580,available at http://scholarcommons.usf.edu/cgi/view-content.cgi?article=1156&context=jss.

43 The conference is called the Egypt Economic Develop-ment Conference. See its website: Egypt the Future,available at http://www.egyptthefuture.com/(lastaccessed January 2015).

44 Former Egyptian official, interview with authors, Cairo,Egypt, October 2014.

45 Global Subsidies Initiative and International Institutefor Sustainable Development, Energy Subsidy CountryUpdate: Assessing Egypts Energy Subsidy Reforms(2014), available athttp://www.iisd.org/GSI/sites/de-

fault/files/ffs_egypt_update_august_2014.pdf.

46 Amr Adly, The Future of Big Business in the New Egypt(Beirut, Lebanon: Carnegie Middle East Center, 2014),available at http://carnegieendowment.org/files/big_business_egypt.pdf.

47 Ahram Online, New Egypt road network to becompleted by end of 2014/15: Minister, July 31, 2014,available at http://english.ahram.org.eg/NewsCon-tent/3/12/107468/Business/Economy/New-Egypt-road-network-to-be-completed-by-end-of--.aspx.

48 International Monetary Fund, Arab Countries inTransition: Economic Outlook and Key Challenges(2014), available athttp://www.imf.org/external/np/pp/eng/2014/100914.pdf.

49 The Economist, Al-Sisi Ascendant.

50 Reuters, Egypt to hold donor conference in February:planning minister, September 8, 2014, available athttp://af.reuters.com/article/topNews/idAFKBN-0H31EU20140908.

51 Former Egyptian official, interview with authors.

52 Associated Press, Bill Permits Waiver of Precondi-tions on Egypt Aid, The New York Times, December16, 2014, available at http://www.nytimes.com/apon-line/2014/12/16/us/politics/ap-us-united-states-egypt.html?_r=0.

53 Reuters, Russia, Egypt seal preliminary arms deal worth$3.5 billion: agency, September 17, 2014, available athttp://www.reuters.com/article/2014/09/17/us-russia-egypt-arms-idUSKBN0HC19T20140917.

54 Mohamed Fouly, Egypt, China see huge chancesfrom enhancement of ties, Xinhuanet, December 24,2014, available at http://news.xinhuanet.com/english/china/2014-12/24/c_133874626.htm.

55 Egyptian security officials in Ministry of Interior, inter-view with authors.

56 Former Egyptian official, interview with authors.
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