US arms industry would lose big from Egypt aid cut-off

The refusal of the US, as the main arms supplier, to cut off military aid to the Egyptian armed forces in the face of their coup against a lawfully elected government has drawn widespread outrage. What is often ignored is that there are powerful forces opposed to such an aid cut-off. The following articles focus on two such groups.

Thalif Deen

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THE United States, which has refused to cut off its hefty $1.3 billion in annual military aid to Egypt, continues to argue that depriving arms to the 438,500-strong security forces will only 'destabilise' the crisis-ridden country.

There is perhaps a more significant - but undisclosed - reason for sustaining military aid flows to Egypt: protecting US defence contractors.

Virtually all - or an overwhelming proportion - of the $1.3 billion granted under Foreign Military Financing (FMF) is ploughed back into the US economy, specifically into the US defence industry.

William Hartung, director of the Arms and Security Project at the Centre for International Policy (CIP), told Inter Press Service (IPS) US President Barack Obama's refusal to cut off military aid to Egypt while US weapons are being used to murder protesters is 'unconscionable'.

'The reasons given for continuing this aid no longer hold up to scrutiny. It is not a source of stability, as the Obama administration claims,' he said.

And it has certainly not given the United States any leverage to moderate the behaviour of the regime, said Hartung, who has written extensively on the politics and economics of the US defence industry.

'One thing the aid has done and continues to do is to enrich US defence contractors like Lockheed and General Dynamics,' he added.

With the exception of a tank factory built with US assistance, he pointed out, the vast bulk of the roughly $40 billion in US military aid to Egypt over the past 30 years has gone straight into the coffers of US weapons makers.

The sophisticated weapons systems already purchased by Egypt - with much more still in the pipeline - include F-16 fighter planes, E2-C Hawkeye reconnaissance aircraft, Apache and Sikorsky helicopters, C-130 transports, Sidewinder, Sparrow, Improved-Hawk and Hellfire missiles, M1A1 Abrams and M60A1 battle tanks, and M113A2 armoured personnel carriers.

All of these weapons have either been delivered - or are in the process of being delivered - by some of the major US defence contractors, including Lockheed Martin, Northrop Grumman, General Electric, Boeing, Sikorsky, General Dynamics, United Defence and Raytheon, among others.

Besides the $1.3 billion in FMF outright grants, Egypt also receives $1.9 million annually for International Military Education and Training (IMET) and about $250,000 in Economic Support Funds (ESF).

Egypt also receives, at minimum cost as delivery charges, second-hand US equipment under Excess Defence Articles (EDA) worth hundreds of millions of dollars annually.

The US defence contractor General Dynamics is involved in helping Egypt co-produce the M1A1 Abrams battle tank, described as 'one of the cornerstones of US military assistance to Egypt'.

Additionally, there is an ongoing programme to continue upgrading equipment in the Egyptian arsenal and follow-on support and maintenance contracts for the upkeep of US equipment.

In a piece published in Common Dreams online, Jacob Chamberlain, a staff writer, quotes a report from National Public Radio (NPR) as saying that every year, the US Congress appropriates more than $1 billion in military aid to Egypt.

'But that money never gets to Egypt. It goes to the Federal Reserve Bank of New York, then to a trust fund at the Treasury and, finally, out to US military contractors that make the tanks and fighter jets that ultimately get sent to Egypt.'

So far, the Obama administration has penalised Egypt by suspending the delivery of four F-16 fighter planes (the Egyptian air force already has 143 F-16s, with the last order of 20 dating back to March 2010 still in the pipeline) and the cancellation of joint military exercises with Egypt scheduled for September.

The Obama administration has also refused to describe the military takeover of a civilian government as a 'coup' because under US legislation such a designation would automatically generate a cut-off of US aid.

As of 16 August, the death toll from the military crackdown has been estimated at between 500 and 1,000, with nearly 4,000 injured.

Pieter Wezeman, a senior researcher with the Arms Transfers Programme at the Stockholm International Peace Research Institute (SIPRI), told IPS, 'It is correct that the US military industry benefits from US military aid to Egypt.

'And it is correct that if the United States would stop altogether with supplying such aid to Egypt, that would have some effect on the turnover of the US arms industry,' he added.

However, he said, 'I am doubtful if arms industry lobbying [or] concern for the arms industry is a reason of any significance for the US to not halt all FMF aid to Egypt.'

There are several reasons, he said, including a temporary stop which would have only a minor effect.

'After all, some of the equipment that has been contracted for can be produced and stored by the US government - which is, after all, the entity that signed the contracts with the US industry - until the situation in Egypt changes.'

Presumably, funding not earmarked can be withheld and would benefit the industry later, he added.

Moreover, said Wezeman, the US has embargoed major buyers of US arms and cut military aid before, despite the obvious costs for the industry.

The best examples are Iran in 1979 - although that was arguably as well a decision by Iran at that time - Pakistan in the early 1990s and India in 1963.

Citing other examples, he said, in the case of Saudi Arabia and the United Arab Emirates (UAE), the US has foregone some major deals due to the fact that they did not want to supply certain advanced equipment. For example, it is generally assumed that France clinched a major deal for combat aircraft in the late 1990s because it included 300-km-range cruise missiles which the US had refused.

Military aid to countries like Greece has diminished from high in the 1980s and 1990s to a very low level now.

Wezeman said although $1.3 billion a year is a lot of money, it is relatively small compared to the current cutbacks in US military spending and the sequestration issue, which will have a much bigger effect on the US arms industry. - IPS                       

Israel and AIPAC keep up efforts to save aid for Egyptian military Alex Kane ISRAEL is working hard to save Western aid to Egypt. The Israeli government's lobbying, buttressed by the American Israel Public Affairs Committee (AIPAC), comes as reports emerge about the Obama administration potentially cutting off some aid to the Egyptian armed forces because of its brutal crackdown on the Muslim Brotherhood in recent weeks. On 19 August, the New York Times' Jodi Rudoren reported that Israel was planning to 'intensify' its efforts to persuade Europe and the US to keep up Western aid to Egypt. The Israeli effort is not being done in the open - open lobbying by Israel for the Egyptian military would not be viewed positively in Egypt. But an anonymous Israeli official told Rudoren that the Israeli perspective is all about 'putting Egypt back on track at whatever cost. First, save what you can, and then deal with democracy and freedom and so on'. The official added: 'At this point, it's army or anarchy.' In Washington, AIPAC is following the Israeli government's lead. As Foreign Policy's John Hudson reported:'AIPAC, which was credited with helping kill an amendment to cut Egyptian aid in July, is now operating behind the scenes in private meetings with lawmakers to keep alive Cairo's funding, congressional aides from both political parties said.' The $1.3 billion in American aid to Egypt has long been the price paid to guarantee that the Camp David peace treaty with Israel holds together. But today there's little chance, even without US aid to Egypt, that the peace treaty would unravel or that war would break out between the two countries. Instead, Israel may be keeping up efforts to ensure aid because the country wants an effective military crackdown on Sinai Islamists that threaten both Egypt's generals and Israel. Additionally, as former intelligence officer Paul Pillar suggests in The National Interest, 'the Israeli Right has to be discomfited by any thought of the United States using leverage based on a major aid relationship in that part of the world to get the recipient to change destructive policies.' The efforts to make sure that there's a continued flow of aid come as governments around the world debate their response to an Egyptian government crackdown that has killed hundreds of Islamists and opponents of the 3 July coup. As for the Obama administration, its response remains unclear. While the president announced in the week of 12 August that the US would suspend joint military exercises with the Egyptian military, the much more important question of US military aid to Egypt looms large. The Daily Beast's Josh Rogin reportedon 19 August that the Obama administration had secretly suspended military aid to Egypt. Rogin wrote: 'In the latest example of its poorly understood Egypt policy, the Obama administration has decided to temporarily suspend the disbursement of most direct military aid, the delivery of weapons to the Egyptian military, and some forms of economic aid to the Egyptian government while it conducts a broad review of the relationship. The administration won't publicly acknowledge all aspects of the aid suspension and maintains its rhetorical line that no official coup determination has been made, but behind the scenes, extensive measures to treat the military takeover of Egypt last month as a coup are being implemented on a temporary basis.' The White House denied the report on 20 August. As the Washington Post'sAnne Gearan explained: 'The Obama administration is in the midst of a case-by-case review of aid programmes for Egypt to see whether any should be suspended in light of the actions of the military-backed government. So says the administration, which insists the review does not equal a hold or a suspension of aid - yet.' But even if Rogin's report is true, the suspension of aid would be a symbolic move. The vast majority of the $1.3 billion in annual military aid has already been disbursed. It's only $585 million in aid that's at stake. So the real question is whether the full package of US military aid will be disbursed next year. Given the history of US policy, and Israel's efforts to ensure the aid keeps flowing, it's likely that military aid will continue.                                                  Alex Kane is an assistant editor for Mondoweiss (mondoweiss.net), from which this article is reproduced, and the World editor for AlterNet.

*Third World Resurgence No. 275, July 2013, pp 30-31