• 07:46
  • Wednesday ,24 October 2012

Foreign aid undermines confidence among political players in Egypt

By-Samer Soliman



Wednesday ,24 October 2012

Foreign aid undermines confidence among political players in Egypt

 The volume of aid Egypt has received is more than the majority – if not all – of its Third World peers have ever seen.

In the 1950s and 1960s Egypt had special ties to the Soviet Union, which no other non-Marxist country enjoyed. International relations are not necessarily built on ideological or religious harmony, but most essentially economic and strategic interests. Egypt is a key state, which is why Soviet military and economic assistance flowed generously in its direction.
After changing orientation from East to West since the 1970s until recently, Egypt had special relations with the US and received financial and military assistance only exceeded by Israel.
Egypt has a long history with foreign assistance – almost half a century – but it has not succeeded in becoming an economy based on modern industry, a dream of many successive generations. Subsequently, in developmental economics literature, Egypt can be seen as a model of how foreign assistance is not a pivotal factor in economic development, and how aid cannot compensate for the lack of national development policies capable of mobilising domestic financial and human resources.
I am not implying that aid did not help Egypt. Soviet financial and technical assistance helped build the High Dam in the 1950s. In the 1950s and 1960s, Soviet aid covered a critical part of the training and arming of the Egyptian military. US aid was also crucial in upgrading weak infrastructure close to collapsing in the 1980s.
While foreign aid provided some economic support for Egypt, it failed to transform the country into an industrial state.
Do donor countries have their own interests and calculations, and thus do not send aid for the sake of philanthropy? The lengths that people go to prove that the Soviet Union and US only sent aid to Egypt to serve their own interests is absurd because that goes without saying – it is implied. Relations between countries are built on interests and there is no room for philanthropy.
The question is not whether the US benefited from aid to Egypt, instead: How much did Egypt benefit and were the returns worth the political and economic cost?
Some focus on the cost of aid on Egypt’s foreign policy as well as economic policies. They argue Egypt made compromises with Israel and supported the US on issues that it would not have done if it was not for aid. This directly implicates the regimes of Sadat and Mubarak, who were agents of the US and sometimes even Israel, they add. 
But this is also a naïve argument because Egypt’s foreign policy under Sadat and Mubarak were essentially a reflection of the interests of the ruling alliance in Egypt, and not dictated by the US and Israel.The same applies to economic policies that shifted from “socialism” in the 1960s to “liberalism” since the 1970s, triggered by the ruling alliance’s ideological and political transformation, which also occurred in many countries that did not receive foreign aid (point not clear)
The highest price Egypt paid for foreign assistance was on domestic politics because it poisoned the country’s political environment and caused a breakdown of trust among political players. Because of aid, everyone accuses everyone of treason or being an agent or at best subjugation. The army is accused of being an agent of the US because it receives some $1 billion in financial aid, along with technical assistance; the government is accused of also being an agent because of the aid it receives. The army and the government in turn accuse liberal and left-wing NGOs of being agents of the “West” because some of them receive assistance from “Western” organisations. Meanwhile, the Islamists are accused of being agents of Gulf states, especially Qatar and Saudi Arabia, because some Islamist groups receive aid from these countries.
In this manner, we have all become a nation of agents and followers of foreign agendas and powers. This is nonsense and we must stop and take stock of the situation.
First, the volume of foreign aid to Egypt has decreased in recent decades either because the inflow of aid? from overseas has dropped, donor countries suffer from budget deficits, or the size of the population and economy in Egypt has exploded, causing the effect of aid to dwindle. Egypt, in fact, is self-reliant and not dependent on foreign help and thus the issue of foreign aid should be cut down to size. 
Second, Egyptian society – especially political circles – needs to seriously and honestly discuss foreign assistance. I propose that the first question various political players should answer is whether Egypt really needs foreign aid? If the answer is yes, what sectors need foreign aid? The second question should be: What are the regulations for state bodies and society to receive foreign aid?
Without a serious consensus answer where all political forces reach an understanding on both these questions, foreign assistance will continue to drain Egypt – most notably because foreign aid actively depletes trust among players on the domestic scene. This trust is already almost non-existent.