WASHINGTON — Nearly 16 months after first pledging to help Egypt’s failing economy, the Obama administration is nearing an agreement with the country’s new government to relieve $1 billion of its debt as part of a U.S. and international assistance package intended to bolster its transition to democracy, administration officials said.
The administration’s efforts, delayed by Egypt’s political turmoil and by wariness in Washington about new leaders emerging from its first free elections, gained new urgency in recent weeks, even as the United States risks losing influence and investment opportunities to countries like China, which President Mohammed Morsi chose for his first official visit outside of the Middle East.
In addition to debt assistance, the administration has thrown its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund. Last week it dispatched the first of two official delegations to work out details of the proposed debt assistance, as well as $375 million in financing and loan guarantees for U.S. financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.
The assistance underscores the importance of shoring up Egypt at a time of turmoil and change across the Middle East, from the relatively peaceful uprisings in Egypt and Tunisia to the still-unfinished transition in Libya, and from the showdown over Iran’s nuclear program to the war in Syria. Given Egypt’s influence in the Arab world, the officials said, its economic recovery and political stability could have a profound influence on other nations in transition and ease wariness in Israel about the tumultuous political changes under way.
The administration’s revived push came after Morsi won the presidency in June and overcame a constitutional showdown with the country’s military rulers. Morsi and his party, the Muslim Brotherhood, have since made it clear that the struggling economy is their most urgent priority, brushing aside reservations about U.S. and international assistance and outright opposition to it from other Islamic factions.
In fact, U.S. officials say they have been surprised by how open Morsi and his advisers have been to economic reforms, with a sharp focus on creating jobs.
Hoping to capitalize on what they see as a ripening investment climate, the State Department and the U.S. Chamber of Commerce will take executives from nearly 50 U.S. companies like Caterpillar and Xerox to Cairo beginning Saturday as part of one of the largest trade delegations ever organized.
“It’s important for the U.S. to give Egypt a reason to look to the West, as well as the East,” said Lionel Johnson, the chamber’s vice president for the Middle East and North Africa.
