Five Issues That Should Be Discussed at the US-Egypt Strategic Dialogue

The main purpose of the August 2 US-Egypt strategic dialogue in Cairo seems to be to demonstrate that the two countries are settling back into more normal ties after two difficult years. The US-Egypt relationship, never easy, came under particular strain after the Egyptian military’s July 2013 ouster of former President Mohamed Morsi and the intense crackdown on the Muslim Brotherhood and other dissent, the US partial suspension (lifted in March) of military aid over mass human rights abuses, an upsurge of anti-Americanism in the Egyptian media, and Egyptian perception of US neglect of the conflict in neighboring Libya, among other divergences. But in recent months, in the face of growing regional turmoil and a rising terrorist threat in Egypt, the two governments have been trying to turn the page, even though a dramatic improvement in the relationship is not on the horizon.

US Secretary of State John Kerry and Egyptian Foreign Minister Sameh Shoukry will lead the dialogue, a biannual forum to discuss bilateral and regional issues that began during the Clinton Administration. The dialogue languished toward the end of the Mubarak regime and was put on hold after Egypt’s 2011 uprising.

It would not be surprising if Kerry and Shoukry want to focus the August 2 meeting on Egypt’s role on regional goals such as brokering an end to Syria’s war, countering Iranian influence in the wake of the US-Iran nuclear deal, or even restarting Israel-Palestinian negotiations, reportedly a top priority for Kerry. Egypt remains important on certain Middle East issues (Egypt notably declined, however, to join the military campaign against the Islamic State in Syria and Iraq, in order to concentrate on Islamic State affiliates in Egypt and Libya and its campaign against the Muslim Brotherhood). Furthermore, talking about such regional topics is much less contentious than Egypt’s domestic situation. 

But alongside the regional agenda, Kerry should raise five internal issues: the Sinai insurgency, human rights, the economy, and reshaping US military and economic aid. The reality is that Egypt’s influence beyond its borders will be limited as long as the country is hampered by serious economic and security challenges at home. And these domestic issues also matter more to Egypt’s stability.

Sinai Insurgency

A top agenda item should be working with Egypt to adopt a more effective approach against the insurgency in North Sinai led by Sinai State, an Islamic State affiliate and the most lethal terrorist threat facing the country. The military’s two-year campaign has not stemmed attacks. Egypt is likely to be sensitive about discussing the army’s performance, and may assert that Sinai is a matter of national sovereignty on which outside advice is unwelcome. But the United States has a large stake in preventing the establishment of a jihadist safe haven in Sinai, in helping Egypt avoid a long fight that could dangerously erode its defense capabilities, and in re-stabilizing Israeli-Egyptian border security under the terms of the 1979 Peace Treaty.

Kerry must convey genuine empathy to his hosts regarding the terrorist threat—militants have killed hundreds of security officials and civilians in the past year and Egyptians are reeling from major attacks in Sinai and Cairo in the past few weeks. However, Kerry needs to try to convince them that the military’s approach in Sinai—extremely heavy-handed in civilian-populated areas, among other concerns—is counterproductive. First, Kerry should offer Egypt appropriate counter-terrorism assistance, such as special-forces training and intelligence upgrades for more targeted actions. Second, Kerry should probe whether and how Cairo is working to improve conditions for marginalized civilians in North Sinai, many of whom are caught between jihadist and state violence. While there is no quick development or military fix to Sinai’s security problems, a serious effort by the Egyptian government towards socioeconomic development and inclusion could help to gain the local cooperation required to defeat the insurgency. Finally, Kerry needs to press Egypt to provide better security for the Multinational Force and Observers (MFO) Mission in Sinai, tasked with monitoring Egyptian and Israeli compliance with the 1979 Peace Treaty. The MFO’s 1,600 international troops, including 700 US soldiers, are increasingly vulnerable to Sinai State attacks.

Human Rights

Kerry should present the need for protection of human rights and governance as another central part of the dialogue, as integral elements of Egypt’s civilian security and stability. While Egypt will push back, mass human rights abuses and a lack of state accountability exacerbate Egypt’s security challenges. Repression further alienates citizens from their government and increases their susceptibility to the appeal of revenge violence and extremist ideologies. Repression also asphyxiates the dynamic, entrepreneurial environment needed for broad-based economic growth. Of the many human rights problems plaguing Egypt, Kerry should concentrate on two:  the thousands of political detainees facing overcrowding, reported abuse and torture, and denial of due process, and crackdowns against human rights defenders and other independent civil society actors.   

Egypt’s Economy

Despite slight improvements over the past year, Egypt’s economic situation remains fragile. The country still needs to secure some $6 to $7 billion annually in external financing in order to keep imports of food and fuel flowing. Since last summer’s reduction of fuel subsidies, the reform agenda of President Abdel Fattah al-Sisi has stalled. Kerry should convey a twofold message. First, the United States and the international community are looking to see reforms to open up the economy to competition, investment, and trade, and to improve the climate for small and medium businesses. Second, Egypt should give greater attention to human development, youth employment, and a stronger social safety net for Egypt’s poor. Otherwise, Egypt risks repeating the exclusionary economic policies that helped fuel the 2011 uprising.

Restructuring Military Aid

The dialogue provides the first chance to discuss the Obama administration’s plan to implement major changes, beginning in Fiscal Year 2018, to the annual $1.3 billion afforded to Egypt through the Foreign Military Financing (FMF) program. One such change is an end to Egypt’s privilege of cash flow financing (CFF), which enables Egypt to pay for US weapons in installments rather than upfront. CFF has allowed the FMF funds to become tied up with payments for very expensive weapons orders, such as F-16 planes, for years in advance. Ending CFF will make the FMF program more flexible to respond to new security priorities. In another change, the administration wants use FMF for only five categories:  counterterrorism, Sinai security, border security, maritime security, and sustainment of US-purchased weapons systems already in Egypt’s arsenal. This shift would allow for a much greater focus in the FMF program on improving Egyptian capabilities and modernizing its defense posture, which has been organized to defend against conventional threats such as a ground invasion by another army, against today’s far more pertinent asymmetric threats.

Kerry should describe what these FMF changes will look like in practice and listen to Egypt’s perspective. The conversation may be hard. Despite the $40 billion in FMF that the United States has provided Egypt since 1979, the two militaries do not necessarily share a strategic outlook and threat perception. While Sisi’s views on military modernization are unclear to the public, many in Egypt’s security establishment may want to maintain the FMF status quo. In addition, US efforts to encourage Egypt to change its military doctrine could be perceived as foreign meddling in an institution that epitomizes national sovereignty among Egyptians. Egypt may believe that it can wait out the Obama administration and convince the next US president not to implement these changes. But Kerry should explain that a restructuring of FMF has been under consideration during several US administrations and has support in Congress.

The Future of US Economic Aid

Finally, the two sides need to talk about the future of US economic assistance, which the United States has cut to $150 million a year (down from $600 million a decade ago and $1 billion twenty years ago). Some in Egypt call for terminating the aid, which they see as a trifling amount that benefits US contractors more than Egyptians, and replace it with new efforts to expand trade and investment. There is also fatigue among some US officials over the aid program, as negotiating projects with the Egyptian government is often fractious and protracted, and disbursement of aid monies is very slow.

Economic, or civilian, aid, however, is one of the only tools the US has to support Egyptian citizens in a relationship currently dominated by government-to-government security cooperation. The Obama administration should re-orient the economic aid program away from policy reforms and government beneficiaries (already well-assisted by other donors) toward direct strengthening of Egypt’s human development through educational scholarships, entrepreneurship, and public health. In this regard, Kerry should seek Egypt’s full cooperation on the new large-scale scholarship program that the United States launched this spring. If the new aid approach is successful, the United States should consider increasing the funding. But the United States also needs to show Egyptians that it can deliver the promised assistance. Its track record on implementing post-2011 signature initiatives, such as the Egyptian-American Enterprise Fund to support small and medium-sized businesses, has not been impressive, according to a recent Government Accountability Office report. Continuing US economic assistance does not preclude parallel efforts to strengthen investment and trade, but Kerry should keep in mind that past attempts to move from “aid to trade” floundered mainly due to Egypt’s failure to implement critical reforms.   


US-Egypt ties right now are mostly about trying to slog through on a range of thorny issues amidst a difficult and worrying situation in Egypt and chaos in the region. It remains to be seen whether the new US approach of drawing closer to Egypt’s increasingly repressive, military-backed government as a counterterrorism partner will be wise. Past experience raises serious concerns, but it would appear the Obama administration feels it has few good options right now. Kerry’s main goals for the August 2 dialogue should be to raise sensitive topics forthrightly, to avoid any public or private praise for Egypt’s current authoritarian approach, and to lay the groundwork for subsequent detailed talks on military aid and other important matters. 

Amy Hawthorne is a Senior Fellow at the Rafik Hariri Center for the Middle East at the Atlantic Council.  

Image: Photo: US Secretary of State John Kerry sits with Egyptian President Abdel Fattah al-Sisi at the Congress Center in Sharm el-Sheikh, Egypt, on March 13, 2015, before a bilateral meeting and their attendance at an Egyptian development conference (State Department)