Egypt: Background and U.S. Relations

Report by the Congressional Research Service

At a broad level, the United States views the stability of Egypt, the most populous country in the Middle East, as key to regional stability, and therefore maintains a decades-long security partnership to strengthen Egypt’s armed forces and its ability to combat terrorism. In April 2021, Egypt joined the U.S. Naval Forces Central Command’s Combined Maritime Forces, a 34-nation naval partnership to combat terrorism, prevent piracy, and encourage regional cooperation. In September 2021, 600 U.S. service personnel from the U.S. Central Command (CENTCOM) participated in Operation Bright Star, a biennial multinational military training exercise cohosted by the United States and Egypt that, since the early 1980s, has helped foster the interoperability of U.S. and Egyptian forces.

Another key U.S. component of U.S.-Egyptian military cooperation has been expedited naval access through the Suez Canal. The Egyptian government has long provided U.S. warships with the courtesy of front-of-the-line access to the Canal for expedited passage. After the March 2021 temporary blockage of the canal by a stranded container ship, U.S. officials have reiterated the importance of open access to the canal for commercial trade and military operations.

Successive Administrations also have expressed admiration for Egypt’s role in Middle East peacemaking (see the “Egypt, Israel, and the Palestinians” section above). According to U.S. Ambassador to Egypt Jonathan Cohen, “The U.S.-Egypt strategic partnership is vital to both nations and spans decades. We have cooperated with one another every day, across the administrations of eight U.S. presidents on a wide agenda which began with Egypt’s pioneering role in promoting Middle East peace.” Since 1982, the United States has continued to participate in the Sinai Peninsula peacekeeping and monitoring mission, known as the Multinational Force and Observers (MFO).

Though military-to-military relations remain the backbone of the bilateral relationship, the United States and Egypt seek opportunities to expand trade and investment deemed mutually beneficial. Despite having the largest population in the Middle East, Egypt ranks as the region’s fifth-largest economy by GDP (behind Turkey, Saudi Arabia, the UAE, and Israel). By total 2020 volume of trade, Egypt ranks as the 50th-largest U.S. trading partner, at $6.8 billion (a 20% drop from 2019 due to the pandemic). The United States has a trade surplus with Egypt and exports wheat and products. According to the U.S. Department of Commerce’s Egypt Country Commercial Guide, U.S. foreign direct investment (FDI) in Egypt was $1.37 billion in 2019 (latest data available), making the United States the third-largest foreign investor in Egypt, behind the United Kingdom and Belgium. Most FDI from the United States is concentrated in the oil and natural gas sectors.

Challenges in the Bilateral Relationship

Various U.S. concerns about Egypt’s internal security, political repression, and social stagnation complicate longstanding bilateral military and economic cooperative endeavors, but the countries continue to share security interests. After nearly a decade of terrorist attacks and insurgent warfare, the Sinai Peninsula continues to be an area of significant concern to U.S. policymakers. According to the latest U.S. State Department Report on Terrorism, “Nearly all terrorist attacks in Egypt took place in the Sinai Peninsula and largely targeted security forces, but terrorist attacks targeting civilians, tourists, and security personnel in mainland Egypt remained a concern.” Beyond the spate of violence emanating from the Sinai is concern over Egypt’s dynamism as a 21st-century nation state that meets the growing demands of its educated and interconnected youth. According to Tamara Cofman Wittes, the President’s nominee for USAID assistant administrator for Middle East:

Even in the face of a relationship that has today as many differences as areas of agreement, many parts of the United States government continue to view the nation of Egypt as ‘too big to fail.’ There is good reason for this view. Egyptians represent a full one-fifth of the entire Arab world. An economic or political disruption in Egypt would, as it did in 2011, have profound effects across the region.

The COVID-19 pandemic has further strained state finances, forcing the government to continue to rely on foreign creditors to finance its large public debt, which, as of September 2021, was equal to 92% of Gross Domestic Product. The International Monetary Fund (IMF) has repeatedly lent Egypt funds with the stipulation that it cuts spending on food and fuel subsidies, changes that successive Egyptian governments have been slow to make because of fear of igniting popular unrest. Since 2016, the IMF has lent Egypt $20 billion; it continues to emphasize that in order for Egypt to unlock its growth potential, Egypt’s private sector needs to grow and the state needs to reduce its role in certain sectors while “fostering labor market participation of women and youth, and encouraging exports.”136 According to one longtime expert on Egypt, Professor Robert Springborg:

Egypt’s biggest challenge comes down to the state’s money: where does it come from and where does it go? The al-Sisi regime is based on the proposition that Egypt is too big to fail and therefore that the world will continue to support it financially. But there are serious questions regarding regime sustainability in the face of a global financial crisis. Egypt’s foreign debt position is extremely vulnerable. Foreign direct investment is limited to hydrocarbons and real estate investment, which create few jobs. As for where the money goes, it is not being distributed fairly. The regime is not investing in public services, education, or health care. Sectors that according to the 2014 constitution are supposed to receive at minimum between three to four percent of annual GDP do not. Seventy percent of Egyptians are living on less than five and a half dollars a day.

Successive U.S. Administrations also have expressed concerns over the Sisi government’s continued crackdown against political dissent and nonviolent opposition. Biden Administration officials have reiterated this concern while attempting to maintain the uneasy balance of U.S. longstanding concern for human rights in Egypt with close ties to the military. During a 2021 State Department press conference, State Department Spokesperson Ned Price remarked:

When it comes to Egypt, it is true that Egypt plays an important role in promoting some of our key interests in the region: regional security and stability through the guardianship of the Suez Canal; counterterrorism cooperation; and its leadership in promoting Middle East peace. Secretary Blinken has had an opportunity to discuss some of these issues with his counterpart, Foreign Minister Shoukry, just as we raise human rights, just as we raise our values. These two things, they’re not separate. They’re inextricably linked. If we don’t stick up for our values, if we don’t stick up for human rights, we’re not sticking up for our interests. We recognize that, and we can do both. We have deep concerns, as we have said, about the human rights situation in Egypt, including undue restrictions on civil society, undue restrictions on freedom of expression, some of the detentions you have mentioned. There is repression of civil society and human rights abuses. They undercut Egypt’s own dynamism and stability as a partner of ours. We will consistently raise these issues. We will not shy away from them. We’ll do that both publicly, as we have, and we’ll do it privately, too. We’ll also work and seek to find a partner in Congress to champion these same issues.

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Egypt: Background and U.S
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