THE SOUND AND THE FURY OF EGYPT'S REACTION TO USG

C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 002524

SIPDIS

NSC STAFF FOR ABRAMS/POUNDS

E.O. 12958: DECL: 03/31/2015
TAGS: PGOV PREL EAID KMPI KDEM EG
SUBJECT: THE SOUND AND THE FURY OF EGYPT'S REACTION TO USG
DIRECT FUNDING OF DEMOCRACY GRANTS

REF: A. CAIRO 2198


B. CAIRO 1703

Classified by Charge Gordon Gray for reasons 1.4 (b) and (d).

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Summary
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1. (C) Egyptian anger at our March 3 announcement of direct
USG funding for democracy promotion has now reached the
Parliament. After several weeks of increasingly strident
editorial coverage in newspapers controlled by or sympathetic
to the GOE, the People's Assembly has debated the
implications of the announcement. The People's Assembly's
threats include a proposed effort to eliminate the "civil
company" loophole that has allowed civil society
organizations, like the Ibn Khaldun Center, which are unable
or unwilling to register with the GOE as recognized NGOs, to
establish themselves legally under an alternate framework.
At this point, we think that the GOE's fulminations do not
threaten the ability of civil society here to play a role in
democratic reform. In our view, the GOE's actions are a
response, for domestic consumption, to the public nature of
our support for political reform. We are, however, closely
monitoring the developing reaction in the event that we need
to make counter-moves of our own. End summary

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The Angry Whine of the Press
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2. (C) Shortly after the March 3 announcement (ref B),
editors close to the GOE, such as Samir Raghab of
Al-Gomhouriya, launched a series of caustic press complaints
about the grants announcement. These attacks were soon
echoed by elements of the nationalist tabloid press, such as
Al-Osboa and Sawt Al-Umma. The complaints lambasted
"American interference in Egypt's internal politics" and
denounced the Egyptian civil society organizations as
"spies," "tools in foreign hands," and "Marines" for their
willingness to take USG funds ("dirty, soft, and slippery
American money") allegedly to undermine the Egyptian nation.
In another disturbing development, Al Masry Al Youm, a
leading independent newspaper, reported that on March 18,
imams (prayer leaders) at two major Cairo mosques described
Saad Eddin Ibrahim (SEI),chairman of the Ibn Khaldun Center,
and Negad El Borai, director of the United Group, as
"traitors" for agreeing to accept USG funding for their
democracy promotion projects.

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Civil Society Pushes Back, a Bit
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3. (C) Although the press has provided relatively little
space for the civil society groups which received the USG
grants to defend themselves, the groups have nevertheless
acquitted themselves well when the opportunity has presented
itself. They have all emphasized that they are
legally-established organizations, operating on a
non-partisan basis within the limits of existing Egyptian
law. Dr. Hoda Badran, of the Alliance for Arab Women, one of
the grantees, also mused on the irony of the GOE, which
receives billions of dollars in foreign funding, criticizing
NGOs for receiving much smaller amounts. In response to the
alleged defamation by prayer leaders on March 18, Negad El
Borai, of the United Group, issued a press release alleging
that the GOE was supporting this religious intimidation of
civil society. Borai also said that the GOE would be
responsible if any harm came to SEI or himself. In comments
to us on March 28, Borai urged the USG not to be silent in
the face of the media outcry. We assured Borai of USG
support for civil society activists, but noted that we did
not see utility at this time in trying to engage Egypt's
yellow/nationalist press on this issue.


4. (C) Comment: Borai, in our view, has some reason to be
concerned about the potential for thuggery directed or
motivated by the GOE in this campaign against the NGOs.
There have been sporadic instances of politically motivated
attacks, including a November 2004 assault on journalist
Abdul Halim Qandil and the disruption last month of a human
rights NGO's seminar on the case against opposition leader
Ayman Nour, which the GOE's critics have blamed on
GOE-controlled thugs. More ominously, Borai's press release
mentions the case of liberal intellectual Farag Foda, who was
assassinated in 1992 by an Islamist attacker after being
vilified by Islamist writers in the media. Notwithstanding
these concerns, none of our civil society partners have
expressed any hesitation to us about proceeding with their
projects. Dr. Hoda Badran told ECPO Minister Counselor on
March 28 that she had checked with both the Ministries of
Interior and Social Affairs regarding USG support for her
project and they appeared willing to let it proceed. End
comment.


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Irritation from the Ministry of International Cooperation...
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5. (C) Privately, the GOE also expressed its pique at our
decision to announce the democracy grants. In a letter dated
March 3 to USAID Director Ellis, Minister for International
Cooperation Aboulnaga described the announcement of the
grants as "a surprise." In a March 7 meeting with Director
Ellis and ECPO Counselor, she complained that the USG had
inadequately consulted with the GOE regarding the
announcement of the grants. Director Ellis and ECPO
Counselor advised Aboulnaga that the USG remains committed to
transparent direct funding of civil society projects in Egypt
that are working to expand freedom and democracy.

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but Progress on the Consultative Group
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6. (C) Also in her March 3 letter and in the March 7
meeting, Aboulnaga demonstrated a newfound enthusiasm for the
long-delayed establishment of a Consultative Group on
democracy and governance assistance (ref A). The onus to
propose GOE nominees for the Consultative Group had been with
the GOE since December. The March 3 announcement of the
democracy grants seemed to spur Aboulnaga to action; she
provided the GOE nominees to the Consultative Group at the
March 7 meeting. The group conducted its first
organizational meeting on March 24 and plans to meet on a
monthly basis.

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The People's Assembly Jumps into the Fray
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7. (C) On March 27, the People's Assembly was the scene of
a vigorous debate over the issue of foreign funding for civil
society groups. The consensus of the debate was that the GOE
needed to monitor closely and perhaps limit foreign funding
to civil society groups. In response to pointed questioning
by a number of parliamentarians, Minister of International
Cooperation Aboulnaga, and Minister of Insurance and Social
Affairs Guindy (whose ministry has oversight for NGO
matters),emphasized that the GOE would in no way allow the
grants announced on March 3 to serve as "a vehicle for
foreign interference." Minister for Parliamentary Affairs
Shazly also opined that the GOE needed to review the existing
provision for the establishment of civil companies, which has
offered some civil society groups, such as the Ibn Khaldun
Center, with an alternative to registering under the GOE's
restrictive NGO law.

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Comment: Where Is It All Leading?
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8. (C) In the charged environment of evolving political
reform in Egypt, it is unclear where this strident and heated
debate will lead. As we move toward additional USAID and
MEPI grants to support freedom and democracy in Egypt, and as
we urge other donors to do the same, we hope that the
controversy over direct funding of democracy grants to civil
society will diminish. Similarly, we believe that once the
civil society groups in question are able to implement their
projects, the non-partisan and technical nature of their
projects will become even more apparent.


9. (C) Most of the backlash is the result of the GOE's
nationalist inclination to demonstrate its resistance to
"foreign interference." As the GOE reconciles itself to the
USG goal of providing direct funding to civil society
projects which are focused on democracy promotion, we
anticipate that this negative media campaign will ebb and
flow, but we do not think that it will prevent Egyptian civil
society from carrying out its vital work. Although the GOE
has long known about our intentions to provide funds directly
to civil society projects, and although this message has been
reinforced by developments such as the Brownback amendment,
our March 3 announcement represented a particularly bitter
pill to the GOE old guard.


10. (C) The shrillness of the GOE reaction has been driven
by two interrelated forces. First, the GOE perceives--and
resents--that the USG is "undoing the deal" of the Camp David
agreement, which the GOE believes entitles it to control over
USG assistance funds. Second, the fact that the USG is
providing democracy promotion funds to Egyptian
non-governmental organizations gives the GOE old guard, as it
grudgingly contemplates political reform, a reason to
complain about foreign interference, and avoid grappling with
the real issues of reform.

11. (C) As this point, we do not plan to respond publicly
to the broadside of criticism, since a defensive response on
our part might only encourage the GOE and its commentators to
up their rhetoric. We will continue to monitor the reaction
closely in the event that GOE actions go beyond the current
rhetoric and threaten the ability of civil society here to
play the role that we believe it should. At this point we do
not anticipate that the GOE will escalate the situation
(e.g., by directly interfering with or preventing our
grantees from conducting their work),although we cannot rule
out the possibility. End comment.


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GRAY