Identifier
Created
Classification
Origin
07CAIRO2290
2007-07-25 14:44:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

AMBASSADOR'S MEETING WITH MINISTER OF

Tags:  ECON EAID EG 
pdf how-to read a cable
VZCZCXYZ0001
RR RUEHWEB

DE RUEHEG #2290 2061444
ZNY CCCCC ZZH
R 251444Z JUL 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 6263
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
C O N F I D E N T I A L CAIRO 002290 

SIPDIS

SIPDIS

STATE FOR NEA/ELA, NEA/RA, EB/IFD
USAID FOR ANE/MEA MCCLOUD AND DUNN
USTR FOR SAUMS
TREASURY FOR MATHIASEN AND HIRSON
COMMERCE FOR 4520/ITA/ANESA/OBERG

E.O. 12958: DECL: 07/25/2017
TAGS: ECON EAID EG
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF
INTERNATIONAL COOPERATION

CLASSIFIED BY ACTING DCM WILLIAM R. STEWART FOR REASONS 1.4
(b) AND (d).

C O N F I D E N T I A L CAIRO 002290

SIPDIS

SIPDIS

STATE FOR NEA/ELA, NEA/RA, EB/IFD
USAID FOR ANE/MEA MCCLOUD AND DUNN
USTR FOR SAUMS
TREASURY FOR MATHIASEN AND HIRSON
COMMERCE FOR 4520/ITA/ANESA/OBERG

E.O. 12958: DECL: 07/25/2017
TAGS: ECON EAID EG
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF
INTERNATIONAL COOPERATION

CLASSIFIED BY ACTING DCM WILLIAM R. STEWART FOR REASONS 1.4
(b) AND (d).


1. (C) The Ambassador, A/USAID Director John Groarke, USAID
Strategy, Coordination and Support Director Steffi Meyer and
econoff met with Minister of International Cooperation Fayza
Aboul Naga on July 19 to discuss ESF. Aboul Naga noted that
if ESF levels decline to $150-200 million annually beginning
in FY09, Egypt will be paying more to the U.S. in debt
service than it receives in economic assistance. She
reported that annual non-ESF debt payments are $350 million,
of which approximately $150 million is P.L. 480 repayment.
The GOE would like to establish an "endowment" into which it
would make these non-ESF debt repayments. New ESF funds
would also be put into the endowment beginning in FY09. The
endowment would then be used to repay ESF debt from soft
loans issued in the 1970s and early 80s. The soft loans will
be repaid by 2021, and under Aboul Naga's proposal, all ESF
would be eliminated by 2025. Egypt is taking the initiative
in phasing out ESF, and Aboul Naga believes we should welcome
this initiative. ESF is a drag on the U.S. budget, and as
Egypt develops, it no longer needs as much assistance.


2. (C) Aboul Naga plans to travel to Washington at the end
of September to explain this proposal to Congress. She
believes Congress does not understand what is happening in
Egypt, and this is reflected the Senate's proposal to
withhold some part of Egypt's FMF pending GOE actions in
specific areas (Note: Aboul Naga was apparently referring to
the amendment to the Senate FY08 Foreign Ops bill proposed by
Senator Kyl (R-AZ),which was subsequently withdrawn from the
draft bill). The Ambassador encouraged Aboul Naga to make
the trip to Washington, but warned that her proposal would be
a hard sell with Congress, which does not like endowments.
Moreover, our timelines are likely much shorter and many
members of Congress are concerned about lack of progress on
democratic reform in Egypt. The Administration hopes to go
ahead soon, however, with the Congressional Notification (CN)
of a $50 million initial disbursement for the new cash
transfer program.


3. (C) The Ambassador also noted that we would like to
program remaining FY06 ESF before Congress recesses August 6.
If the money is not programmed, it becomes part of the large
balance of unobligated cash transfer funds that Congress
continually eyes for rescissions due to slow progress on cash
transfer benchmarks. Aboul Naga said she did not want a
repeat of the $200 million rescission in cash transfer funds,
which happened despite Egypt's progress on financial sector
reform. Ahmed Magrabi, Minister of Housing, proposed to MIC
the use of $100 million in FY06 ESF for a
wastewater/sanitation project in Upper Egypt. Magrabi also
proposed using the funds for an ongoing water management
program, and construction of two hydroelectric plants in
Sohag. These projects will benefit thousands of Egyptian
villages and millions of Egyptians. Aboul Naga said she
would send a formal request to USAID with the
wastewater/sanitation proposal, noting that this is a GOE
priority (Note: A copy of this letter was faxed to
NEA/ELA.). She also asked that the $50 million initial
disbursement come from FY07 money, and that any remaining
FY06 money be used for other ongoing projects needing
additional funds.


4. (C) A/USAID Mission Director John Groarke said that a CN
would be needed to add money to ongoing projects. This is
possible, but USAID will have to explain in the CN that the
Administration is not abandoning the cash transfer program,
but does not want too much money to build up in that program.
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