CONFIRMING USG OFFER ON EGYPT ASSISTANCE

S E C R E T STATE 038619

SIPDIS

E.O. 12958: DECL: 04/20/2019
TAGS: EAID EFIN PREL PHUM EG
SUBJECT: CONFIRMING USG OFFER ON EGYPT ASSISTANCE

REF: A. CAIRO 613 B. STATE 31978

Classified By: NEA Acting A/S Jeffrey Feltman, Reasons
1.4 b & d


1. (U) This is an action request. Please see paragraph
three.

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SUMMARY
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2. (S) The Department appreciates the Ambassador's
efforts to consult with the GOE about the way forward on
Economic Support Funds (ESF),per ref A. Please continue
conversations with the GOE with the objectives and
clarifications outlined here. End Summary.



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ACTION REQUEST
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3. (SBU) Ambassador should approach the Egyptian Prime
Minister or other appropriate senior official to achieve
the following objectives.

-- Continue consultations with the GOE about our approach
to FY 2010 Egypt assistance and on the long term foreign
assistance relationship. The Administration is not
prepared to discuss specific 2011 funding levels at this
time.

-- Confirm that the USG cannot identify additional
funding for Egypt in FY 2010, above that already
presented in prior discussions.

-- Offer to entertain the GOE's request to modify the use
of proceeds from past and future cash transfers to make
these funds more useful to the GOE in the current
financial situation.

-- Express the Administration's intention to oppose
Congressional initiatives to reinsert the FY 2008
legislative conditionality into the FY 2010
appropriations bill. Note that, as a general rule, the
Administration opposes all Congressional earmarks.

-- Inform the GOE that the USG has decided on a new
approach to D&G funding for FY 2009.

-- Secure GOE agreement to program FY 2009 ESF.

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REPORTING DEADLINE AND POINT OF CONTACT
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4. (U) Post should approach the Government of Egypt by
April 24, 2009, and report response. Please contact
NEA/ELA Katherine Allen (202-647-1022) via phone or e-
mail for additional information if needed.

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BACKGROUND AND TALKING POINTS
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5. (C) The USG continues to support the Ambassador's
engaging in a serious, informal discussion on the long-
term assistance relationship. Ambassador may inform the
GOE that, although the USG is not prepared to discuss
2011 funding levels at this time, it would welcome a
broader discussion of the long term foreign assistance
relationship in a manner that highlights, to the maximum
extent possible, our desire to hear and consider GOE
views.


6. (SBU) As outlined in Ref B, the Administration intends
to request from Congress an additional $50 million in FY
2010 ESF for Egypt ($250 million total). The
Administration has also requested $50 million FY 2009
supplemental Nonproliferation, Antiterrorism, Demining
and Related (NADR) funding for scanners to help the GOE
address smuggling across the Gaza border. It is not
possible to raise the FY 2010 level further.


7. (SBU) In principle, the USG supports further
conversations about restructuring the cash transfer to
allow more flexible use of funds for the GOE, as long as
they do not modify the negotiated benchmarks and
associated sums. However, Washington will need to review
specific information about any proposed modifications
before agreeing to any changes.


8. (SBU) The FY 2008 appropriations act conditioned $100M
of assistance--from either FMF or ESF--on Egypt's
progress on judicial independence, police reform, and
prevention of smuggling into Gaza. Conditionality was
not effective in compelling reform. The Administration
intends to oppose such an initiative again in the future.
At the same time, the issues addressed by the
conditionality (Gaza border smuggling, police reform, and
judicial reform) remain areas of concern to the United
States. The Administration's ability to push back
effectively on Congressional efforts to impose such
conditionality increases in direct proportion to our
ability to point to positive developments in these areas.
As a standard practice, the Administration opposes any
Congressional Egypt-specific earmarks, which would
include those related to D&G.


9. (SBU) The United States intends to continue funding
NGOs. We remain committed to the promotion of democracy
and human rights in Egypt. However, in FY 2009 no
bilateral ESF will support unregistered NGOs. On the
other hand, we strongly encourage the GOE to ensure that
registration of U.S. and Egyptian NGOs moves forward much
more quickly. Some of these requests have been pending
for several years. Accelerating registrations would be
an important signal the GOE can send to affirm our mutual
commitment to the values of democracy and good
governance. It is also worth noting that numerous
members of Congress watch very closely, and take into
consideration in advancing legislative proposals, the
degree to which NGOs in Egypt have freedom to act.


10. (SBU) Background on unregistered NGOs: For 2009, the
Department is taking a new approach to funding
unregistered NGOs without eliminating the current
program. For 2010 we will look at possible options, but
we are not in a position to confirm continuation at this
time. This approach responds to GOE concerns about the
bilateral ESF program, while preserving the USG's role as
a leading advocate for greater openness and greater
democratic participation among the Egyptian population.
The Middle East Partnership Initiative (MEPI) and the
Bureau for Democracy, Human Rights and Labor (DRL) have
agreed to support this new approach. MEPI will provide
$1.3 million for direct grants to Egyptian civil society
organizations and other groups. According to its
standard procedure for allocating HRDF, DRL will hold an
open solicitation in Washington to allocate $1.3 million
for bids from U.S. and international NGOs to work in
Egypt. DRL also expects that a portion of its funding
will support "subgrants" through a U.S. or international
NGO to local organizations in Egypt. USAID's grant to
Freedom House, which was approved at a level of $9.8
million over three years in November 2008, will need to
be terminated, as no further funds would be available to
continue this grant. End Background.
CLINTON