Egypt’s Debt to the U.S.: Rationalist or Reflectivist

The U.S. has been in conversation with the newly elected democratic government of Egypt in an effort to negotiate terms of an agreement to forgive $1 Billion of Egyptian debt to the U.S.  While U.S. officials have preached supporting democracy in the region during a crucial time of transition, the U.S. business interests in Egypt demands an explanation of the agreement from the perspective of Rationalist Liberalism.

In a period of economic instability and uncertainly for Morsi’s government, U.S. financial support is integral in the transition to democracy (Myers).  The American people have always had an affinity for ideology of democracy and supporting uprisings against oppressive leadership, so the idea of supporting a democratically elected president post-regime overthrowing by forgiving $1 Billion in debt is in line with American priorities.  From the reflectivist perspective, this agreement is due to coherence in political structure and American empathy for the Egyptian people’s struggle.  

If it wasn’t for caution by the US by supporting the uprising verbally but not with the presence of boots on the ground, the U.S. forgiving a large portion of the Egyptian debt could be viewed as the imposition of democracy and excessive U.S. intervention and highly neoliberal.  Excessive U.S. presence could have also undermined the legitimacy of the Morsi presidency in the eyes of other Arab nations.

If we adopt the rationalist perspective, the U.S. government’s decision to overlook $1 Billion of debt appears to have very different motives.  The U.S. has major interests in Egypt’s intelligence cooperation, foreign investment opportunities, and their influence in the the politics of the MENA region.  

Intelligence Cooperation: 

During the Mubarak regime, the Egyptian army proved to be the most valuable asset in providing the U.S. with information on extremist groups as well as monitoring the unstable Egypt and Gaza Strip border (Abou Taleb).  The transition to democracy has brought up questions about how cooperative the new government will be as far as providing intelligence to the U.S.  The $1 Billion agreement cannot be viewed purely as an American bribe to keep their hand in Egyptian operations, but a certain amount of reciprocation on the part of the Egyptian government honoring U.S. interests is not out of the question.  

Supporting the democratically elected government also provides the U.S. with the benefit of a safeguard against Al Qaeda affiliates filling the power vacuum left after the uprisings.  (However it is important to note that some Muslim Brotherhood do have loose ties with Al Qaeda). In this regard, the cost of $1 Billion can be weighed against the benefit of assuring extremist groups do not gain any significant control in Egypt. 

Foreign Investment:

Egypt’s diverse economy presents an opportunity of foreign investors in Egypt’s recovering economy.  Following the uprising, foreign investors and businessmen were scared off by the incredible amount of military court trials accusing businesses of corruption and ties to the old regime.  In Mubarak’s Egypt, bribes were the only way to acquire the permits necessary to do business.  The backlash in the post-regime Egypt has been to put the majority of large business owners on trial, most of who were found guilty (Daud).  The repercussions of these trials were significant: foreign investors fled and have not returned, causing the Egyptian economy to suffer.  However if the U.S. forgives Egypt’s debt, the IMF will most likely follow with a loan of $4.8 billion, as well as promising $375 million to American investors (Myers).  To the U.S., this is a huge opportunity to take advantage of a struggling but diverse market.  For Egypt, although accepting the U.S. offer as well as the IMF loan might carry the cost of accepting a certain degree of foreign influence, however the benefit would be the chance to curb the  unemployment rate and stimulate their economy.

Influence in Politics of the MENA Region:

The U.S. push for democracy in Egypt can be analyzed from the view of realists in that its is security based, as well as from the perspective of reflectivist liberals and neoliberals because of the prevalence of democratic ideology.  However in the scope of rationalist liberals, financially supporting the democratic government might lead to the spread of democracy in the region, which could open the doors to better trade relations and diplomatic negotiations in a region where U.S. diplomacy has been anything but easy.  Especially in energy and oil sector, open and friendly relations between democratic governments would be beneficial for the energy glutton of the world, the U.S. 

Final Thoughts:

While it is clear that the agreement between the U.S. and Egypt has significant benefits for a cost of $1 billion, it is important to call to mind the implications of the agreement in light of the recent protests of the film “Innocence of Muslims.”  U.S. officials have confirmed that the debt forgiven will proceed despite delays, however the support of the American people is not certain (Gearan).  In a time of economic recovery and debate over debt in the U.S., overlooking such a large amount for a country who tore down the U.S. flag at the embassy is far from popular. If we examine this predicament from the Putnam’s “Two Level Game Theory” there is a breakdown in opinion between the U.S. government (A) and the American people (A₁) in an effort to maintain the relations between (A) and the Egyptian government (B).  The consequences of this breakdown are uncertain though it is doubtful that they will be too grave.  At any rate, the verdict of proceeding with the agreement show that the benefits of the agreement outweigh the costs for both countries.   

Works Cited

Bilateral and Regional Issues in U.S.–Egyptian Relations. Carnegie Endowment for International 

     Peace, June 2009. Web. 21 Sept. 2012. <http://carnegieendowment.org/2009/06/17/ 

     bilateral-and-regional-issues-in-u.s.-egyptian-relations/blmu>.

Cook, Steven. On the Economy, Egypt's New Leaders Should Follow Mubarak. The Council on Foreign Affairs, 26 May 2012.  Web.  4 Sept. 2012. <http://www.cfr.org/>

Enders, Klaus. Egypt: Reform Triggers Economic Growth. International Monetary Fund, 13 Feb. 2008.  Web.  4 Sept. 2012. <http://www.imf.org>.

Gearan, Anne. “US Aid to Egypt Stalled.” The Washington Post. 17 Sept. 2012. Print.

Gjelten, Tom. “U.S. Struggles To Balance Its Interests In Egypt.” NPR. 11 Feb 2012. http:// www.npr.org/2011/02/11/133691051/U-S-Struggles-To-Balance-Interests- InEgypt. 21 Sept. 2012.

Myers, Steven. “U.S. is Near Pact to Cut $1 Billion from Egypt Debt.” The New York Times 4 Sept. 2012. Print.