U.S. seen withholding most military aid from Egypt -source


By Arshad Mohammed

WASHINGTON, Oct 8 (Reuters) - The United States is leaningtoward withholding most military aid to Egypt except to promotecounter-terrorism, security in the Sinai Peninsula that bordersIsrael, and other such priorities, a U.S. official said onTuesday.

The official said U.S. President Barack Obama had not made afinal decision on the issue, which has vexed U.S. officials asthey balance a desire to be seen promoting democracy and rightswith a desire to keep up some cooperation with Egypt's military.

The military on July 3 overthrew President Mohamed Mursi,who emerged from the Muslim Brotherhood movement to becomeEgypt's first freely elected president last year, following theend of Hosni Mubarak's 30-year rule in February 2011.

Mursi supporters and security forces have repeatedly clashedsince, including on Sunday, one of the bloodiest days since themilitary took power, with state media reporting 57 people dead.

After Mursi's ouster, the Obama administration said it wouldsuspend about $585 million in military assistance to Egyptpending a wider policy review.

The U.S. official, who spoke on condition of anonymity, saidthe Obama administration was now leaning toward continuing towithhold most of that, with the exceptions described above.

The official said the United States was also leaning towardcontinuing some economic aid to Egypt, but chiefly funds that goto non-governmental groups rather than to the government itself.

A second U.S. official, also speaking on condition ofanonymity, said a decision on the aid was likely to be madepublic by the end of the week, although he noted that anannouncement has been repeatedly postponed.

In Cairo, the Foreign Ministry said on Wednesday it had notreceived any official word from Washington on the issue.

"The relationship between Egypt and the United States is oneof partnership, and not one of donor and recipient," saidForeign Ministry spokesman Badr Abdelatty.

Egypt for decades has been among the largest recipients ofU.S. military and economic aid because of its 1979 peace treatywith U.S. ally Israel, which agreed to withdraw from the SinaiPeninsula it seized from Egypt in 1967 as a result of the pact.

The United States has long provided Egypt with about $1.55billion in annual aid, including $1.3 billion in militaryassistance.


The removal of Mursi has left Obama with an acute dilemma:whether to get tough with the army for toppling a democraticallyelected president, albeit an Islamist who had few friends inWashington, or whether to acquiesce in his overthrow.

U.S. officials have said there has been a sharp debatewithin the administration for months over the issue, with onesaying that the Pentagon had argued for continuing military aid,while others urged a significant reduction.

At the U.N. General Assembly on Sept. 24, Obama appeared tosplit the difference, saying the United States would maintainconstructive ties with Egypt's interim government despite itsanti-democratic moves - including an emergency law andrestrictions on opposition parties, the media and civil society.

He also suggested that some military aid would depend on theinterim government embracing a more inclusive democracy.

"Going forward, the United States will maintain aconstructive relationship with the interim government thatpromotes core interests like the Camp David Accords andcounter-terrorism," he said, referring to the U.S.-brokeredagreements that led to the Egyptian-Israeli peace treaty.

"We'll continue support in areas like education thatdirectly benefit the Egyptian people," he added. "But we havenot proceeded with the delivery of certain military systems, andour support will depend upon Egypt's progress in pursuing a moredemocratic path."

Earlier on Tuesday, CNN had quoted a U.S. official as sayingthat an "accumulation of events," including the recent violence,had led to the decision on a "full suspension" of aid, a reportthe White House denied.

"The reports that we are halting all military assistance toEgypt are false," Caitlin Hayden, a spokeswoman for the WhiteHouse National Security Council, said in a statement. "We willannounce the future of our assistance relationship with Egypt inthe coming days, but as the president made clear at (the U.N.General Assembly), that assistance relationship will continue."

The Pentagon declined all comment.

Vanessa Murray, a spokeswoman for the U.S. Defense SecurityCooperation Agency, which oversees foreign military aid andsales, earlier said there had been no policy change on Egypt.

Officials at General Dynamics Corp, which makes M1A1tank kits for Egypt, and Boeing Co, which is buildingApache helicopters for the Arab country, said late on Tuesdaythey had not been notified of any decision to halt military aid.

There was no immediate comment from Lockheed Martin Corp, which is building F-16 fighter jets for Egypt.Shipments of four F-16s have already been halted temporarily,and eight more jets were due to be delivered in December.

Two former government officials familiar with foreignmilitary sales have said the Obama administration is likely tocurtail certain high-visibility weapons sales, such as the 12Lockheed Martin Corp F-16s due to be delivered to Egypt thisyear, to send a message to the military. The planes could befairly easily adapted for sale to other countries, they said.

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