[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

REFLECTIONS ON THE REVOLUTION IN EGYPT, PART II

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HEARING

BEFORE THE

SUBCOMMITTEE ON
THE MIDDLE EAST AND SOUTH ASIA

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

JUNE 20, 2012

__________

Serial No. 112-155

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Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS

ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California deceased 3/6/12 deg.
STEVE CHABOT, Ohio BRAD SHERMAN, California
RON PAUL, Texas ELIOT L. ENGEL, New York
MIKE PENCE, Indiana GREGORY W. MEEKS, New York
JOE WILSON, South Carolina RUSS CARNAHAN, Missouri
CONNIE MACK, Florida ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio BRIAN HIGGINS, New York
BILL JOHNSON, Ohio ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas KAREN BASS, California
TOM MARINO, Pennsylvania WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
------

Subcommittee on the Middle East and South Asia

STEVE CHABOT, Ohio, Chairman
MIKE PENCE, Indiana GARY L. ACKERMAN, New York
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska THEODORE E. DEUTCH, Florida
ANN MARIE BUERKLE, New York DENNIS CARDOZA, California
RENEE ELLMERS, North Carolina BEN CHANDLER, Kentucky
DANA ROHRABACHER, California BRIAN HIGGINS, New York
DONALD A. MANZULLO, Illinois ALLYSON SCHWARTZ, Pennsylvania
CONNIE MACK, Florida CHRISTOPHER S. MURPHY, Connecticut
MICHAEL T. McCAUL, Texas WILLIAM KEATING, Massachusetts
GUS M. BILIRAKIS, Florida
TOM MARINO, Pennsylvania
ROBERT TURNER, New York

C O N T E N T S

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Page

WITNESSES

Mr. David Schenker, director, Program on Arab Politics,
Washington Institute for Near East Policy...................... 6
Michele Dunne, Ph.D., director, Rafik Hariri Center for the
Middle East, Atlantic Council.................................. 14
Jon B. Alterman, Ph.D., director, Middle East Program, Center for
Strategic and International Studies............................ 19

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. David Schenker: Prepared statement........................... 8
Michele Dunne, Ph.D.: Prepared statement......................... 16
Jon B. Alterman, Ph.D.: Prepared statement....................... 21

APPENDIX

Hearing notice................................................... 42
Hearing minutes.................................................. 43

REFLECTIONS ON THE REVOLUTION IN EGYPT, PART II

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WEDNESDAY, JUNE 20, 2012

House of Representatives,
Subcommittee on the Middle East
and South Asia,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 1:30 p.m., in
room 2200 Rayburn House Office Building, Hon. Steve Chabot
(chairman of the subcommittee) presiding.
Mr. Chabot. We're going to come to order. I believe the
ranking member, Mr. Ackerman, will be here very shortly. The
folks that are at the back, if you'd like to make your ways in
a little bit and over here, I'm fine with that because I've
been told that we're going to have to close the door at some
point. I apologize for having a smaller meeting room. Two of
the other subcommittees, yes, you can keep coming in. I know
we've got some more folks out there. Normally, we're in the
larger room. This is, I think, the first time in the last 2
years we've been in the smaller room. Because two of the other
Foreign Affairs subcommittees have a joint hearing going on. So
they're in the larger room. But feel free to come over this
way, too, if there's not sufficient room over there.
I'm Steve Chabot. I'm the chairman of the Foreign Affairs
Subcommittee on the Middle East and South Asia. As I said, I
know the ranking member, Mr. Ackerman, will probably be here
shortly. We believe we're going to be interrupted by votes here
within the next 10 minutes or so. I think there are three votes
which will take about \1/2\ hour. So we're going to try to get
through as much of this as we can before the votes happen. Even
when the bells go off for the votes, we have about 5 to 10
minutes before we have to actually go, so we'll try to get in
as much as we can. Maybe the introduction of the witnesses as
well.
In any event, I want to thank everyone for being here this
afternoon. I want to welcome my colleagues who will be arriving
shortly, and all the folks that have shown interest in this
particular hearing on Egypt this afternoon.
Just over 1\1/2\ years ago, Hosni Mubarak resigned as
President of Egypt in response to massive and sustained
protests by the Egyptian people. Unfortunately, as the last
year has illustrated far too well, freedom rarely marches
steadily forward in a straight line. A year and a half into the
transition, Islamist groups have won a majority in the
parliamentary elections. The Muslim Brotherhood candidate for
President, Mohamed Morsi, appears to have won in the recent
run-off election. The Egyptian economy is on the verge of
collapse. The trial against civil society NGO workers is still
ongoing and perhaps most disturbingly recently, measures
implemented by the SCAF appear to have the effect of actually
rolling back democratic progress.
The events of the past week have been especially alarming.
On June 13th, the Supreme Council of the Armed Forces, SCAF,
reauthorized the use of military tribunals in cases involving
Egyptian citizens. On June 14th, the Supreme Constitutional
Court ruled that one third of the Egyptian Parliament was
elected illegally. This prompted the SCAF to declare the entire
Lower House of Parliament invalid. And on June 15th, the SCAF
dissolved it and assumed full legislative authority.
The Egyptian parliamentary leadership has refused to
recognize the decision, prompting security forces to surround
the Parliament building. The SCAF also has now invalidated the
standing constituent assembly, the body which was charged with
writing the new constitution, and has taken it upon itself to
appoint the new panel.
Finally, on June 17th, as the polls in the Presidential
runoff election were closing, the SCAF issued an addendum to
the March 2011 transitional constitution which, among other
provisions, gives the SCAF veto power over any provisions of
the forthcoming constitution.
We all knew Egypt's path toward democracy was not going to
be without its bumps. With the President and the nearly 47
percent of the elected seats in the Egyptian Parliament going
to the Muslim Brotherhood, and nearly a quarter to other
Islamist parties, it is clear that Islamists will dominate the
Egyptian political landscape in the near future.
And we all knew that the Egyptian military was to no small
degree operating in uncharted territory in its efforts to
oversee a democratic transition. But I don't think anyone
expected events to unfold quite as they have.
While I continue to question the Islamist commitment to the
principles of democracy, I believe the SCAF would have a
positive and reinforcing effect, but unfortunately, far from
calming the situation, I feel the recent decisions taken by the
SCAF will only stoke already-inflamed tensions between the
military and the public. And I also fear that the SCAF has lost
a tremendous opportunity to be a force for good. Democratic
transitions, even under the best of circumstances, are fraught
with potential peril and a nascent Egyptian Government could
have benefitted from a steady hand to help guide it forward.
That opportunity appears to be departing and it is time for us
all to face the fact that the genie, as they say, it out of the
bottle.
Equally disturbing, however, is the state of the Egyptian
economy. Since the revolution began, spending on public sector
salaries and food and energy subsidies have skyrocketed,
leading to a predicted budgetary deficit of $23 billion.
Authorities have been financing this deficit by borrowing from
domestic banks and using the country's foreign exchange
reserves which have fallen nearly 60 percent from approximately
$36 billion in early 2011 to $15.5 billion in June 2012.
The situation is fundamentally unsustainable. If foreign
exchange reserves continue to dwindle, officials may be forced
to depreciate the value of the Egyptian pound, a move that
could boost interest rates and reduce asset values, potentially
stalling any economic recovery. Sooner or later, Egyptians are
going to have to face the fact that serious structural reforms
are needed and they're going to need outside help. Although the
International Monetary Fund and World Bank have offered
assistance, some maligned officials, in particular, the
Minister of International Cooperation, Fayza Abul Naga, have
obstructed progress, citing the loan and its potential
conditions as threats to Egypt's sovereignty. This is absurd
and I would caution the forthcoming Egyptian Government to
reconsider this stance as well as Abul Naga's role in any
future government. Such a loan would offer Cairo the
opportunity to make critical economic and governmental changes
while continuing to provide for a Egyptian population in the
meantime.
Although Egypt's exact path to democracy remains unclear,
what is clear is that Egypt is an important country, a very
important country, that is going through an extraordinary
transition. I hope to see power handed over to a civilian
government that is committed to a pluralistic Egypt that
remains an ally of the United States and committed to peace
with Israel. Decisions about U.S. assistance to Egypt must
ultimately be shaped by the choices and policies made by
whatever Egyptian Government that the Egyptian people choose to
elect.
We have an interest in strongly supporting a democratic
government that respects the rights of its citizens and rule of
law, fosters greater economic opportunity and observes
international obligations. We would obviously react very
differently to any government that does not respect the
institutions of free government, discriminates against or
represses its own citizens, or which pursues policies which are
destabilizing in the region. That said, we should be careful
about making judgments too quickly. I suspect that the transfer
of power, the government formation, and the constitutional
revision process are going to take some time.
For decades, Egypt has been a critical ally to the United
States and the global war on terror and in pursue to Arab-
Israeli peace. Egypt has been, and I hope will remain, a leader
in the Arab world and a force for peace in the region. I hope
our witnesses here today can help us both understand the
current state of affairs in Egypt and guide U.S. policy
accordingly.
And at this time I would like to yield to the distinguished
ranking member of this committee, the gentleman from New York,
Mr. Gary Ackerman.
Mr. Ackerman. Thank you very much, Mr. Chairman. I want to
start by thanking and commending all of our witnesses for
appearing today and trying to help us to understand what's
happening in Egypt and what it means for the United States and
our national security.
If making predictions is a sucker's game, then making
predictions about Egypt must be a sort for mad men, degenerate
gamblers, and otherwise distinguished, sane, and expert
congressional witnesses. [Laughter.]
Welcome. Every prediction about the Egyptian revolution,
except for change, followed by uncertainty and capped off by
the unexpected has failed. The path of the Egyptian revolution
began not with Hosni Mubarak's expected death, but with that of
a frustrated fruit peddler in Tunisia. President Mubarak was
removed from power not by the masses, but ultimately by his
fellow generals. And the generals of the Supreme Council of the
Armed Forces, the SCAF, having seized power, have shown
themselves alternatively painfully hesitant and spastically
aggressive in their rule. What could not happen, did. What one
expected now seems--what no one expected, now seems obvious.
And what will finally come to be is not much clearer today than
it was a year ago.
One of our nation's greatest writers, William Faulkner, who
chronicled the way of the American South, continued years later
to be shaped and gripped by the drama of the Civil War and the
failure of Reconstruction authored a brief, but compelling
warning to all those who expected to move swiftly and cleanly
from one period to another. ``The path,'' Faulkner wrote, ``is
never dead. It's not even past.''
The many twists and turns of Egypt's post-Revolutionary
transition accord with this idea because with the notable
exception of Hosni Mubarak, the people contending for power in
Egypt today are by and large the same people they were on
January 24, 2011. Their outlook, goals, prejudices, and
experiences did not disappear or transform when Hosni Mubarak
ceased to be President. Even this revolution, as in every
revolution, it is power, power, who will have it, what limits
there will be upon it, and upon whom and for what ends it can
be applied, power that is the object of the current struggle.
There was only one prediction that I heard that has held
up. I heard it from one of the key actors in the present drama.
About a year ago at a private dinner party, this top shelf
player was being questioned aggressively about the prospects
for the then upcoming parliamentary elections and what it would
mean if the Muslim Brotherhood won. The elections, again and
again, with almost impossible politeness, he deflected the
question. ``Their victory,'' he asserted, ``was very unlikely.
Really, almost inconceivable.'' But the questions continued to
be thrown at him without respite.
``What would happen if they did win the elections? How can
you be sure they're not going to win the elections? What if
you're wrong? What if they have more strength than you think?''
After ducking and dodging throughout the meal and with dessert
departing untouched and no relief in sight, he finally
retreated with some tinge of anger and got to the bottom line.
He actually answered a different question. ``The Muslim
Brotherhood will never rule Egypt,'' he said.
That statement wasn't a prediction or a pledge for our
benefit. It was an expression of a commitment that was much a
part of this man as the marrow in his bones. Subsequently, I've
gotten to know him better. He's a man of his word. And like it
or not, he promises and he delivers.
It was in the wake of the Supreme Constitutional Court's
action against the Parliament and in favor of the candidacy of
the former prime minister following the outcome of the
Presidential election and vote in the shadow of the newly SCAF-
issued amendments to the constitutional declaration. The
question I wish had been pressed upon him once the Muslim
Brotherhood is blocked from power, what then?
I suspect his answer would be something along the lines of
saying the Nile will continue to flow. I guess we'll see.
Mr. Chabot. Thank you very much. And at this time I'm going
to go ahead and introduce the panel. You've probably heard the
buzzers going off which is us being called for a vote on the
floor. If the second bell hasn't gone off by the time I get
through the introductions we may get in one of the testimonies
here before we head over there, but I'll go through these
quickly.
Our first witness will be David Schenker, who is the
Aufzien Fellow and director of the program on Arab politics at
the Washington Institute for Near East Policy. Previously, he
served in the Office of the Secretary of Defense as Levant
country director and was awarded the Office of the Secretary of
Defense Medal for exceptional civilian service in 2005. Mr.
Schenker holds an M.A. in Modern Middle Eastern History from
the University of Michigan and a B.A. in Political Science and
Middle East Studies from the University of Vermont.
Next, we have Michele Dunne, who is director of the Rafik
Hariri Center for the Middle East at the Atlantic Council of
the United States. Prior to this, she was a senior associate at
the Carnegie Endowment for International Peace, and editor of
the Arab Reform Bulletin from 2006 until 2011. She was also
previously a Middle East specialist with the U.S. State
Department where her assignments included serving on the
National Security Council staff, on the Security of States
Policy Planning staff in the U.S. Embassy in Cairo, and U.S.
Consulate General in Jerusalem in the Bureau of Intelligence
and Research. She holds a PhD in Arabic Language and
Linguistics from Georgetown University where she was a visiting
professor for 2002 until 2006 and we welcome you here this
afternoon, Doctor.
And finally, we have Jon Alterman who holds the Zbigniew
Brzezinski chair in global security and geostrategy and is
director of the Middle East Program at CSIS. Prior to joining
CSIS, he served as a member of the policy planning staff at the
U.S. Department of State and is a special assistant to the
Assistant Secretary of State for Near Eastern Affairs. Before
entering government, he was a scholar at the U.S. Institute of
Peace and at the Washington Institute for Near East Policy.
The second bell went off, I didn't quite make it. However,
we've been joined by the former chair of the Full Foreign
Affairs Committee, Mr. Berman from California, and as is the
practice of this committee, if he'd like to take a minute for
an opening statement? Okay, unfortunately, we have to head over
to vote and we may not make it, especially as we get older, we
get a little slower getting over there. So--and we don't want
to miss a vote, so at this time, we will recess and as I
understand we have about three votes, so we should be back
ballpark around \1/2\ hour. So we are in recess at this time.
[Recess.]
Mr. Chabot. Okay, we're back in session and unless Mr.
Berman has changed his mind about making an opening statement
we'll go right to the witnesses and I'm assuming by his grin,
that he is not.
So we've introduced the panel, so Mr. Schenker, you're
recognized for 5 minutes. We again apologize for the
temperature. I don't want to say it may be slightly cooler,
because you've been here longer than I have. It doesn't feel
quite as hot as it did, but we've got a lot of people in a
relatively small room. We have a 5-minute rule. You have 5
minutes. The yellow light will come on. You'll have 30 seconds,
excuse me, 60 seconds to wrap up and we ask you to stay within
that if at all possible. So you're recognized for 5 minutes,
Mr. Schenker.

STATEMENT OF MR. DAVID SCHENKER, DIRECTOR, PROGRAM ON ARAB
POLITICS, WASHINGTON INSTITUTE FOR NEAR EAST POLICY

Mr. Schenker. Chairman Chabot, Ranking Member Ackerman,
it's an honor to participate in this important hearing on the
subject of vital national interest. I thank you for the
opportunity to present my views to this committee today.
Today's hearing could not be more timely, well, actually,
given the dynamic nature of post-revolt politics in Egypt,
tomorrow might have been somewhat better. Earlier this week, it
seemed the Muslim Brotherhood's Mohammed Morsi had won Egypt's
hotly contested Presidential election. Tomorrow, however, it
would not be surprising if we had learned that erstwhile
Mubarak Prime Minister Afhmed Shafiq is Egypt's new chief
executive. At this very moment, we just don't know. What we do
know is that regardless who Egypt's next President is, barring
an unexpected retreat of political power, Egypt will continue
to reside with the military. And in order to maintain this
power, Egypt's military will likely have to take increasingly
repressive measures.
Meanwhile, this military, and whatever government emerges
in Egypt, are together going to have to contend with a series
of increasingly complex challenges that have in the last 16
months reached the crisis point. Foremost among these
difficulties is the economy which has deteriorated
precipitously since last year's revolt. Foreign reserves
plummeted, capital has fled, foreign direct investment has
dried up, inflation is taking hold, and tourism has dropped to
a fraction of its pre-2011 levels.
In May, Minister of Finance Mumtaz Saad predicted that
elections would quote unquote deg.``be the beginning
of the national economic recovery.'' His assessment was overly
optimistic. The effort to revitalize the economy will be
hampered not only by continued political uncertainty and
unrest, but also by the worsening security situation. The
immediate aftermath of the revolt saw a rash of prison escapes
and a surge in violent crime in Egypt, including car jackings,
armed robberies, and kidnapings, a situation that drove much of
the appeal for quote unquote deg.``law and order
President candidate, Ahmed Shafiq.'' The security deficit is
most conspicuous in the Sinai where armed groups are claiming
allegiance to the ideology and agenda of al-Qaeda are becoming
increasing active and Bedouin tribesmen have been kidnaping
tourists and harassing the multi-national force and observes.
Operations by Gaza-based terrorists against Israel are
emanating from the Sinai are also on the rise.
It's difficult to discern whether the Egyptian military is
incapable or just unwilling to secure the Sinai. Both scenarios
are troubling. Not only is insecurity in the Sinai unlikely to
be contained indefinitely to the peninsula, should Israeli-
Egyptian ties further deteriorate, border incidents will become
more subject to populist politics and difficult to manage.
The bleak economic and security picture is accompanied by
equally grim prospects for return to political normalcy. For
the foreseeable future it seems, the Muslim Brotherhood and the
SCAF will be locked in an ongoing and destabilizing struggle
for power. At the same time, the Muslim Brotherhood will be
challenged from the right by the Salafists, their chief
political and ideological rivals, pushing the Brothers to take
an even military line.
Regardless who prevails in the Presidential contest, Egypt
seems destined for a combination of populist, Islamist, and
authoritarian politics. While this may not imply an end to the
peace agreement with Israel or strategic ties to the United
States, changes in policies that impact women, political
pluralism and religious tolerance could complicate bilateral
relations with Washington. At the same time, the absence of a
Parliament and a President with limited powers will diffuse
authority, making it difficult for Washington to work with
civilian leaders in Cairo on issues of mutual interest.
Continued military preeminence in Cairo may in the short
term guarantee some long-standing U.S. strategic interests in
Egypt: Priority access to the Canal, over slights,
counterterrorism cooperation, and the maintenance of the peace
treaty with Israel. But it is an inherently volatile situation.
The opposition, Islamists and liberal alike, are sure to employ
anti-U.S. populist politics as a cudgel against the military
and should the military crack down and reinstitute draconian
measures, it will further stress U.S.-Egyptian relations.
Sixteen months on the transition in Egypt is not over.
Indeed, it is just beginning. And with limited leverage,
Washington is going to have to pick its spots with both the
military and civilian leadership. Populism, along with the
social justice imperative of the revolution, will make it more
difficult to sustain a critical political commitment to
economic reform in Egypt. Washington must encourage Egypt to
remain dedicated to economic reform and continue to remind
Cairo of the inverse relationship between radicalism and
foreign direct investment.
At the most basic level, however, Egypt is going to have to
help itself. Already, the Salifists and the Muslim Brotherhood
have opposed a Japanese loan to expand the Metro system in
Cairo which Islamists consider is interest and prohibited by
Islam. The Salifists are also opposed to the $3 billion IMF
loan. It's not clear whether the Muslim Brotherhood and the
SCAF will come down on this critical funding. At the end of the
day, the sine qua non for maintaining the substantial U.S. aid
package to Egypt is a continuity of the core elements of the
strategic partnership. While the instinct may be to lower the
standard for other less pressing issues, Washington should, in
fact, take the opposite tact. If democracy in Egypt is ever to
take root, regardless of who is at the helm, Cairo should be
held to a high standard in this coming period in terms of human
rights, religious freedoms, political pluralism, and women's
rights. Revoking or reconfiguring the U.S. aid package right
now would likely be more provocative than productive. Lest
these issues fall by the wayside, a periodic congressional
report requirement for the administration could keep this
issues on the front burner.
Egypt with 83 million people is too big and too important
to fail. But a return to authoritarianism, either religious or
secular, would also be a failure, dashing Egypt's aspirations,
undermine U.S. interests in the region and ensuring continued
instability in this critical state. Thank you.
[The prepared statement of Mr. Schenker follows:]

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Mr. Chabot. Thank you very much. I appreciate your
testimony this afternoon.
Dr. Dunne, you're recognized for 5 minutes.

STATEMENT OF MICHELE DUNNE, PH.D., DIRECTOR, RAFIK HARIRI
CENTER FOR THE MIDDLE EAST, ATLANTIC COUNCIL

Ms. Dunne. Thank you, Mr. Chairman, for the honor of
testifying before the subcommittee. I'll summarize the written
statement that I've submitted.
With the conclusion of their first post-revolution
Presidential election, Egyptians should have been celebrating
this week, the transition from inter-military rule to
government by elected civilians. Instead, they're back
demonstrating in Tahrir Square. The question, Mr. Chairman, is
whether the democratic transition in Egypt has gone
irretrievably off the rails or whether it can get back on
track.
We're awaiting the final results of the Presidential
election. Today, a coalition of judges who set out to do a
parallel count of the vote announced that they agreed with the
Muslim Brotherhood, that Freedom and Justice Party candidate
Mohamed Morsi won by about 900,000 votes out of a total of
about 25 million votes cast. But the Presidential Election
Commission, whose decisions are final and cannot be appealed in
court, is now reviewing complaints of irregularities by both
campaigns and will announce the final results soon, perhaps
tomorrow.
Unfortunately, demonstrations and violence might well
ensue, particularly if the Commission disqualifies enough votes
to name former Prime Minister Afhmed Shafiq the winner. Sixteen
months after promising to oversee a democratic transition, the
Supreme Council of the Armed Forces, the SCAF, was as of last
week on the verge of finally surrendering executive powers. But
at the eleventh hour, as you know, the Supreme Constitutional
Court invalidated the law under which the Parliament was
elected and the SCAF acted quickly to reclaim legislative
powers from what Egyptians call the Parliament of the
revolution in which Islamists held a majority, as well as to
limit the new President's power.
So among the most troubling elements of this supplementary
constitutional declaration issued by the SCAF on June 17th is
that it gives the SCAF the power basically to control the
writing of the new constitution, to control who will be on the
assembly that writes that constitution, to set the timetable
and to object to any article in the constitution. It also will
allow the SCAF to retain legislative powers and budgetary
authority for months, perhaps even through the end of this
year, until--because now, parliamentary elections cannot take
place until there is a--until the new constitution is already
in place. And then, of course, there will need to be a revision
of the electoral law and so forth based on the court decision.
So this is going to draw out for quite a while. And the SCAF
will, according to this decree, be able to remain free from
control by the new President who will be unable to appoint any
senior defense ministers or make decisions on any military
matters.
In sum, this constitutional declaration removed the
Parliament as a counterweight, the SCAF, and it positions the
military as a power separate from and above civilian
authorities, and it forces the writing of a new constitution in
haste and under the pressure of military rule.
Now Egyptians are now asking whether this court ruling
invalidating the Parliament was an impartial ruling,
particularly after a series of indications from senior members
of the judiciary that some of them now feel they need to take
aside in this power struggle between the SCAF and the
Brotherhood, which is truly unfortunate because the judiciary
was among the most respected institutions in Egypt. But even if
it was--let's say it was an impartial court decision to
invalidate the law under which the Parliament was elected. It
really doesn't justify the SCAF's declaration after that. The
SCAF could have simply called for new parliamentary elections.
It did not have to see some of the powers that the existing
constitutional declaration would have given the President. And
it certainly did not have to cease control of the writing of a
constitution.
This disruption and manipulation of the political
transition--I have to say as I was thinking about this, the
phrase Etch-a-Sketch transition came to mind. Every once in a
while when the SCAF sees that it doesn't like the way things
are going with the transition, they just sort of shake it up
and start drawing it all over again. You know, it does come at
the expense of Egypt's economy, as Mr. Schenker was just
saying, as well as national security, because both of these
things are going to suffer as a result of the on-going struggle
between the military and the Brotherhood.
Now the United States might not be able to control or
change the behavior of Egypt's SCAF. They appear to be willing
to pay any price to avoid bowing to the choices of the voters.
But the United States can and should decline to use its
taxpayers' funds to support such leaders. The United States
should withhold assistance until the situation in Egypt
clarifies, withhold at a minimum military assistance, while
articulating a desire to build a new partnership with Egypt
once it's on the road to becoming truly democratic, to
respecting the rights of all its citizens, and to playing a
responsible and peaceful regional role. Thank you very much.
[The prepared statement of Ms. Dunne follows:]

----------

Mr. Chabot. Thank you very much.
Dr. Alterman, you're recognized for 5 minutes.

STATEMENT OF JON B. ALTERMAN, PH.D., DIRECTOR, MIDDLE EAST
PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

Mr. Alterman. Thank you, Mr. Chairman, Ranking Member. It's
a great honor and a pleasure to appear again before you this
afternoon to discuss developments in Egypt. Watching Egypt for
the last 18 months has been a humbling experience. I've been
constantly surprised. And although conspiracy theories abound,
I'm convinced that everybody is completely making this up as
they're going along and they've been doing so for some time
now.
Each of status quo is deeply troubling to us as Americans
and its allies, but it seems to me it's not sustainable. Our
strategic goal has to be to try to influence Egyptian politics
so they become more inclusive and ultimately more resilient.
While I'm discouraged of what's happened in Egypt in recent
months, I'm not yet ready to despair, nor should you be.
Events in Egypt are disturbing, in part, because hopes were
so high in February 2011. Egypt's protests then seemed to
promise the rise of a more pluralistic and inclusive country.
The image of Egypt that emerged from the revolution was a
country that embraced young and old, rich and poor, Christian
and Muslim, religious and secular, urban and rural.
Through the Mubarak years, where I lived off and on in
Egypt, there was often a sort of dour xenophobia that lurked
under the surface. It seemed to me to reflect a certain
insecurity and lack of self confidence among Egyptians, a
manifestation of their awareness that they were once a world
leading civilization, more recently that led the Third World,
but they have fallen far behind former peers such as South
Korea and ceded influence in the Arab world to the wealthier
countries in the Gulf. All of that evaporated with the advent
of the protests that brought down Hosni Mubarak. The world's
eyes were on Egypt for the first time in a half century.
Ordinary Egyptians were lionized and Egypt once again seemed to
be in the vanguard of a movement that led hundreds of millions
of people.
With the military's reassertion of power, that hope has
evaporated. The question of what U.S. policy should be in the
midst of all this is both important and subtle. Long before the
fall of Hosni Mubarak, there were pathologies in the U.S.-
Egyptian relationship that needed addressing, but weren't being
addressed. We have to address those pathologies and define a
relationship going forward that serves both our interests and
our values.
As I've told this committee before and as I've written
other places, I've long thought it would be helpful to right
size our aid relationship with Egypt. The steady provision of
$1.3 billion a year in annual military assistance over more
than 30 years has led to an environment in which each side
feels deeply taken for granted. I can't tell you what the level
of U.S. assistance to Egypt should be, nor is it my role to.
Instead, the U.S. Government needs to sit down with the
Egyptians, have a serious discussion about what we need, about
what they need, and what each is willing to do for the other.
The relationship has lost the intimacy of the 1970s and the
eight figures should reflect that. In my judgment, reshaping
the aid package will actually improve our relationship with
Egypt in the longer term.
I don't think--I do not think it's advisable to condition
U.S. aid on political milestones in Egypt for two reasons.
First, conditionality works best when it's quantitative,
triggered by discrete and concrete metrics. Qualitative
conditionality tends to invite endless debate and
argumentation, not compliance.
Additionally, conditioning the aid on political outcomes
creates a powerful impulse on the part of the target state to
demonstrate resistance and bravado and it's often
counterproductive. We also have to be careful to take the long
view. We're only in the middle of what will be a long and drawn
out process of political change in Egypt. The Muslim
Brotherhood and young revolutionaries aren't going to go away
and the military is going to have to work hard in the coming
months to preserve its legitimacy. Here, I think, we need to
think about two relationships which I am sure members of this
committee know better than I do, the U.S. relationship with
Turkey, the U.S. relationship with Pakistan. We've had an
uninterrupted relationship with Turkey and they have gone
through military coups and had a more democratic evolution. We
cut our military relationship with Pakistan in the 1990s. There
are people who talk about the lost generation in the Pakistani
military. It did nothing to heal the civil military tensions in
Pakistan.
Egypt has a growing economic problem and I think that will
likely guide the leadership toward political compromise and
more inclusive politics because if there's political turmoil,
they simply won't be able to access international capital. They
won't be able to get IMF loans and a whole range of things, I
think, will be much more difficult and the Egyptian leadership
needs it to be to have success on any terms.
For Israelis who looked at events in Egypt with great
alarm, I think the army's actions must come as a great relief.
The Egyptian military has sophisticated understandings with the
Israeli counterparts and the Egyptian military now remains in
control. Overall, I think, Egypt's political evolution and that
of the broader Arab world hasn't stopped. And in my judgment,
this is another sign that Israel needs to build out its
relations with Arab republics. There's already a sort of
grudging acceptance of Israel and I think this is a sign the
future is coming and Israel needs to reach broader.
For the United States, this isn't where we thought we'd
find ourselves 18 months ago. Our allies in the Egyptian
military promised something different and we expected something
different. Yet, it's important to remember that we're only in
the middle of what will surely be a long transition to an
unknown new status quo. We should hold fast to our interests
and to our values in Egypt and in the long run, I'm confident
that change is coming and the U.S. can play a constructive role
influencing it in a positive direction.
Going forward, one idea should guide us. We should aim to
enlarge our partnerships in Egypt, not limit them, and build on
that fertile ground that encompasses a shared interest between
our two countries. Thank you.
[The prepared statement of Mr. Alterman follows:]

----------

Mr. Chabot. Thank you very much and members now will have 5
minutes to ask questions of the panel and I'll begin with
myself.
One element of both the NGO raids and Egypt's declining IMF
financing which has gotten considerable attention has been the
central role of Egypt's Minister of International Cooperation,
Fayza Abul Naga. In an editorial, the Washington Post recently
noted that--and this is kind of a long quote:

``The campaign against the International Republican
Institute, National Democratic Institute, and Freedom
House, along with a half dozen Egyptian and European
groups, is being led by the Minister of International
Cooperation, Fayza Abul Naga, a civilian hold over from
the Mubarak regime. Abul Naga, an ambitious demagogue
is pursuing a well-worn path in Egyptian politics
whipping up national cinema against the United States
as a way of attacking liberal opponents at home.''

Referring to the U.S. funding of NGOs like IRI and NDI, she
has reported to have said,

``Evidence shows the existence of a clear and
determined wish to abort any chance for Egypt to rise
as a modern and democratic state with a strong economy
since that will pose the biggest threat to American and
Israeli interests, not only in Egypt, but in the whole
region.''

That's her quote.
It is also reported that financing from the IMF and World
Bank were declined because according to Ms. Abul Naga, the
terms of the loan were incompatible with the national interest,
again, her words. She is reported to have added that ``the
government would not accept conditions dictating by the World
Bank or the International Monetary Fund.''
It's my belief that--let's face it, the chief agent
provocateur, since the revolution, this person has shown very
clearly that she cannot be trusted as the custodian of American
taxpayer dollars or even as an advocate for Egypt's own self
interest. Do you believe Ms. Abul Naga's--that she'll continue
to have a place in the forthcoming additional government? And
if so, how should the United States react? And I would leave
that up to anyone.
Mr. Schenker?
Mr. Schenker. Ms. Abul Naga has remarkable staying power.
She is, for lack of a better term, Fahlul. She survived the
Mubarak administration in fine shape and has the ears of the
SCAF very clearly. Her star has risen and she's doing very
well. I would say certainly that she, in my eyes, very clearly
she was responsible for the NGO crisis. I think a lot of people
see it as this was something that was engineered by her. I
think she has been subsequently PNGed by the U.S. Government
which I think was warranted.
We've had a long history of problems with Ms. Abul Naga. If
you go back and look back at these Wikileaks documents, you'll
see a stack about this thick of complaints from the U.S.
Embassy about how Ms. Abul Naga is undermining our efforts to
improve the aid process or to really implement what we think
was necessary for Egyptian development.
Ms. Abul Naga has also had a very interesting response to
the accepting of foreign funding, the IMF money. She has
actually taken a leading role so far on this Japan issue where
the Muslim Brotherhood and the Salifists say that they can't
accept the money from Japan, some $450 million for the Metro
system because it's interest. Ms. Abul Naga, we will call her
Sheikha Abul Naga for her religious credentials, has come
forward and issued an edict saying that no, no, it's not
interest and we can take this because the Government of Japan
is not a money-making endeavor. So it's a very odd role she's
had, but it's persistent.
Mr. Chabot. Does anybody else want to add anything? Yes,
Dr. Alterman and Dr. Dunne.
Mr. Alterman. I think she's not in as secure a position as
she appears from Washington, partly because of her history. She
was a close, personal friend of Suzanne Mubarak. A lot of her
friends have been discredited. I think she is desperate in many
ways. She has been trying to control the money and her
objection to U.S. aid was that it bypassed her. She is about
controlling the money and controlling all the international
money that goes to Egypt.
I think she sees Egypt slipping through her fingers. I
think she sees the role slipping through her fingers. I think
rather than seeing her as a powerful woman who is standing up
to the United States, she is trying to build herself up as a
powerful person who is standing against the United States to
shore up what is ultimately a very, very weak position both in
the broader Egyptian public and also in the current Egyptian
Government.
Mr. Chabot. Thank you. Dr. Dunne?
Ms. Dunne. Yes, you know, in addition to the role that Ms.
Abul Naga played in the whole NGO issue and I certainly agree,
she drove the whole thing. I hope that Egyptians see the damage
that she did to Egypt's relations and the foreign assistance
that Egypt could have and frankly should have received in the
last 16 months because she was so insistent basically on
wanting cash budget support and was sure that that would come
if Egypt held out and so they didn't take other kinds of
assistance, for example, an IMF loan on very soft terms and so
forth that they should have taken.
I hope this is recognized within Egypt, but that's not for
certain. And she has a very strong relationship with senior
members of the SCAF and if they continue to hold sway, then we
can't exclude the possibility that she would appear once again
in a prominent position in the new cabinet that will be named
in the coming weeks. So that is something the United States
might want to raise privately.
Mr. Chabot. Thank you very much. My time has expired. The
gentleman from New York is recognized for 5 minutes.
Mr. Ackerman. Well, now that we've burnished her street
credentials, there was a play on Broadway in which right before
the last act the audience every night got to vote on what the
third act was going to be, how it was going to turn out or who
done it or whatever it was. Of course, there were a limited
number of possibilities and presumably whatever score they
announced, that's what they did.
We don't really get to vote in the last act anywhere,
specifically Egypt. There's a well-known adage that countries
don't have friends, they have interests. What would the outcome
of this final act of this particular part of the play be in the
interests of the United States? Would our interests be long
term in democracy should always prevail and the will of the
people should be adhered to? Not analogous in any way, but back
in the '30s, the National Socialist Party seemed to have a slam
dunk in the election. Nobody thought what Nazis did was a good
thing. The world didn't approve, but certainly they didn't
steal an election.
What was in our interests to do business with them? To not
do business with them?
In Egypt, if the SCAF comes up short in votes, and I guess
it depends on who's counting, but they really came up short in
votes, is it in the U.S. interest that an organization that
says things about adhering to national obligations and
treaties, et cetera, remain in power? Or if the bad guys are
promising terrible things, I mean I guess it's more analogous
of what happened once upon a time, not too long ago in Algeria
where the election yielded enough results for them to change to
a new constitution that the majority party that was coming in
agreed that they wanted to do and have an Islamic republic
rather than a democratic country. And the President just voided
out the election.
Sometimes you root for the bad guy. I remember once as a
much younger congressman trying to explain my vote before a
newspaper editorial board and they wanted to know why I voted
that way. And I just looked them in the eye and said sometimes
you have to stand up and do the wrong thing.
What's in our interests doing what we know? We don't want
the outcome in most elections to go through and just ignore
them or what?
Dr. Alterman?
Mr. Alterman. Mr. Ackerman, I think our interest is having
some sort of hopeful stalemate which brings in----
Mr. Ackerman. So group prayer.
Mr. Alterman. Group prayer. Everybody hold hands, which
brings in a wide variety of parties who come to believe that
they can win in the future. It seems to me that the mark of a
democracy is not people's willingness to win, but their
willingness to lose because they feel if they lose one round,
they can win a future round. And I think the great danger right
now in Egypt, the reason why people fear tremendous violence
over the coming weeks is a sense that if you don't lock in a
victory now, you will never live to fight another day. That's
what happened in Algeria and more than 100,000 deaths as a
consequence.
I think to my way of thinking the best possible outcome is
one where the military feels they have a stake in making it
work. The Muslim Brotherhood feels they have a stake in making
it work. The young revolutionaries who had so much hope of
where this would all go, so you know, well, we don't like Morsi
or Shafiq, but we could live to fight another day. We could
have a better set of candidates in the future, and ultimately
bringing all these groups to feel if they hold their nose and
it's good enough because they will be able to compete again I
think is the best we can hope for right now. And it's not
certain we're going to get there.
Mr. Ackerman. Does Egypt have a long enough tradition of
free and fair elections to be able to base the hopes that you
live to fight another day, but that day may be fought for by
your great, great, great grandchildren?
Mr. Alterman. I think they have enough tradition of good
enough. And Egypt has been getting by on good enough for a long
time and I think good enough is politically the best outcome we
can hope for right now.
Mr. Chabot. The gentleman's time has expired. The gentleman
from Florida, Mr. Bilirakis, is recognized for 5 minutes.
Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it
very much. I have a couple of questions. Since the fall of
Mubarak, we may have seen the end of authoritarian regime, but
we have yet to see the rise of a new democratic leadership.
Late last year, a few of my colleagues and I called for an end
to the unconditional aid, U.S. aid to Egypt as long as the
persecution and attacks on Coptic Christians and other
religious minorities continue. For a brief time, we thought we
had a victory. We thought we were successful. The House
released its Fiscal Year 2012 funding bill and placed
conditions on the U.S. aid.
As we know, things continue to get worse in Egypt. There
was a crackdown on--you mentioned the program of democracy NGOs
and their staffs including the U.S. citizens. Before moving
forward, I want to remind the committee that the Egyptian
Government has yet to drop the charges on the U.S. citizens and
I want to hear an update on that.
But Secretary Clinton, and of course, the Obama
administration, decided to waive the new restrictions and
continue to provide U.S. taxpayer dollars and military aid to a
country that disregards the basic principles of human rights
and religious freedom. Now months later, it is clear that their
decision to waive was not only untimely in my opinion, but
wholly without merit.
The trial, I understand, is scheduled to convene on July
4th and our U.S. citizens will be tried in absentia. With all
that said, I'd like to ask a couple of questions. How do we
engage Egypt to ensure that human rights and religious freedom
for Christians and all religious minorities are respected? Can
we expect the new Egyptian Government to drop charges against
the U.S. citizens? What's the status there?
Also, how do we ensure that whoever comes to power in Egypt
can protect Israel, of course, our important ally from any
threats or attacks? And of course, to keep the peace agreement
between Israel and Egypt?
For the panel.
Mr. Chabot. Whoever would like to answer.
Mr. Bilirakis. Whoever would like to take the question.
Mr. Chabot. Dr. Dunne?
Ms. Dunne. Congressman, you've raised some extremely
important issues here. And I think in a way it links back to
Congressman Ackerman's question because you know what we really
need to be in favor of in Egypt is the development of a strong
democratic system. And this is, I think, what Dr. Alterman was
saying in somewhat more picturesque terms, but a system in
which people believe that there will be accountability through
the ballot box and so forth and also that there's a--they can
work out these issues such as how the rights of all citizens
will be protected. And that's certainly something the United
States has to stand up for.
But I think it's only going to happen in a system where
Egyptians can work out their differences in a peaceable way.
I really worry that if we take a narrow view of this and
say well, we'd rather see the military than the Brotherhood in
power and therefore, you know, forget about this whole
democracy thing, that it will lead to a situation of ongoing
conflict and violence. We really can't turn the clock back 5
years or something like that. Egyptian society, it isn't where
it was. And I don't think people will accept it. So it will
lead to a situation of ongoing conflict and a lot of that will
be taken out against Christians and other minorities inside of
Egypt, I'm convinced.
Mr. Bilirakis. How do we engage? Excuse me for--what is
your suggestion?
Ms. Dunne. I think that we do need to continue to provide
support to NGOs and stand up for them. Now before this
Parliament was just dismissed, there was a draft new law on
NGOs that would have allowed much better conditions. Maybe not
absolutely perfect, but much better operating conditions for
both Egyptian and foreign NGOs. And that--and although it's not
directly related to the case against the Americans which will
resume in court on July 4th, people felt that if a new NGO law
was passed, that somehow it would make the case easier to
resolve against the people who are on trial.
Now, you know, all of that has been absolutely thrown up
into the air, since there now won't be a Parliament for many
months in Egypt. They won't be able to pass a new law. And so
the current conditions will continue to go forward. And that's
going to make it very difficult to have the sort of engagement
that we really would like to have with the Egyptian Government
on these issues.
Mr. Chabot. The gentleman's time has expired.
Mr. Bilirakis. That's fine. Can someone comment on the
peace treaty with Israel?
Mr. Chabot. If somebody would like to briefly comment.
Mr. Bilirakis. Thank you.
Mr. Ackerman. That's a brief subject. [Laughter.]
Mr. Schenker. It's quite alarming, a lot of what we're
hearing, but we do have certainly the military being the
leading supporter of the peace treaty in Egypt and we also have
statements from senior officials in the Muslim Brotherhood
saying that while they find that certain provisions of Camp
David to be abhorrent or inappropriate, that they're not
calling for war. I think that you're going to have a very
deteriorating bilateral relationship between Egypt and Israel.
I think you can see very clearly a trajectory where the Israeli
Ambassador and the highest level of representation of the two
countries no longer exists, that there's no longer an
ambassador, et cetera. But whether the bilateral relations are
broken or peace treaty, I don't think that's on the table any
time in the immediate future. And that will be the case as long
as the military has a say and the constitution that the
military is busy writing, they have a provision that they will
have to be consulted by the President in terms of declaration
of war. We'll see if that sticks.
I'm more concerned about how these states are going to get
along as security deteriorates in the Sinai. I think that there
are--just the number of land mines that are out there with
these al-Qaeda affiliates or wannabes that are taking hold,
with the lawlessness, with--even the MFO, the Multinational
Force Observers, are being limited in their operations now,
that are meant to oversee and ensure the ongoing commitments of
the peace treaty. And I think this is very problematic. The
question is in terms of the next crisis whether there will be
somebody for the Israelis to call and get a response.
It came very close, perilously close, to having six Israeli
diplomats lynched last year after one of these incidents. In
the future, if there's this type of populist politics, you may
not have a mechanism that works efficiently to prevent a
tragedy.
Mr. Chabot. The gentleman's time has expired. The gentleman
from Connecticut, Mr. Murphy, is recognized for 5 minutes.
Mr. Murphy. Thank you, Mr. Chairman. I wanted to ask Mr.
Ackerman's question maybe a different way. He asked about what
our interests were and Dr. Alderman gave, I think, a very good
summary what the best case scenario might be. So let me ask it
maybe the opposite way.
You know, sometimes you engage in policies designed to
encourage something you want and other times you engage in
policies to discourage something you don't want. And so the
opposite or the flip side of Mr. Ackerman's question is what's
the worst case scenario for the United States of all of the
various things that could play out between the existing parties
or parties to come, the Salifists, for instance, what do we
want to guard against happening here?
Mr. Schenker. I think the worst case scenarios are
imaginable here, an Islamist President, an Islamist Parliament,
that is authoritarian in nature in its own right. This is
democracy unfulfilled. You have the process. You have the
institutions and yet it goes the wrong direction. I think if
you look even worse than that, you're going to have the
Brotherhood sitting in a Parliament eventually, depending on
what happens in the best case scenario. A freely elected
Parliament looks somewhat like it looks right now and you're
going to have the Salifists on the far right, basically
pressing the Brotherhood to take even more militant positions
and they're going to give in and go to this more populist, more
Islamist route. That's not going to be good for minorities in
Egypt. It's not going to be good for U.S.-Egypt relations.
You've got basically two Turkey models competing right now
in Egypt. One is the old Turkey model where the military
maintains control and shores the national security issues. And
you've got the new Turkey model where the Islamists may, in
fact, be looking to have civilian control, are looking for
civilian control and bringing the military to heel and then do
whatever they want with the civilian system. And I can see many
bad things emanating from that.
Ms. Dunne. Congressman, if I might briefly give another
worst case scenario, it is that the military that was once in
power behind the scenes is in power explicitly and you know is
tampering with the democratic process and violating human
rights, putting civilians to military trials, cracking down on
civil society, meanwhile, enjoying a great deal of American
assistance and therefore, the United States is incurring the
hatred of many, many people in Egypt because the United States
is seen as supporting all of that. And that is the current
situation. It's the current worst case scenario.
Mr. Murphy. So we've got one is the Islamist President. One
is the status quo.
Mr. Alterman. The third is if you combine these two
scenarios that you have a military crackdown which creates a
violent and increasingly radicalized opposition, increasing
amounts of violence, tens or hundreds of thousands of deaths,
populist politics that ultimately push the military from power
and what you have is not some sort of restrained, deal-seeking
Islamist political party that's trying to work within an
Egyptian context, but instead a radicalized, anti-American,
anti-Israeli, populist force which is as totalitarian as
anything the world has seen and which not only affects Egypt
and its immediate neighborhood, but also begins to spread some
of those ideas and ideology more broadly through the Middle
East affecting a whole range of American interest. I don't
think it's likely, but I think if you're talking about that's
the worst case, I think you combine those two, you get that,
and then you project it out to the rest of the Middle East and
that's what you could be looking at.
Mr. Murphy. So does that mean as scared as we may be of
what the Muslim Brotherhood brings to the presidency or to the
Parliament, the best U.S. policy in the short term is to get
the SCAF out of the way or get the military out of the way as
quickly as possible?
Mr. Alterman. My argument would be--it's unclear the extent
to which they've been willing or could be made willing to work
with each other. There are constant rumors of deals involving
the SCAF and the Muslim Brotherhood. I think our best case
scenario, my judgment, is finding ways for them and others to
work out some sort of comity to go forward and preserving
struggles for the future.
Mr. Chabot. The gentleman's time has expired. We'll go to a
second round now and I'll recognize myself for 5 minutes.
I know all of you have mentioned some of the economic
implications and the problems that exist right now and in fact,
I guess the bottom line is Egypt stands on the threshold of a
potential economic disaster. With cash reserves dwindling,
budget deficits skyrocketing, and little sign of the political
will to execute requisite economic reforms, a true crisis may
be just around the corner.
What measures does Egypt need to take to ensure its near-
term and long-term economic viability? And how can the U.S.
best encourage Cairo to institute these measures? And what
happens if the Egyptian economy does collapse? I'll perhaps go
down the line unless somebody wants to take it.
Doctor, do you want to take it?
Ms. Dunne. The Egyptian Government, who is ever in power,
needs to be careful about their budgetary situation and they
have started to do this. They have started to roll back fuel
subsidies. Fuel subsidies, in particular, are the thing that
have been devouring the Egyptian budget and so forth. But to be
honest with you, I mean beyond that the economic conditions in
the political transition are closely linked. The reason that
there's no IMF deal right now is because of the political chaos
in Egypt and the fact that this transition keeps being
interrupted and prolonged and changed and so forth.
Whether it is international financial institutions or other
donors, they want to give money to a government that they
believe is going to be there long enough to live out the terms
of the agreements and also that the money is going to be used
wisely and not going to be just gobbled up immediately. This is
really a problem. They need to get the political transition
moving forward as it should have been this week moving forward
and then they will be able to get the economy back on its feet.
The security situation is also extremely important. They're
not going to get tourists returning until they get the security
situation in Sinai and elsewhere under control. And that's
going to require police reform which is something that--reform
of the police and internal security and getting them back
operating normally, that still hasn't happened 16 months into
this transition.
Mr. Murphy. Thank you. Mr. Schenker.
Mr. Schenker. We're facing, I think, potentially, and I
think the SCAF pointed this out about a year ago that if things
don't improve that you will have a second revolution being a
revolution of the hungry, that the traditional World Bank
numbers say that 40 percent of the people in Egypt live on less
than $2 a day. I think a year after the revolution, it's
probably closer to 50 percent of the people in Egypt.
If you talk to people and there's polling immediately after
the revolution, people said that 80 percent of the people
expected that their standard of living would increase after the
revolution. I think just the opposite has happened. Meanwhile,
you have a heavy pressure notwithstanding this great step that
was taken toward the fuel subsidies. I think there's going to
be a heavy pressure to keep and even increase some subsidies
and government salaries and a pressure to hire more people with
the high unemployment rates. The Government of Egypt needs some
7 percent growth per year to create the 600,000 or 700,000 jobs
a year that are just needed to remain at an even unemployment.
And to get the kind of growth, you need security. You need
stability. You need a political process and confidence in the
Government of Egypt and that's not going to happen any time
soon.
Mr. Chabot. Before I run out of time, let me just get one
more question in. And Dr. Alterman, if you'd like to take this
one. Analysts disagree to some degree over how the Muslim
Brotherhood will ultimately react depending on how much it's in
power and how this all plays out, but whether it will moderate
its traditionally religiously inspired hard line traditions or
not. What do you expect to occur? What is reasonable to expect?
I know we're speculating to a considerable degree here. And how
do Islamists or anybody who is in power there expect to revive
the heavily European dependent tourist industry, for example,
if they're legislating restrictions on women's dress or ban
alcohol or other things which may well be on the horizon?
Mr. Alterman. First, I think nobody knows and they don't
know. I mean this is a movement which has been going through a
tremendous change as it has come into the public, as it's
engaging in politics. So I think there's a part about the
future of the Muslim Brotherhood, its future unity, the extent
to which hard liners and old line guys versus the young
generation versus more political people versus more religious
people, how that whole battle turns out, I think, remains
uncertain.
My guess is if they want to legislate different regulations
for tourists, that's very easy to do. There are a number of
countries in the Gulf, for example, where tourists can drink,
tourists can gamble, nationals cannot, and I could certainly
see that happening in Egypt.
But I think that part of this also depends on what the
political evolution over the coming year or so is. I mean if
the Brotherhood is competing for votes and is looking for the
center of Egyptian politics, there are a lot of people in the
center of Egyptian politics, Christians, secular Egyptians,
even religious Egyptians who are skeptical about the
Brotherhood, who say you have to convince me. And I think there
are ways that that can turn into moderation of some of the more
extreme forms. If you radicalize the Brotherhood, the radicals
will come to the fore.
I was just in Moscow yesterday and I was talking to a Turk
who said, you know, the Brotherhood is more democratic in
Turkey, but we were moderating them for 20 years. And I think
there are some people who have had the experience of Islamist
politics in Turkey who will tell you that there's nothing wrong
with Islamists in government, just don't give them everything
up front. Make them compete for the middle. Persuade people
that their intentions are good and then you can live with them.
Mr. Chabot. Thank you very much. My time has expired. The
gentleman from New York, Ranking Member Mr. Ackerman is
recognized for 5 minutes.
Mr. Ackerman. So who is going to tell the Egyptians we
figured out what they should do? [Laughter.]
We're kind of playing at the margins right here of all
sorts of theoreticals and in some scenarios we may be able to
actually have a little bit of influence and in some absolutely
none and in others whatever we do to influence, will have the
complete opposite effect.
I think I heard that one of the better outcomes would be if
everybody had some kind of a compromise. I think we've got a
pretty clear indication that the SCAF is able to compromise.
They're very pragmatic. They know what their needs are. They
know what their creature comforts are. They seem to know how
much that would cost and that there's a price tag on it and
they know where to send the bill.
Can the street or better yet, the brotherhood, or can the
people to their right, Salifists, and whoever else that might
be out there, can they compromise? Can the ideologues
compromise? The generals, it appears to me, are not ideologues
at all, ever. And anybody, I think, who has ever met with them,
going there or coming here, they have needs and wants and what
they're willing to do. It's not pie in the sky. It's not
religion. It's all practical.
Can you compromise--can the other side compromise?
Mr. Alterman. Sir, I think in many ways, the Brotherhood
since 1928 has been finding ways to compromise on and off. They
have been playing a long game. They have agreed not to be an
official political party for decades until they just became a
political party for this election. They have agreed to play a
long game to try to win social support and Islamize the
society, rather than control the government.
I think in point of fact, the Brotherhood has some people
who would not feel uncomfortable making the kinds of deals that
you make in Congress. There are ideologues to be sure, but I
think there are a lot of people who are political pragmatists,
who are very good at getting out the vote, who are very good at
doing things for the constituents and who would be at home in
any political body anywhere in the world. And I think it's
people like that who are the promise for making a deal both
with the military and with the U.S. Government and with the
Israelis.
Mr. Ackerman. These are the people who initially pledged
that they weren't going to contest for the presidency and they
compromised by going back on what they said they weren't going
to do.
Mr. Alterman. One explanation for that is that they
believed that the army was going to shut them out and the only
way to guarantee that they had a role was to compete for the
presidency. We don't have insight into their decision making,
but that's an explanation that's been offered.
Mr. Ackerman. I don't mind betting $10 million with
somebody because I don't have it. I'll get into the ring with
Jersey Joe Walcott or Killer Kowalski or something because I
know that's not going to happen. And if I think I could beat
them, then it happens. I'm older than you. [Laughter.]
That was when wrestling was real. [Laughter.]
It's a matter of they're not going to do it. They're not
going to put up a candidate for President until they think they
can win the presidency. That's the practicality of it. But I
think it's also an indication not that they're practical, but
it's an indication of it's a way of getting to what they want.
Do they want an Islamist state? There's a question. I know the
military answer. It's a hell no. Where are the Salifists on
this? Where is the Brotherhood? Where is the street? Where are
all the people who didn't vote? We don't know these big
answers. It makes it pretty dangerous.
Mr. Chabot. The gentleman's time has expired. The gentleman
from the Commonwealth of Virginia, Mr. Connolly, is recognized
if he would like to ask questions.
Mr. Connolly. I thank the chair. Before I do, I just want
the record to show emphatically, in large print, Mr. Ackerman
admitted he's much older than I am. [Laughter.]
Mr. Ackerman. I'm a politician. Just disregard anything I
say. [Laughter.]
Mr. Connolly. He's also retiring, so he----
Mr. Ackerman. It costs him nothing.
Mr. Chabot. He's open to say pretty much anything he wants.
Mr. Connolly. Let me ask our panelists, and welcome to all
of you and forgive me for being late. I'm in a markup at the
Oversight and Government Reform Committee that is bound and
determined, God knoweth why, to issue a contempt citation
against an honorable man. That's a different subject.
I am concerned about the status of the NGO personnel. I
know our colleague from Florida talked about the Americans, but
what about the Egyptians? I met them when I was last there a
few months ago and these are terribly dedicated patriots trying
to effectuate change in civil society and they are being put in
the dock, in the cage, particularly for the women among them.
It's very humiliating and very hard to explain back home to
their families and so forth.
I want the United States to stand with those brave
Egyptians and we don't want the word to spread that somehow we
only care about your nationality if you're an American. We
actually, I hope, are sort of blind with that respect. We care
about all of the people who work at these NGOs who are trying
to make theirs a better society.
So I'd be interested in your take on their status and what
more the United States can and should be doing or not to try to
assist it.
Dr. Dunne, do you want to begin--whoever.
Mr. Schenker. Congressman, fortunately, the NGOs, IRI, and
NDI, et cetera, are actually continuing to pay the Egyptian
nationals who remain in Egypt and are on trial. They're also
paying their legal fees. This makes sense, obviously. There's
also one American who has remained in Egypt to fight the
charges on his own volition.
I think that this is going to go on for some time and it's
helpful that the United States Government or these NGOs have
stepped forward to support this personnel, but this is going to
be an issue that is ongoing for some time and there's--we can
make statements and if the judicial process works and Egypt has
had a history of judicial independence for some time, although
that's come into question of late, this ridiculous political
trial should be thrown out in which case these NGO workers may
have difficulty finding work going forward, although it may
also be a badge of honor to have done this for them.
Ms. Dunne. Congressman, the Egyptian employees and the
Americans are all still on trial. The next hearing is to be
July 4th and there was to be a new draft NGO law that might
have made it easier for NGOs, both foreign and Egyptian, to
operate. It was in the Parliament. It was in the committee and
would have been voted on, but now the Parliament, of course, is
dissolved. And there probably isn't going to be another
Parliament for months. So this unfortunate situation is going
to continue.
I think the United States has to be discussing with the
Egyptian Government, with the new President and the new
government that will be appointed, how civil society is going
to be treated in the future and make it clear that this is
going to determine not only to some extent how the U.S.-
Egyptian relationship is going to go, but also Egypt's
relations with Europe and so forth. This whole struggle has
caused a lot of programs to be suspended, even though as Mr.
Schenker noted, maybe some of the employees are still being
paid, but all of the activities that those NGOs were supposed
to carry out are all just suspended. Nothing is happening. No
new money is moving.
Meanwhile, Egypt is going to have lots of elections and so
forth and things where those NGOs could have been making an
important contribution. And it's a real shame. We were
discussing a little bit earlier, Minister of International
Cooperation, Fayza Abul Naga, and whether she would be
appearing in the new government or not. So this is clearly one
of the issues that the United States needs to take up behind
the scenes with the Egyptian Government.
Mr. Connolly. Thank you. Mr. Alterman.
Mr. Alterman. Congressman, if I could just say, I was an
election observer in the second round of Egyptian elections in
December, and I just want to echo what you said about not only
the patriotism, but the dedication and the true qualities of
the Egyptian NGO workers I came across. It was inspiring, not
because they were serving American interests, but because of
how passionately they believed they were serving Egyptian
interests. It's a credit to us and we should stand by them.
Mr. Connolly. I thank you. My time is up. Thank you, Mr.
Chairman.
Mr. Chabot. Thank you. The gentleman's time has expired and
I want to say that I agree with the comments the gentleman made
relative to the NGO folks. And the only thing I disagree with
was his non-germane comment relative to the attorney general
and the case that's going on in another committee which we
shall not debate in this committee. So in any event, that
concludes the business that we have before this committee. And
I want to thank the witnesses this afternoon for testifying. I
think this was very helpful to the members. We will convey this
to our colleagues who were not able to be here today.
Procedurally, the members have 5 days to revise and extend any
statements or submit any additional questions. And if there's
no further business to come before the committee, we're
adjourned. Thank you.
[Whereupon, at 3:32 p.m., the subcommittee was adjourned.]

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