415 March 8, 1 985 REAGAN'S BLUNT MESSAGE TO EGYPT'S MUBARAK I INTRODUCTION Egyptian President Hosni Mubarak's visit to the White House on March 12 will focus attention on the United States' special received the attention and aid which the U.S. has been showering on Egy pt. Yet, although Cairo and Washington remain bound by them about the optimal strategy for advancing the Middle East peace process and the scope and nature of the U.S. aid program.

Ronald Reagan must speak bluntly to Mubarak about these differ ences and ho w to resolve them beneficial. Both partners, however, have been disappointed that the bilateral benefits of the arrangement have not been as great quacies of the U.S. military and economic aid programs and called for greater American diplomatic pressure o n Israel in Middle East peace negotiations. Washington has been dismayed by the strict limitations Egypt has imposed on strategic cooperation and by the slow pace of Egyptian economic reform. Recently, there also has been increasing American concern about t he cold shoulder Egypt has turned to Israel since the 1982 Israeli intervention in Lebanon. Continued Egyptian footdragging on normalizing rela tions with Israel will only strengthen Israeli misgivings about trading territory for peace with other Arab sta tes relationship with his country.

No other Arab state ever has I common strategic interests, there are growing differences between I I The U.S.-Egyptian relationship, in the main, remains mutually I as anticipated. Cairo has complained about the perceived inade- I I I I Washington has poured $15 billion of foreign aid into Egypt since 19

74. To date, this investment has produced substantial strategic and foreign policy dividends. Cairo has broken with Moscow, worked to reduce the influence of the Soviet U nion and radical anti-Western states in the Middle East, negotiated a 4 2 peace treaty with Israel, and acted as a moderate, stabilizing force' in this turbulent region.

There are, however, troubling signs on the horizon. As Egypt's efforts at.reconciliat ion with those Arab states opposed to the Camp David process have gained momentum, Cairo has sought to distance itself from the U.S. as well as from Israel. Reagan should tell Mubarak that the flow of U.S. economic aid is bound to be reduced if improved E gyptian-Arab relations come at the expense of Egyptian-American and Egyptian-Israeli relations.

American aid should be seen in the context of Egypt's continued cooperation in building a stable, peaceful Middle East, not as an entitlement program derived from Egypt's past participation in Camp David.

American aid is a political reward and should not become an economic commitment that can be taken for granted. Washington should gauge the flow of aid primarily according to the degree of Egyptian strategic coo peration, rather than to Egypt's economic needs. Only Egyptian economic reforms, not American largesse will solve Egypt's economic problems.

EGYPTIAN-AMERICAN SPECIAL RELATIONSHIP Over the past decade the U.S. has developed a special rela tionship with Egypt--the preeminent state in the Arab world.

This de facto alliance is founded on a common commitment to Middle East peace, regional stability and opposition to the expansion of Soviet influence. Although this relationship survived the 1981 assassination of President Anwar Sadat, it is clear that the honeymoon is over. After the initial burst of euphoria and the unfulfilled promise of the Carter-Sadat years, the United States has settled into a more restrained relationship with Mubarak's Egypt.

Comprising almost half the population of the Arab world, the 46 million Egyptians long have been a dominant political, military and cultural power in the Middle East have been economic. In the 1950s, President Gama1 Abdul Nasser sought to play off the two superpowers against each other to gain maximum economic advantage. He then opted for an alliance with Moscow Egypt's major problems When Soviet-supplied arms failed to produce Egyptian victories in a series of wars against Israel, President Sadat replaced Egypt's Soviet connection with an American one. Unlike Cairo's defunct special relationship with Moscow, which essentially was based on arms transfers, Cairo's special relationship with Wash ington was motivated primarily by economic and diplomatic goals the revitalization of the Egyptian economy and the establishment of an Egyptian-Israeli peace that could be broadened into a com prehensive Arab-Israeli peace 3 Sadat oversold the benefits of an Egyptian-Israeli detente.

Counting heavily on U.S. assistance , Sadat promised that pe?ce with Israel would improve dramatically the Egyptian economy and would be a first step toward a comprehensive solution. As cus todian of Sadat's legacy, Mubarak has a vested interest in secur ing as much American help as possibl e to fulfill his mentor's promises. Failure to ameliorate Egypt's economic problems or expand Arab participation in the peace process (thereby removing the onus of Egypt's "separate peace" with Israel) would not only undermine Mubarakls authority but the s t ability of Egypt as well Although fundamentally healthy, the Egyptian-American special relationship remains vulnerable to several hazards. In the short run, the chief threat is Egyptls campaign to stage a reconcilia tion with other moderate states by hold i ng the U.S. at arm's length, downplaying its commitment to the Camp David accords and freezing relations with Israel. There are also likely to be con tinuing strains over aid levels and peace strategies In the long run, the slowly rising tide of Islamic f u nda mentalism within Egypt, unless checked, poses the most serious threat to close re1ations.l Because such fundamentalism has mush roomed among young educated Egyptians alienated by the dismal employment prospects offered by the Egyptian economy, Washing ton must .find a strategy of economic reforms and aid to bolster Egypt's economy if it hopes to help avert the triumph of Islamic funda mentalism in Egypt.

FOREIGN POLICY ISSUES Middle East Process The chief foreign policy issue on Mubarakls agenda for Was hington will be the Middle East peace process that a window of opportunity exists for broadening the Middle East peace negotiations to include Jordan and the Palestine Liberation Organization (PLO). The apparent agreement on common negotiating principles r eached between Jordan's King Hussein and Yasser Arafat last month has strengthened this conviction.2 The He believes For an analysis of Islamic fundamentalism; see: Daniel Pipes Funda mentalist Muslims and U.S. Policy," Heritage Foundation International B riefing No. 13, August 1984.

Meeting in Amman, Hussein and Arafat reportedly arrived at a "framework agreement" that called for an international conference at which a joint delegation of Palestinians and Jordanians would negotiate the return of Israeli-occ upied lands in return for peace. Arafat indicated his acceptance of previous U.N. resolutions on the Palestine issue (but not a specific acceptance of U.N. Resolution 242) and accepted an eventual confederation with Jordan while insisting on Palestinian " s elf-determina tion i.e., a Palestinian state The New York Times, February 15, 1985. c I 4 Egyptian President considers it Washington's responsibility to galvanize the moribund peace process to resolve the status of the West Bank and Gaza before the growth of Israeli settlements'leaves little to be negotiated.

Mubarak's view that Washington's active involvement is crucial to the success of Middle East pedce talks is based on the historical record. In all successful negotiating efforts in the past--the 1974 and 1975 Sinai disengagement agreementsi the Syrian-Israeli disengagement agreement, the 1978 Camp David accords, and the 1979 Egyptian-Israeli peace treaty--U.S. engagement in the negotiations as an honest broker was indispensable.

American involvement, however, is a necessary but not suf ficient condition for success. There must be a willingness to compromise on both sides of the negotiating table and, more important, a willingness to come to the negotiating table in the first place. President Reagan's b old September 1982 peace initia tive, calling for Palestinian self-government in association with Jordan, was rejected out of hand by Israel's Begin government and was shelved when King Hussein haggled indecisively with Arafat.3 Mubarak lauded the Reagan i nitiative as a "lifetime oppor tunitylt4 and appealed to the other Arab leaders to support it. Mubarak differed with the plan, however, on two major points. He advocated the creation of a Palestinian state, an outcome speci fically ruled out by the Reagan initiative, and he held out the possibility'of a PLO role in the negotiations.. During a White House visit last year, Mubarak embarrassed his host by calling for U.S.-PLO talks despite Washington's longstanding commitment to reject negotiations with the P L O until it recognizes Israel and disavows terrorism. Mubarak recently softened this position by urging the Reagan Administration to invite to Washington an Israeli and joint Jordanian-Palestinian delegation, that would include non-PLO Palestinians rather than PLO official The Egyptian President also offered to act as a host for such talks in Cairo.

The Reagan Administration has indicated willingness to broker a wider Arab-Israeli agreement. Wisely, however, it has resisted the temptation to rush into peace talks before both sides have reached a consensus on a negotiating position. Israel is preoc cupied with its withdrawal from Lebanon and its economic crisis. A push for negotiations now could precipitate the fall of Israel's national unity government and p aralyze movement on these issues as well as peace negotiations, until after another round of elec tions For an analysis of Reagan initiative, see: James Phillips For Hussein Time to Get Off the Fence," Heritage Foundation Backgrounder No. 235 December 20, 1982.

John Merriam Egypt Under Mubarak Current History, January 19

83. The New York Times, February 25, 1985 5 The Arabs also are far from ready to enter such crucial nego tiations. Already the Hussein-Arafat framework agreement an nounced February 11 has drawn criticism from senior PLO officials.

Such criticism led Arafat in April 1983 to back away from a similar agreement on a unified Jordanian-Palestinian negotiating stance that King Hussein sought in reply to the.September 1982 Reagan peace initiativ e by his agreement with Hussein this time, the agreement itself is a nonstarter.

Israel to join the talks recognition of the state of Israel before entering negotiations with Palestinians--not just an implicit recognition of the de liberately vague U.N. S ecurity Council Resolution 242 Even if the slippery PLO chairman should abide It falls short of what would be necessary to.induce Jerusalem would need an explicit The international conference on the Palestinian question envisioned in the Hussein-Arafat fr a mework agreement would lead to rhetorical posturing but little real progress. Moscow, mean- while, could hardly be expected to facilitate the peace process because a lastfng peace would reduce Arab dependence on Soviet arms--Moscow's chief source of influ ence.

An Arab-Israeli settle ment, moreover, would intensify the Muslim world's attention on the Soviet occupation of Afghanistan. Hardline states such as Syria would be handed a veto over the negotiating positions of Arab moderates would lead inevitably t o a bitter stalemate.

The resulting lowest common denominator diplomacy The experience of past Arab-Israeli peace efforts indicates that only direct, fade-to-face negotiations are likely to succeed.

Until Arab negotiators are willing to sit down with the Israelis a high-profile American peace push would be unproductive merely would focus Arab attention on negotiating with Washington rather than with Jerusalem and distract the Arabs from their own res p onsibility to impart momentum to the peace process It Egypt and Israel While'Cairo is impatient for a renewed American commitment to broaden Egyptian-Israeli peace to include other Arab states Washington--particularly Congress--is growing increasingly imp a tient for a renewed Egyptian commitment to the existing peace.

The current "cold peace" between Egypt' and Israel reduces Israeli incentives for taking risks to make peace with other Arab coun tries. The freezing of Egyptian-Israeli political, trade, and cultural relations that followed the 1982 Israeli military opera tions in Lebanon should be thawed gradually as 1srael.withdraws from Lebanon.

Particularly disturbing is the continued absence of an Egyptian ambassador in Israel and Cairo's escalating con ditions for his return. 'The Egyptians initially indicated that their ambassador would return after Israel withdrew from Lebanon. Later Cairo added new requirements, such as progress in negotiations over the disputed border at Taba and the enhancement of P alestinian living standards in the occupied territories. 6 A thaw in the ''cold peace" would go far toward encouraging the Israelis to enter negotiations with other Arabs and wou3;d reduce Israeli reservations about the willingness of Arabs to fulfill tre aty commitments, a concern heightened by the abrogation of the May 17, 1983, Lebanese-Israeli agreement.

Egypt and the Arab World Washington is concerned that the growing Egyptian rapproche ment with the Arab world will harm Egyptian-American relations.

M ubarak has gone out of his way to mute his association with the U.S. and stress Egypt's tlnonalignment.'l Cairo's urge to keep Washington at armis-length is reflected in Egypt's voting in the United Nations. It is a curious voting record for seeking a mas s ive increase in American aid Percent of Egyptian U.N. Votes With U.S Year Percentage 1980 1981 1982 1983 32.8 29.0 24.4 23.4 record a country Source: U.S. State Department, International Organization Bureau U.S.-Egyptian Military Cooperation Egypt's large population and strategic location make it a key geopolitical actor in the Middle East It straddles the African-Asian land route as well as the important Suez Canal-Red Sea waterway. Egypt's armed forces at 447,0006 are the largest in the Arab world. They are undergoing a transfusion of Western particularly American, military technology to replace outmoded Soviet weapons systems and maintain a relatively high level of military morale and combat effectiveness.

Egyptian-American strategic cooperation began in earnest after the 1978 Camp David accords. Egypt provided the U.S. with some of its most advanced Soviet-made weapons systems, which the U.S. dissected and reconstructed through reverse engi~~eering American intelligence capabilities were also enhanced t h rough the exchange of information between the two intelligence communities The Military Balance 1983-1984 (London: International Institute of Stra tegic Studies 1984 p. 53 The Washington Post, October 8, 1981, p. A20 I 7 and access to Egyptian facilities for SR-71 reconnaissance flights over Afghanistan, Iran, and South Yemen.* Egypt supplied arms to Afghan resistance forces and extended sanctuary to the Shah of Iran after he was ignominiously shunted out of the United States.

Egypt has been a stabilizing force in the Middle East not only by quitting the confrontation bloc, thereby reducing the risks of another Arab-Israeli war, but also by checking the destabilizing activities of such anti-Western states as Libya South Yemen, Iran, and Ethiopia. Cairo has provided pilots and advisors to the Sultanate of Oman, supported anti-Libyan factions in Chad, backed the beleaguered Sudanese regime of President Gaafar Numeiri, and supplied Iraq with weapons to stem the advance of Iranian forces that eventually could t hreaten the entire Persian Gulf.

The hallmarks of direct Egyptian-American cooperation have been the "Bright Star" series of annual military exercises and the deployment of American AWACS radar aircraft in Egyptian air space following Sadat's assassination , Libya's intervention in Chad, and the March 1984 Libyan air attack on the Sudanese city of Omdurman. This latest Libyan gambit also prompted the U.S. to air transport an Egyptian air defense unit to Sudan to guard against further Libyan aggression. In a d dition, Cairo has granted overflight rights and landing privileges ta American aircraft participating in military exercises in Oman and facilitated the transshipment of supplies to U.S. Marines stationed in Lebanon with the multinational peacekeeping forc e In August 1984, an American minesweeping force at Egypt's request helped clear the Red Sea shipping channels of mines presumably placed by Libya.

Despite close cooperation in restraining Libyan activities Egypt has been less willing to'aid American conti ngency planning for Persian Gulf crises. The modernization of the Egyptian base at Ras Banas was to have been the most concrete manifestation of bilateral military cooperation. Located across the Red Sea from the oil terminal at the Saudi industrial city o f Yanbu, Ras Banas was slated to become a key rear staging base for the U.S. Rapid Deployment Force. Sadat insisted, however, that he would not sign a formal agreement for U.S access to the base and questions arose as to whether Egyptian or American contr actors would carry out the $400 million modernization program. The U.S. Congress eventually declined to fund the project because of persistent disagreement on these issues.

Cairo's continued refusal to sign Ras Banas access agreements with Washington, let alone grant base rights, has been attributed to Egyptian determination to retain its nonaligned status. Yet Egypt exhibited no such inhibitions during the early 1970s when the Soviets maintained up to 20,000 military specialists and The Washington Star, J a nuary 8, 1980, p. 4. 8 advisors in a base network inside Egypt, some of which Egyptians were not allowed to enter without Soviet permission llnonalignmentll was never called into question within the so-called nonaligned movement because of such overt pro- Soviet behavior.

If Cairo feels bound by the nonaligned movement, it should not request so much American military aid Egypt',s Foreign Aid and the Ecryptian Economy Between 1974 and 1984, the United States provided over $15 billion in'military and economic assistance to Egypt. The Ameri can aid effort in Egypt is now the largest non-military aid program in the world In real terms the U.S. has already spent more per capita on Egypt than it did on Europe during the Marshall Plan.g Yet American aid has had li ttle visible impact on Egyptian society It is disbursed to repair Egypt's decaying infrastructure to fund imports of food and raw materials to reduce Egypt's balance of payments deficit, and to support Egyptian health and education programs.

Cairo is requesting an additional 1 billion.in FY 1986 on the top of its $2.2 billion in FY 19

85. It also wants its military debt to the U.S. rescheduled. More aid will not solve Egypt's staggering economic problems. Egypt needs a dynamic economic strategy designed to trigger growth and the will to carry it out.

Mubarak should cut, for instance, the massive subsidies that skew Egyptians' economic behavior. He should boost productivity by strengthening the private sector and reducing government mis management. Internal reform, not external aid, is the .key to the revitalization of the Egyptian economy. Washington should in crease its aid to Egypt only if Cairo undertakes long-overdue economic reforms and upgrades its strategic cooperation with the U.S.

U.SI POLICY TOWARD EGYPT Ronald Reagan should advise President Mubarak that 1) The U.S. remains committed to broadening the Middle East peace, but only on the basis of the Camp David accords. The framework agreement reached by King Hussein and Yasser Arafat is stillborn because neither the U.S. nor Israel will accept it. Direct Arab negotiation with Israel, not an interna tional peace conference that will turn into a propaganda extravaganza, is the means of furthering the peace process 2) American aid to Egypt should be based on the level of Egyp tian strategic cooper a tion and compliance with the spirit of Camp David-not on Egypt's economic needs, which may prove Stanley Reed, "Dateline Cairo: Shaken Pillar ,I1 Foreign Policy, Winter 1981-1982, pp. 176-177 9 to be bottomless given the current structure of the Egyptian e conomy. And with Congress' concern over the deficit, Cairo should not expect a 1 billion aid increase in the absence of improved strategic cooperation 3) Internal economic refoms are needed to ameliorate Egyptls economic problems, not massive injections o f American aid.

Egypt's huge subsidies soak up billions of dollars that could otherwise be invested in expanding Egypt's economic base. While limited subsidy programs such as food stamps should continue to protect the poor, middle-class and wealthy Egyptia ns should pay the market price for food, electricity and gasoline avoid provoking a xenophobia that could be manipulated by Islamic fundamentalists. The U.S. Agency for International Development (AID) should limit its American contract person nel, replaci ng them with Egyptians wherever possible.

Washington should coordinate its policy toward the Sudan with Cairo, which historically has taken a deep interest in Sudanese affairs due to Sudanese control over the upper Nile.

A joint disaster relief team consi sting of U.S. food relief personnel.and Egyptian medical personnel would go far toward easing the famine that threatens the Sudan 4) The official U.S. presence in Cairo should be reduced to 5 CONCLUSION Cairo and Washington share similar goals but often a d vocate different views of achieving these goals. The U.S. should'encour age Egypt to seek a wider peace by promoting direct Arab-Israeli talks along the lines of Camp David rather than subscribing to the pipedream of a peace produced by an international c onference.

American aid should be devoted to strengthening the Egyptian free market economy by encouraging internal reforms rather than rein forcing its subsidies. Aid levels should be pegged to the level of strategic cooperation to thwart not only regiona l threats such as Libya, but also the Soviet Union.

James A. Phillips Senior Policy Analyst