Egypt’s July 3 coup and the crackdown on President Mohamed Morsi’s Muslim Brotherhood have sparked renewed calls from Congress for a cutoff of U.S. foreign aid to the new Egyptian government. While there are strong arguments in favor of continuing aid, the Obama Administration cannot continue to deny that what happened in Egypt was indeed a coup, which legally requires a halt in U.S. military aid.

The Administration needs to work with Congress to gain the legal authority to provide aid on a conditional basis in order to give Egypt’s “Arab Spring” hopes a second chance. Tighter strings should be attached to U.S. aid to help restore democracy and the rule of law in Egypt without undermining important U.S. national interests in fighting Islamist terrorism and safeguarding Egypt’s peace treaty with Israel. A friendly, peaceful, and prosperous Egypt is a top U.S. priority because it would significantly diminish volatility in a strategically important region.

Morsi Poisoned Prospects for Democracy

Many portray the anti-Morsi coup as a blow against democracy, glossing over the fact that Morsi was not a democrat but an Islamist ideologue determined to impose his authoritarian agenda on all Egyptians. Morsi’s heavy-handed rule made him more unpopular after one year in power than Hosni Mubarak was after three decades. On June 30, more than 15 million Egyptians protested Morsi’s misrule and demanded his resignation.

The Egyptian army ousted Morsi on July 3, just as it ousted Mubarak in February 2011, to prevent growing civil disorder from collapsing the power of the state and plunging Egypt into a civil war. Massive popular demonstrations supporting the coup demonstrated that the army’s intervention had strong public backing. A Zogby poll in late July found that 93 percent of Egyptians retained confidence in the military after the coup.

Two-thirds of all Egyptians indicated that the U.S. was too supportive of President Morsi, and more than 80 percent believed that Egypt was harmed by Washington’s support for him. The Obama Administration had treated Morsi with kid gloves, muting its public criticism of his abuses of power, his restrictions on political freedom and freedom of the press, and his crackdown on pro-democracy nongovernmental organizations (NGOs) that the Mubarak regime had tolerated. This led Egypt’s secular and liberal opposition to turn to Egypt’s army in despair, angry that the Obama Administration uncritically supported the Morsi regime.

For better or worse, the army is the only institution that can hold Egypt together and clear the path for new elections. Egypt’s army remains publicly committed to returning civilian leaders to power after elections early next year, which gives democracy a second chance after Morsi’s attempted hijacking of Egypt’s revolution.

U.S. Policy: Realism Needed

The Obama Administration has criticized the crackdown on Morsi’s Muslim Brotherhood and called for an end of the state of emergency imposed by the military government, but Egypt’s army has ignored the Administration just as the Morsi regime did. The Administration has signaled its disapproval by suspending the delivery of F-16 warplanes and cancelling a joint military exercise and is reportedly considering withholding an impending transfer of Apache helicopters.

The Administration has stopped short of calling the army’s intervention a coup to avoid triggering an aid cutoff under Section 7008 of the Department of State, Foreign Operations, and Related Programs Appropriations Act (as contained in the Consolidated Appropriations Act of 2012), which bars “any assistance to the government of any country whose duly elected head of government is deposed by military coup d’état or decree or, after the date of enactment of this Act, a coup d’état or decree in which the military plays a decisive role.”

A coup is a coup. Despite the Administration’s denials, the law requires it to suspend aid. To avoid jeopardizing the important benefits of strategic cooperation with Egypt, the Administration should work with Congress to gain the legal authority to provide aid on a conditional basis as long as Egypt’s interim government remains committed to a democratic transition. Aid should be renewed only if the interim government schedules free and fair elections, reverses the Morsi regime’s crackdown on pro-democracy NGOs, and publicly commits to (1) fully protecting U.S. citizens and property, particularly the U.S. embassy and other diplomatic posts; (2) maintaining the peace treaty with Israel; (3) cooperating in fighting al-Qaeda and other Islamist terrorist organizations; and (4) implementing policies that protect the rights of its citizens, including due process of law and freedom of religion, expression, and association.

Washington must be realistic about how much can be achieved with the limited leverage afforded by cutting aid to Egypt. Most of the $1.3 billion in military aid for the current fiscal year already has been disbursed. The $250 million in economic aid has been eclipsed by the $12 billion in aid, loans, and fuel promised to Egypt by Saudi Arabia, Kuwait, and the United Arab Emirates, which strongly support the new government. Moreover, last Monday, the Saudi Foreign Minister promised to compensate Egypt for any loss of aid from the U.S. or the European Union.

An abrupt cutoff of U.S. aid would also set back important U.S. foreign policy goals by hindering military cooperation with Egypt, undermining the international fight against terrorism, jeopardizing the Egypt–Israel peace treaty, and possibly leading the Egyptian army to postpone elections indefinitely. Cancelling weapons and maintenance contracts also could cost American taxpayers up to $2 billion in penalties under contracts with U.S. defense firms.

Rather than pulling the plug on aid and sacrificing future influence in Egypt, the U.S. should attach tighter strings to aid to preserve strategic cooperation on vital national security interests while holding Cairo to its promised return to civilian rule.[1]

A Second Chance for Egypt

Washington should maintain ties with Egypt’s new government to help stabilize the country, preserve bilateral military and counterterrorism cooperation, maintain Egypt’s peace treaty with Israel, and help protect American interests in the Middle East. A complete cutoff of aid would only increase the risks of greater carnage in Egypt and the Middle East while setting back important foreign policy goals and damaging the reputation of the United States as a reliable ally. Washington should attach strong conditions to its aid but should not unilaterally pull the plug as long as Egypt’s army remains committed to holding elections and satisfying those conditions.

—James Phillips is Senior Research Fellow for Middle Eastern Affairs in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.