This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 002524 
 
SIPDIS 
 
NSC STAFF FOR ABRAMS/POUNDS 
 
E.O. 12958: DECL: 03/31/2015 
TAGS: PGOV PREL EAID KMPI KDEM EG
SUBJECT: THE SOUND AND THE FURY OF EGYPT'S REACTION TO USG 
DIRECT FUNDING OF DEMOCRACY GRANTS 
 
REF: A. CAIRO 2198 
 
     ¶B. CAIRO 1703 
 
Classified by Charge Gordon Gray for reasons 1.4 (b) and (d). 
 
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Summary 
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¶1.  (C)  Egyptian anger at our March 3 announcement of direct 
USG funding for democracy promotion has now reached the 
Parliament.  After several weeks of increasingly strident 
editorial coverage in newspapers controlled by or sympathetic 
to the GOE, the People's Assembly has debated the 
implications of the announcement.  The People's Assembly's 
threats include a proposed effort to eliminate the "civil 
company" loophole that has allowed civil society 
organizations, like the Ibn Khaldun Center, which are unable 
or unwilling to register with the GOE as recognized NGOs, to 
establish themselves legally under an alternate framework. 
At this point, we think that the GOE's fulminations do not 
threaten the ability of civil society here to play a role in 
democratic reform.  In our view, the GOE's actions are a 
response, for domestic consumption, to the public nature of 
our support for political reform.  We are, however, closely 
monitoring the developing reaction in the event that we need 
to make counter-moves of our own.  End summary 
 
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The Angry Whine of the Press 
---------------------------- 
 
¶2.  (C)  Shortly after the March 3 announcement (ref B), 
editors close to the GOE, such as Samir Raghab of 
Al-Gomhouriya, launched a series of caustic press complaints 
about the grants announcement.  These attacks were soon 
echoed by elements of the nationalist tabloid press, such as 
Al-Osboa and Sawt Al-Umma.  The complaints lambasted 
"American interference in Egypt's internal politics" and 
denounced the Egyptian civil society organizations as 
"spies," "tools in foreign hands," and "Marines" for their 
willingness to take USG funds ("dirty, soft, and slippery 
American money") allegedly to undermine the Egyptian nation. 
In another disturbing development, Al Masry Al Youm, a 
leading independent newspaper, reported that on March 18, 
imams (prayer leaders) at two major Cairo mosques described 
Saad Eddin Ibrahim (SEI), chairman of the Ibn Khaldun Center, 
and Negad El Borai, director of the United Group, as 
"traitors" for agreeing to accept USG funding for their 
democracy promotion projects. 
 
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Civil Society Pushes Back, a Bit 
-------------------------------- 
 
¶3.  (C)  Although the press has provided relatively little 
space for the civil society groups which received the USG 
grants to defend themselves, the groups have nevertheless 
acquitted themselves well when the opportunity has presented 
itself.  They have all emphasized that they are 
legally-established organizations, operating on a 
non-partisan basis within the limits of existing Egyptian 
law.  Dr. Hoda Badran, of the Alliance for Arab Women, one of 
the grantees, also mused on the irony of the GOE, which 
receives billions of dollars in foreign funding, criticizing 
NGOs for receiving much smaller amounts.  In response to the 
alleged defamation by prayer leaders on March 18, Negad El 
Borai, of the United Group, issued a press release alleging 
that the GOE was supporting this religious intimidation of 
civil society.  Borai also said that the GOE would be 
responsible if any harm came to SEI or himself.  In comments 
to us on March 28, Borai urged the USG not to be silent in 
the face of the media outcry.  We assured Borai of USG 
support for civil society activists, but noted that we did 
not see utility at this time in trying to engage Egypt's 
yellow/nationalist press on this issue. 
 
¶4.  (C)  Comment:  Borai, in our view, has some reason to be 
concerned about the potential for thuggery directed or 
motivated by the GOE in this campaign against the NGOs. 
There have been sporadic instances of politically motivated 
attacks, including a November 2004 assault on journalist 
Abdul Halim Qandil and the disruption last month of a human 
rights NGO's seminar on the case against opposition leader 
Ayman Nour, which the GOE's critics have blamed on 
GOE-controlled thugs.  More ominously, Borai's press release 
mentions the case of liberal intellectual Farag Foda, who was 
assassinated in 1992 by an Islamist attacker after being 
vilified by Islamist writers in the media.  Notwithstanding 
these concerns, none of our civil society partners have 
expressed any hesitation to us about proceeding with their 
projects.  Dr. Hoda Badran told ECPO Minister Counselor on 
March 28 that she had checked with both the Ministries of 
Interior and Social Affairs regarding USG support for her 
project and they appeared willing to let it proceed.  End 
comment. 
 
 
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Irritation from the Ministry of International Cooperation... 
--------------------------------------------- 
 
¶5.  (C)  Privately, the GOE also expressed its pique at our 
decision to announce the democracy grants.  In a letter dated 
March 3 to USAID Director Ellis, Minister for International 
Cooperation Aboulnaga described the announcement of the 
grants as "a surprise."  In a March 7 meeting with Director 
Ellis and ECPO Counselor, she complained that the USG had 
inadequately consulted with the GOE regarding the 
announcement of the grants.  Director Ellis and ECPO 
Counselor advised Aboulnaga that the USG remains committed to 
transparent direct funding of civil society projects in Egypt 
that are working to expand freedom and democracy. 
 
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but Progress on the Consultative Group 
-------------------------------------- 
 
¶6.  (C)  Also in her March 3 letter and in the March 7 
meeting, Aboulnaga demonstrated a newfound enthusiasm for the 
long-delayed establishment of a Consultative Group on 
democracy and governance assistance (ref A).  The onus to 
propose GOE nominees for the Consultative Group had been with 
the GOE since December.  The March 3 announcement of the 
democracy grants seemed to spur Aboulnaga to action; she 
provided the GOE nominees to the Consultative Group at the 
March 7 meeting.  The group conducted its first 
organizational meeting on March 24 and plans to meet on a 
monthly basis. 
 
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The People's Assembly Jumps into the Fray 
----------------------------------------- 
 
¶7.  (C)  On March 27, the People's Assembly was the scene of 
a vigorous debate over the issue of foreign funding for civil 
society groups.  The consensus of the debate was that the GOE 
needed to monitor closely and perhaps limit foreign funding 
to civil society groups.  In response to pointed questioning 
by a number of parliamentarians, Minister of International 
Cooperation Aboulnaga, and Minister of Insurance and Social 
Affairs Guindy (whose ministry has oversight for NGO 
matters), emphasized that the GOE would in no way allow the 
grants announced on March 3 to serve as "a vehicle for 
foreign interference."  Minister for Parliamentary Affairs 
Shazly also opined that the GOE needed to review the existing 
provision for the establishment of civil companies, which has 
offered some civil society groups, such as the Ibn Khaldun 
Center, with an alternative to registering under the GOE's 
restrictive NGO law. 
 
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Comment:  Where Is It All Leading? 
---------------------------------- 
 
¶8.  (C)  In the charged environment of evolving political 
reform in Egypt, it is unclear where this strident and heated 
debate will lead.  As we move toward additional USAID and 
MEPI grants to support freedom and democracy in Egypt, and as 
we urge other donors to do the same, we hope that the 
controversy over direct funding of democracy grants to civil 
society will diminish.  Similarly, we believe that once the 
civil society groups in question are able to implement their 
projects, the non-partisan and technical nature of their 
projects will become even more apparent. 
 
¶9.  (C)  Most of the backlash is the result of the GOE's 
nationalist inclination to demonstrate its resistance to 
"foreign interference."  As the GOE reconciles itself to the 
USG goal of providing direct funding to civil society 
projects which are focused on democracy promotion, we 
anticipate that this negative media campaign will ebb and 
flow, but we do not think that it will prevent Egyptian civil 
society from carrying out its vital work.  Although the GOE 
has long known about our intentions to provide funds directly 
to civil society projects, and although this message has been 
reinforced by developments such as the Brownback amendment, 
our March 3 announcement represented a particularly bitter 
pill to the GOE old guard. 
 
¶10.  (C)  The shrillness of the GOE reaction has been driven 
by two interrelated forces.  First, the GOE perceives--and 
resents--that the USG is "undoing the deal" of the Camp David 
agreement, which the GOE believes entitles it to control over 
USG assistance funds.  Second, the fact that the USG is 
providing democracy promotion funds to Egyptian 
non-governmental organizations gives the GOE old guard, as it 
grudgingly contemplates political reform, a reason to 
complain about foreign interference, and avoid grappling with 
the real issues of reform. 
¶11.  (C)  As this point, we do not plan to respond publicly 
to the broadside of criticism, since a defensive response on 
our part might only encourage the GOE and its commentators to 
up their rhetoric.  We will continue to monitor the reaction 
closely in the event that GOE actions go beyond the current 
rhetoric and threaten the ability of civil society here to 
play the role that we believe it should.  At this point we do 
not anticipate that the GOE will escalate the situation 
(e.g., by directly interfering with or preventing our 
grantees from conducting their work), although we cannot rule 
out the possibility.  End comment. 
 
 
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GRAY