VZCZCXYZ0017
RR RUEHWEB

DE RUEHEG #3366 3331555
ZNR UUUUU ZZH
R 291555Z NOV 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 7586
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0359

UNCLAS CAIRO 003366 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR NEA/ELA, NEA/RA, EEB/IFD 
USAID FOR ANE/MEA MCCLOUD AND RILEY 
TREASURY FOR MATHIASON AND HIRSON 
COMMERCE FOR 4520/ITA/ANESA/OBERG 
 
E.O. 12958:  N/A 
TAGS: PGOV ECON EAID EINV EG
SUBJECT:  EGYPT: NEXT STEPS ON ASSISTANCE 
 
REF:  CAIRO 3365 
 
Sensitive but Unclassified.  Please protect accordingly. 
 
¶1.  (SBU) Visiting EEB PDAS Elizabeth Dibble met with Fayza Aboul 
Naga, Minister of International Cooperation to discuss the future of 
U.S. assistance.  USAID Director Hilda Arellano also attended. 
Aboul Naga said the GOE wants to move toward a "sustainable and 
predictable" partnership based on "trade not aid."  The GOE worked 
diligently on the endowment/debt swap proposal Aboul Naga presented 
in Washington.  It is in both our interests to pursue the proposal, 
as it will improve Egyptian public opinion toward the U.S.  Aboul 
Naga also noted the positive response on the Hill to the proposal. 
Her interlocutors, including Congressman Ackerman, requested more 
information on the proposal and, she asserted, were surprised about 
the level of Egyptian debt service paid to the U.S. 
 
¶2.  (SBU) Dibble said the U.S. understands Egypt's desire for 
predictability concerning assistance funds and would provide a 
formal response to the Egyptian proposal soon.  However, the 
proposal will be difficult to accommodate.  In response to Aboul 
Naga's point about Egypt's debt service to the U.S., she noted that 
total U.S. assistance to Egypt, including FMF, is still far greater 
than Egypt's debt payments to the U.S.  Moreover, an endowment/debt 
swap agreement would require Congressional approval, something we 
can not guarantee.  Dibble also expressed concern about funding for 
an endowment, as ESF will be cut to $200 million annually over the 
next five years.  Aboul Naga was especially concerned with this 
latter point.  She had told the Egyptian press upon her return from 
Washington that ESF cuts were unacceptable to Egypt, as $200 million 
would represent a 50% cut all at once, while the current agreement 
reduces ESF by 50% over ten years.  Aboul Naga is concerned that the 
proposed cuts will only fund ongoing USAID bilateral projects and 
leave nothing to shape the more "mature" partnership.  Moreover, she 
claimed, FMF money flows back to the U.S. as equipment purchases and 
should not be counted as part of what Egypt receives. 
 
¶3.  (SBU) Dibble asked if the unobligated balances of the existing 
cash transfer program came up in discussions on the Hill.  Aboul 
Naga said it had not, but made clear that the GOE was making 
progress on the Financial Sector (FS) MOU benchmarks, many of which 
would be met in 2008.  Dibble suggested creation of a Cairo-based 
bilateral steering committee that would comprise all the Egyptian 
ministries with responsibility for implementing both the FS MOU and 
the new Human Development MOU.  Regular meetings of such a committee 
with USAID and Embassy Cairo staff would ensure coordination and 
timely reporting on progress toward meeting the benchmarks.  Aboul 
Naga agreed and said the GOE would welcome a chance to increase the 
flow of information from both sides. 
 
¶4.  (SBU) In a separate meeting, Dibble raised the idea of a 
bilateral steering committee with Manal Hussein, Deputy Minister of 
Finance, who was also supportive of the idea.  Hussein noted such a 
committee would increase GOE intra-agency communication, which was 
lacking.  She noted, for example, that the Ministry of Finance had 
not participated in development of the final Egyptian endowment/debt 
swapping proposal before it was presented by Aboul Naga in 
Washington. 
RICCIARDONE