|The Middle East has been swept with unrest in recent months with people’s demand for change [Reuters]|
US president Barack Obama will announce economic aid for Egypt and Tunisia during a speech on the Middle East on Thursday, but White House officials are saying little about how he will address key policy issues after months of revolution and unrest in the region.
Obama will announce a plan to cancel roughly $1 billion of Egypt’s debt to the United States, a senior administration official said during a conference call on Wednesday. The US will work with the Egyptian government to funnel that money into job creation. Washington will also offer Egypt another $1 billion in new loan guarantees to support infrastructure development.
Other international institutions, like the IMF and the World Bank, are expected to offer several billion dollars in additional financing.
“We think it’s important to note that some of the protests in the region are deeply rooted in a lack of individual opportunity and economic growth, as well as a suppression of political rights,” the administration official told reporters.
Modest debt relief
White House officials have billed Thursday’s speech at the US state department as a “major address.” They have avoided discussion of difficult issues in advance of the speech; Wednesday’s conference call dealt exclusively with Egypt and Tunisia, the first two countries to revolt against their autocratic leaders, which the White House dubbed “beacons for this region.”
Officials focused on trade and economic proposals for the two countries, bound to be the least controversial parts of Obama’s speech.
Asked about US policy towards Syria, though, an administration official flatly refused to discuss the subject.
“We’re going to put that in the category of things you’re going to have to wait for the speech tomorrow to get more clarity on,” the official said.
Economic aid will be welcome in Egypt and Tunisia, both sorely in need of an economic boost. Tunisia’s economy is not expected to grow at all this year.
In Egypt, deficits are expected to widen to more than 9 per cent of GDP this year, and the economy is projected to grow by just 1 per cent – compared to more than 5 per cent last year.
Both countries suffer from high levels of unemployment and economic inequality, structural problems which helped to provide a spark for their revolutions.
The Obama administration says the economic proposals it will unveil on Thursday, particularly the debt relief plan, will provide a quick source of cash for the Egyptian and Tunisian governments.
“Those funds will become immediately available… funds that the Egyptian government will then be able to use in local currency to invest in priority sectors that we and they believe are likely to centre in areas such as youth employment, entrepreneurship,” another administration official said on Wednesday.
|Al Jazeera’s Patty Culhane reports from Washington, DC, ahead of Obama’s speech [Al Jazeera]|
Debt relief has been a top priority for the Egyptian government in the months since former president Hosni Mubarak stepped down. The country’s finance minister, Samir Radwan, travelled to Washington just last month and asked the US government to forgive Egypt’s debts.
Obama’s proposal does not go quite that far: It will only erase $1 billion of the roughly $3.5 billion Egypt owes to the United States.
Egypt currently owes about $35 billion in foreign debts, according to the country’s central bank, the highest such figure in five years. Cairo spends billions each year just to service its debt, with $350 million going to the United States annually. (Another $1 billion goes to the European Union, which has about $9 billion in outstanding loans to Egypt.)
What is more, loan guarantees and financing from the IMF and other organisations could ultimately expand the country’s foreign debts.
‘Moment of opportunity’
Economic issues will not dominate Obama’s speech; the White House says it will be a wide-ranging address focused on America’s relationship with the Middle East.
“[This is] a real moment of opportunity for America,” said Jay Carney, the White House press secretary. “In the last decade, our focus in the region was largely on Iraq, which was a military effort, and on the hunt for Osama bin Laden and the fight against al-Qaeda.”
Administration officials have said little about how Obama will address the complex issues in that relationship, particularly the Israeli-Palestinian conflict. His envoy to the region, George Mitchell, resigned last week, frustrated by stalled negotiations and fighting within the administration.
Direct talks between the two sides collapsed last year, and the Israeli government refused to renew a partial moratorium on illegal settlement construction in the West Bank.
“If there was ever a time to move things along, this is it,” said Philip Seib, the director of the Center on Public Diplomacy at the University of Southern California. “Obama must make clear, publicly and privately, that Israel must move forward now.”
Syria is another question mark: The administration has escalated its rhetoric in recent weeks, but Obama has stopped short of calling on Syrian president Bashar al-Assad to step down.
Earlier on Wednesday, though, the White House announced a new package of economic sanctions aimed at Assad and six other senior officials.
Also unclear is whether Obama will address some of the hypocrisies and inconsistencies in US policy. Earlier this week, Obama announced $500 million in aid to Jordan, a country whose monarch has made at best token gestures towards reforms. The White House continues to back Bahrain’s government after a brutal crackdown on protesters across the island kingdom.
And Obama has yet to publicly repudiate Yemen’s president, Ali Abdullah Saleh, whose security forces have killed hundreds of peaceful pro-democracy protesters over the last three months.
“I think the US is rapidly running out of chances to be a positive force for change in Yemen,” said Gregory Johnsen, a Yemen expert at Princeton University. “I would like to see him [Obama] call publicly for President Saleh to step down.”
For all the interest in Washington, many people in the Middle East have greeted news of Obama’s speech with a shrug. Many of the big promises from Obama’s 2009 Cairo speech have gone unfulfilled, and there is a sense that the US has been slow to react to the unrest sweeping the region.
“I don’t care that much,” said Donya Hassan, an economic analyst in Cairo.