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Egypt - Trade and Diplomatic Relations with the US

Egypt's relationship with the USA started to improve prior to the Camp David accords between Israel and Egypt in 1975. Prior to that, the Egyptian government of Nasser saw itself at odds with the US government over its support of Israel (with whom Egypt was at war until 1975). To a lesser extent this conflict was supplemented by the ideological differences between socialist Egypt who was supported by the USSR against capitalist America. Nevertheless, through America's sponsorship and backing of the camp David peace accords where Egypt received all territories lost to Israel (except Gaza - as per Egypt's choice), plus an annual aid (military and civilian) package of USD $2.5 Billion from the US government helped to improve relations between the two countries.

Since then Egypt and us have enjoyed a burgeoning relationship where both countries have come to rely on each other on issues ranging from conflict management, conflict participation and military and economic aid. In short, Egypt as the most populous and militarily the most powerful Arab country is considered as an important ally in the region to the US government as proven on a number of occasions. Prime example includes Egypt's military participation in the first Gulf War against Iraq, whereby Egypt not only provided extra forces and firepower to the allied coalition forces, but also gave the military action against Saddam more legitimacy in the Arab world and in the Arab street by being an Arab Army siding with the coalition. This legitimacy was by far more important to the allies and America than any other assistance provided by the Egypt.      

Egypt's importance to the Arab world has also assisted America in its efforts to reduce the level of conflict between Israel and the Palestinian factions, whereby Egyptian intelligence officials and their good connections have been used on a number of occasions as mediators to discuss and arrange ceasefires with groups such as Hamas and Islamic Jihad. Egypt also has good relations with the PLO and on a number of occasions the US administration has asked Egypt to use its good offices with the PLO to resolve outstanding political and security related issues.

Furthermore Egypt's strategic location at the foot of the Red Sea and the Suez Canal enables America to have secure access to one of the world's most important water ways which is vital for America's economic and military interests.

At the same time Egypt has also enjoyed the fruits of its relationship with the world's remaining super power. Every year Egypt is the recipient of USD $2.5 Billion from the US government which is used by Egypt for the purchase of goods and military equipment. The superior quality of US weapons plus Egypt's highly manned Armed forces have turned   Egypt into the most militarily potent country in the Arab world. Meanwhile the civilian aid provided to Egypt which according to USAID for the 28-year period beginning in 1975 totaled USD $25.5 Billion has been used to fund projects with examples including:  

•  physical infrastructure programs including electric power, water, wastewater and sanitation, telecommunications and transportation

•  small and medium enterprise development and micro-lending programs

•  education program for the country's female population

Furthermore through its participation in the first Gulf war, the US government canceled USD $10 Billion owed to it by Egypt. This was a major achievement for the Egyptian economy.

Economic Relations

According to the American Chamber of Commerce in Egypt, the US is the largest investing country in Egypt whereby $3.53 billion has been invested in Egypt in the Information Technology and food stuffs. The bulk of US investment is in Egypt's oil and natural gas industry. At the same time according to the same source, 18% of all Egyptian merchandise exports are destined for the US. Egypt imports 16% of its   merchandise imports from the United States.

US exports to Egypt are: cereals, machinery and equipment, aircraft, vehicles and parts.

Egypt's export to the US are: textiles, ready-made garments, petroleum and products, iron and steel.

Current Economic Agreements

The major current economic agreement between the US and Egypt is the U.S.-Egypt Partnership for Economic Growth and Development which was established in September 1994. According to the US Department of State the underlying goals of the partnership are to:

- Expand mutual economic cooperation in the areas of trade, investment, and science and technology;

- Work with Egyptian Government initiatives to foster economic reform, promote economic growth, and facilitate job creation;

- Support Egyptian efforts to increase the role of the private sector in its economy.

There have also been discussions regarding the establishment of a Free Trade Agreement between the two countries, however these have been put on hold due to the two side's inability to reach an agreement regarding the terms of the agreement.

By: Meir Javedanfar - All contents of this page are protected by International Copy Right Laws