Nearly 16 months after first pledging to help Egypt’s failing economy, the Obama administration is nearing an agreement with the country’s new government to relieve $1 billion of its debt as part of an American and international assistance package intended to bolster its transition to democracy, administration officials said.
Egypt’s economy is increasingly precarious. The instability that followed the toppling of former president Hosni Mubarak devastated tourism, one of the country’s greatest sources of foreign currency. The administration’s efforts, delayed by Egypt’s political turmoil and by wariness in Washington about new leaders emerging from its first free elections, gained new urgency in recent weeks, even as the United States risks losing influence and investment opportunities to countries like China. President Mohamed Morsi chose China for his first official visit outside of the Middle East, although a spokesman said the crisis in Syria was the main issue driving the visit.
In addition to the debt assistance, the administration has thrown its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund. Last week, it dispatched the first of two delegations to work out details of the proposed debt assistance, as well as $375 million in financing and loan guarantees for American financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.
The assistance underscores the importance of shoring up Egypt at a time of turmoil and change across the Middle East, including the relatively peaceful uprisings in Egypt and Tunisia, Libya’s unfinished transition, the showdown over Iran’s nuclear program and the war in Syria.
Mr. Morsi has called for President Bashar al-Assad of Syria to leave power and end the bloodshed there, while China, along with Russia and Iran, has been a supporter of Mr. Assad as his military assaults opposition strongholds and civilians.
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