WASHINGTON — 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 a U.S. and international assistance package intended to bolster its transition to democracy, administration officials said.
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 Mohammed Morsi chose China for his first official visit outside of the Middle East.
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 U.S. 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, the still-unfinished transition in Libya, the showdown over Iran’s nuclear program and the war in Syria.
Given Egypt’s influence in the Arab world, the officials said, its economic recovery and political stability could have a profound influence on other nations in transition and ease wariness in Israel about the tumultuous political changes under way.
The administration’s revived push came after Morsi won the presidency in June and overcame a constitutional showdown with the country’s military rulers.
Morsi and his party, the Muslim Brotherhood, have since made it clear that the struggling economy is their most urgent priority, brushing aside reservations about U.S. and international assistance and outright opposition to it from other Islamic factions.
In fact, U.S. officials say they have been surprised by how open Morsi and his advisers have been to economic changes, with a sharp focus on creating jobs.
“They sound like Republicans half the time,” one administration official said, referring to leaders of the Muslim Brotherhood, the Islamic movement turned political party that was long barred from office under the former president, Hosni Mubarak, a close U.S. ally.
Hoping to capitalize on what they see as a ripening investment climate, the State Department and the U.S. Chamber of Commerce will take executives from nearly 50 American companies like Caterpillar and Xerox to Cairo beginning Saturday as part of one of the largest trade delegations ever organized.