Already a Bloomberg.com user?
Sign in with the same account.
Until a popular revolt put his control of Egypt in jeopardy, President Hosni Mubarak had kept a tight grip on power and billions of dollars in U.S. aid flowing with few strings attached, in part by retaining three of Washington's most high-powered lobbyists.
Since Egypt hired the lobbyists in 2007, Congress softened a condition on the foreign aid, added in 2005 over Mubarak's objections, that barred his government from choosing which pro-democracy groups should receive $20 million of Egypt's $1.8 billion in U.S. aid. That restriction became harder to enforce in 2009 when Congress barred all foreign governments from determining who could get such grants. U.S. pro-democracy programs in Egypt ultimately had little effect, a 2009 Agency for International Development audit concluded, because of a "lack of cooperation" by the Egyptian government.
The three lobbyists are Tony Podesta, who has close ties to the Obama Administration, former Republican representative Bob Livingston, and former Democratic representative Toby Moffett. The three formed a joint venture, PLM Group, to represent Egypt in Washington, according to foreign-agent records at the Justice Dept. They were paid $1.1 million a year, says a person familiar with the company.
"Egypt has always been good at promoting its own interests," says Graeme Bannerman, who was the country's top lobbyist in Washington for 17 years before it hired PLM. "Considering how few Egyptian-Americans there are here," he says, the Egyptians "have done a very good job of explaining to Americans why the relationship is so important to the two countries." With PLM, Bannerman says, the Egyptians got "a little more flash" and "increased their firepower."
The PLM contract was for "promoting and safeguarding" the Egyptian government's interests in the U.S., including "maintaining the amount of U.S. military and economic aid to Egypt," according to a draft retainer agreement on file at Justice. Records show PLM staff made 1,873 contacts with lawmakers, their staffs, or Administration officials between 2007 and 2010.
Hiring PLM coincided with debates in Congress about the future of U.S. military and economic aid to Egypt and whether to tie it to improvements in human rights. Egypt "clearly" pushed back on the 2005 language that prohibited it from choosing the civic groups to receive grants to promote democracy, Bannerman says. A congressional aide, who spoke on background to discuss a foreign government matter, says the Egyptians "were upset" when former Representative David Obey (D-Wis.) threatened in 2007 to cut some of the country's foreign aid. Obey was "fed up with the lack of progress on democracy," the aide says. Obey, who retired at the end of last year, confirmed he tried to cut Egypt's military aid to win progress on human rights, and backed off when Mubarak released a political dissident from prison. Obey says he recalls telling both Mubarak and his son, Gamal, that "if they didn't open up the society they would wind up risking being blown out" by political revolution. The Mubaraks, Obey says, "were not very much interested in the message."
At the time, U.S. aid to Egypt was declining. It fell to $1.55 billion in 2010, from $2.1 billion in 1998, according to a Congressional Research Service report. Its military might in the region was also under threat. Three months after the lobbying venture was formed in April 2007, the Bush Administration signed an agreement to increase its military aid to Israel. A year later the U.S. concluded a similar deal with Jordan. Livingston, Moffett, and Podesta declined to comment. Moffett, who represented Connecticut and now heads the Moffett Group, told The Hill newspaper before Mubarak's decision to step down that the group planned to continue to represent Egypt.
The three have strong ties to Washington and past Administrations. Podesta, who runs his own firm, Podesta Group, is the brother of John Podesta, a White House chief of staff under President Bill Clinton. Podesta Group is often ranked by public interest groups as Washington's highest-revenue lobbying firm. Livingston, who represented Louisiana and now runs the Livingston Group, chaired the House Appropriations Committee from 1995 to 1998.
It's routine for foreign countries to hire lobbyists, and Egypt spends less than other governments. The United Arab Emirates spent $10.9 million in 2008 lobbying Washington, according to the Sunlight Foundation, a watchdog group. It was followed by Britain, which spent $6.1 million, and Japan, which paid out $4.2 million.
The bottom line: Washington superlobbyist Tony Podesta and two former congressmen helped Egypt fend off Capitol Hill critics.