Bloomberg News

Weapons to Egypt Under Review as U.S. Public Backs Cutoff

August 20, 2013

The U.S. is weighing whether to suspend deliveries to Egypt of weapons systems including Apache attack helicopters due this month, as a national survey found that half of Americans favor cutting off military aid in response to the violence wracking the nation.

The survey released yesterday by the Pew Research Center in Washington showed 51 percent of respondents said it’s better to cut off military assistance to pressure the Egyptian government, while 26 percent backed continuing aid to maintain U.S. influence and 23 percent didn’t have an opinion.

The Obama administration put deliveries of five major procurement programs, including F-16 fighter jets from Lockheed Martin Corp. (LMT:US) and M1A1 battle tanks from General Dynamics Corp. (GD:US), “under review,” according to a July 16 State Department document sent to Congress and obtained by Bloomberg News. It was dated July 16, two weeks after Egypt’s military ousted the elected Islamist government of Mohamed Mursi.

The U.S. is due this month to deliver 10 Apaches, manufactured by Boeing (BA:US) Co., and is scheduled to provide four kits a month to Egypt to build M1A1 tanks under a contact for 125 kits, according to the document. In both cases, “pending deliveries are under review,” the State Department said in the fact sheet for Congress.

“We’re reviewing all aspects of our relationship,” Defense Secretary Chuck Hagel told reporters yesterday at the Pentagon when asked whether the Apaches will be delayed. The administration last month postponed indefinitely the delivery of four F-16s, while four more remain scheduled for December under a contract for 20 aircraft.

‘Siding With Generals’

Republican Senator John McCain is calling for an aid cutoff, saying that Egypt’s generals benefit from U.S. military hardware such as Apache helicopters, which are made in his home state in Mesa, Arizona. An Egyptian Army Apache flew over pro-military demonstrators in Tahrir Square July 26.

With “Apache helicopters flying overhead, nothing is more symbolic of the United States of America siding with the generals,” McCain said Aug. 18 on CNN’s “State of the Union” program.

“While I agree with John McCain that the Egyptian military flying the Apache helicopters is sort of a very overt symbol of U.S. support for the generals, it’s probably the only system that has utility for the things we want them to do,” said Jeffrey Martini, a Middle East analyst with the Rand Corp. in Washington. “They’ve been using the Apaches for counterterrorism in the Sinai,” where militants have gathered to plot attacks on Israel and on Egyptian authorities.

‘Parade Army’

Delaying or canceling U.S. sales of the F-16s, tanks, and Apaches would have little impact on Egypt’s security because “the Egyptian military doesn’t face an external threat,” Martini said in an interview. Most of the weapons are “more about prestige -- it’s still kind of a parade army.”

The violent crackdown on pro-Mursi protesters by the security services that over six days has claimed close to 1,000 lives focused more attention on the $1.3 billion a year in U.S. military aid that goes toward multiyear contracts for weapons systems.

Military assistance facing scrutiny includes contracts for four Fast Missile Craft -- patrol boats that are scheduled for delivery starting next month -- as well as Harpoon antiship missiles for delivery in November, according to the July document. There are also repair and other contracts in support of prior sales of weapons systems.

President Barack Obama said on Aug. 15 that the U.S. was canceling a military exercise with Egypt that was scheduled to begin next month and directed his staff to review whether further steps were warranted.

Survey Findings

Half of Americans surveyed in the Pew poll said Obama -- who has condemned actions by the Egyptian government and security services -- hasn’t been tough enough on the Egyptian military. At the same time, Americans prefer Egypt’s military over the Islamists: 45 percent said the military would provide better leadership for Egypt, with 11 percent citing the Muslim Brotherhood, and others said neither or had no opinion.

The survey of 1,000 adults was conducted Aug. 15-18 and has a margin of error of plus or minus 3.7 percentage points.

Interruption of delivery contracts for military assistance would leave the U.S. government obligated to fulfill contract payments, find other buyers, or negotiate termination fees that cover contractor costs plus profits

Largest Program

The 20 F-16s, the largest program with Egypt, are under an $803.4 million prime contract with Bethesda, Maryland-based Lockheed, of which $639.4 million had been paid to the company, according to the July document. The full F-16 program is valued at $1.66 billion, including engines, radar and other equipment. Of that, $957.9 million had been disbursed under all contracts, according to the document.

An account at the Federal Reserve Bank of New York serves as a spigot the Obama administration is using to control the flow of aid to Egypt even as it resists calls by lawmakers to stop all assistance.

The State Department has leeway in replenishing the account used to provide Foreign Military Financing that buys weaponry for Egypt, except that the $1.3 billion already appropriated is supposed to be provided by the Sept. 30 end of the current fiscal year, according to a U.S. official who asked not be identified discussing the financing.

After subtracting money already spent and cuts due to the budget process called sequestration, $585 million remains to be provided, Jen Psaki, a State Department spokeswoman, told reporters yesterday in Washington. Jack Gutt, a spokesman for the New York Fed, declined to comment.

‘No Credibility’

Lawmakers led by McCain, a member of the Senate Armed Services Committee, and Republican Senator Lindsey Graham of South Carolina have pushed for the U.S. to suspend all aid to Egypt in an effort to pressure authorities to halt the civil conflict spurred by the military-led overthrow of Mursi early last month.

The administration has declined to determine that Mursi’s overthrow was a coup, averting a requirement in U.S. law to cut off aid, as it seeks to maintain some leverage with the Egyptian military. Invoking the law would bar resuming aid unless the president certifies to Congress that “a democratically elected government has taken office.”

The 10 Apaches are under a contract with Chicago-based Boeing valued at $171 million, of which $163.7 million had been paid, according to the document. The total program is valued at $500 million, of which $267.8 million has been disbursed.

Tank Parts

The tank coproduction agreement -- tank parts are made in the U.S. and shipped to Egypt for assembly -- is under a $338.2 million contract with Falls Church, Virginia-based General Dynamics, of which $160.1 million had been paid. The program’s total value is $866 million, of which $189.3 million had been disbursed among all contracts.

The tank sales to Egypt are “proceeding as planned,” Army spokeswoman Ashley Givens said in an e-mail when asked the status of deliveries.

Four Fast Missile Craft are due to be delivered from September to April 2014 under a contract with VT Halter Marine Inc. valued at $815.1 million, of which $724.8 million had been paid to the prime contractor. The program’s total value is $1.1 billion, of which $863.4 million had been disbursed.

Boeing had been paid $400,000 under the $11.9 million prime contract for 20 Harpoon missiles and related equipment. The total program is valued at $103 million, of which $58.7 million has been paid on all contracts.

To contact the reporters on this story: Terry Atlas in Washington at tatlas@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • LMT
    (Lockheed Martin Corp)
    • $167.85 USD
    • 4.87
    • 2.9%
  • GD
    (General Dynamics Corp)
    • $118.52 USD
    • 0.17
    • 0.14%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus