Billions in Foreign Aid for Islamists

How many billions are U.S. taxpayers willing to give Islamist regimes in the Middle East, both directly and through international organizations? The Obama administration is likely to find out. The Washington Post reports:

The United States and a coalition of international lenders are pushing ahead with billions of dollars in loans and other help for Egypt and neighboring states despite the region’s sometimes violent political turmoil, in hopes of heading off a destabilizing economic collapse.

The risks involved in the effort have been on sharp display in Egypt in the clashes between protesters and forces loyal to President Mohamed Morsi, whose Islamist government must be trusted by the United States, the International Monetary Fund, the World Bank and others to deliver on commitments made in return for international support.

President Obama is planning $1 billion in debt forgiveness for Egypt. The IMF wants to secure a $4.8 billion loan of its own. The World Bank is considering a $2 billion request from Egypt in further governance support. And the European Bank for Reconstruction and Development (EBRD) is planning to invest more than $3 billion per year in Egypt, Tunisia, and others by 2015. The major shareholder in the IMF and World Bank is, of course, the U.S., and we’re a financing member of the EBRD, too. All this is on top of the ‘normal’ $2 billion in American aid to Egypt for both military and civilian purposes in an average year.

This is a horrible conundrum from a foreign policy standpoint. It’s crystal clear that without massive foreign aid Egypt and a number of other Arab countries (including Syria, when the dust settles after the war) will go down the tubes.

What is much less clear is whether they will do something constructive with that aid rather than basically spending it to keep people quiet while the new regimes find their feet.

There is a lot of talk about conditionality and requirements to keep aid from being wasted: requirements like massive cuts in fuel and food subsidies, for example. The trouble is that, while these subsidies are unaffordable and unsustainable in many cases, they are also very popular. Cutting them off could set off new waves of instability and bring even more radical groups to power or lead to new rounds of civil war.

A weak government has a surprising amount of bargaining power, if other countries want it to hang on. By warning that they will collapse if not subsidized, “moderate Islamist” governments can use the threat of radical takeovers to get large infusions of aid money without onerous conditions. This scheme is nothing new: Mubarak was very good at it, and so are many other regimes in sensitive parts of the world.

The real problem is that it is very hard to envision anything like a short-term solution to the crippling problems of the Arab world. The rest of the world may be stuck with the depressing reality that we can have just as much stability in the Arab world as we are willing to buy. Since the end of World War II, Americans have generally been forgiving about how much of their tax money is used to keep problematic countries from falling apart. President Obama is counting on that forbearance to continue.

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