Friday, November 30, 2001

The Bush administration said yesterday it plans to follow through with the sale of sophisticated anti-ship missiles to Egypt despite congressional concerns that it could threaten Israel’s military advantage in the region.
In addition, Secretary of State Colin L. Powell said the administration is trying to “accelerate economic cooperation” with Egypt to help it solve the nation’s recent financial problems.
The State Department said the $400 million sale of more than 50 seaborne Harpoon missiles would help Egypt protect the Suez Canal, which would be of “value to shipping generally and to U.S. warships that use this channel.”
“The sale of Harpoons is part of an ongoing, long-standing cooperation we’ve had with the Egyptian military,” State Department spokesman Richard Boucher told reporters. “This is a follow-on to a system that they already have.
“There are a variety of reasons for that sale,” he said. “We’ve discussed it with members of Congress, and we’ll continue to discuss it with [them].”
Some lawmakers, including Rep. Tom Lantos, a California Democrat and staunch supporter of Israel, expressed concern this week that the sale might jeopardize Israel’s military dominance in the Middle East and argued that Egypt faced no external threat.
Visiting Egyptian Foreign Minister Ahmed Maher said yesterday he was confident his country had enough friends in Washington and the sale would go through.
Egypt is the second-largest recipient of U.S. military aid after Israel, getting some $1.3 billion a year.
Mr. Powell announced Washington’s intention to help Cairo deal with its economic woes in response to reporters’ questions after a meeting yesterday with Mr. Maher at the State Department.
“We are aware that Egypt is having some financial and economic difficulty now, with the drop in tourism, and we are looking at ways that we can accelerate some of our economic cooperation and other programs,” he said. “We want to be as responsive as we can.”
In spite of a decade of economic reforms to develop an export-driven economy, Egypt ran a trade deficit of $9.35 billion in the last fiscal year, according to the Egyptian central bank. Its recent data showed that exports totaled $7.1 billion, of which $2.6 billion came from oil, while imports totaled $16.4 billion.
Revenue losses by the country’s tourism industry and the Suez Canal are expected to increase further as a result of Egypt’s foreign currency troubles.
Earlier this week, Egyptian President Hosni Mubarak warned that boosting exports was a matter of “life and death” for his country’s economy.
Mr. Maher said Egypt’s problems are a “fallout of an international situation” rather than domestic circumstances.
“Tourism has diminished by almost 60 percent,” he complained at a Brookings Institution discussion Wednesday at the National Press Club. “Some insurance companies, for a reason that remains a mystery to us, have declared Egypt a war zone and have raised the premiums of their insurance.
“So we have been suffering from these fallouts of the terrorist acts that took place here in the United States, and we are asking our American friends to help us shoulder this difficulty, not by new money, but showing flexibility in the way our economic cooperation goes,” he said.
At the start of their meeting yesterday, Mr. Powell and Mr. Maher signed a Mutual Legal Assistance Treaty that would provide for cooperation between the United States and Egypt in fighting terrorism, drug trafficking and financial crime.
Mr. Powell said the pact, initially signed in 1998 but not ratified by the Senate and the Egyptian parliament until this year, was “another sign of how close we are in working together on such matters as legal assistance and the war against terrorism.”

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