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Dependent Development and U.S. Economic Aid to Egypt

Published online by Cambridge University Press:  29 January 2009

Marvin G. Weinbaum
Marvin G. Weinbaum
Affiliation:
Department of Political ScienceUniversity of Illinois, Urbana
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Extract

Egypt was firmly ensconced by the early 1980s in the ranks of the Third World's more dependent, financially troubled economies. The country's total foreign debt, under $3 billion in 1973, had grown to 16 billion by 1979. In 1982–83, the external debt was estimated at $20 billion, with the servicing of medium and long-term obligations absorbing more than one-third of export earnings. The terms of trade were also moving against Egypt as its major exports lost value. A trade deficit, registered largely with EEC countries and the United States, stood at the equivalent of $4.7 billion in 1982–83.

Type
Articles
Information
International Journal of Middle East Studies , Volume 18 , Issue 2 , May 1986 , pp. 119 - 134
Copyright
Copyright © Cambridge University Press 1986

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References

NOTES

1 World Bank, World Debt Tables (December 1981) and Middle East Economic Digest (MEED), (December 2, 1983), 13. The debt servicing calculations are based on a survey by Morgan Guaranty Trust Co. in The Wall Street Journal (06 2, 1984).Google Scholar Also see Middle East News: Economic Weekly, Cairo, (December 17, 1982), 3.

2 American Embassy, Cairo, “Economic Trends Report: Egypt,” (April 17, 1984), 2, from data furnished by the Central Bank of Egypt and other sources.

3 Parker, John B. and Coyle, James R., “Urbanization and Agricultural Policy in Egypt,” Foreign Agricultural Report, No. 169, U.S. Department of Agriculture (09 1981), 34.Google Scholar

4 U.S. Department of Agriculture, Foreign Agriculture, “Fact File” (February 1984), 13. Egypt also turned to foreign sources for much of the sugar, vegetable oils, and meat consumed domestically. Once an important rice exporter, the country is now unable to produce enough for its own market. See also Thompson, Anne M., “Egypt; Food Security and Food Aid,” Food Policy, 8, 3 (08 1983), 178–186.Google Scholar

5 Demand for food is rising at an annual rate of approximately 5 percent while agricultural production increases in recent years have averaged no more than 3 percent. And the 47 million people Egypt has to feed in 1983 will, if the prevailing rate of nearly 3 percent population growth per annum continues, increase to 70 million by the end of the century.

6 The Wall Street Journal (October 7, 1981). However, the book value of direct private U.S. investment in industry and agriculture was only $61 million in 1984. U.S. Embassy, “Economic Trends Report,” 4.

7 The New York Times (February 14, 1985).

8 Ibid., 20. Also The New York Times (February 14, 1985), and World Bank, “Arab Republic of Egypt; Current Economic Situation and Growth Prospects,” Report no. 4498–EGT, October 5, 1983, p. 118.

9 Waterbury, John, The Egypt of Nasser and Sadat (Princeton: Princeton University Press, 1983), p. 32.CrossRefGoogle Scholar

10 For a lengthy examination of competing theories on aid's role in development see White, John, The Politics of Foreign Aid (New York: St. Martin's Press, 1974), pp. 122–142.Google Scholar

11 Committee on Foreign Affairs, U.S. House of Representatives, “Economic Support Fund Programs in the Middle East,” Report of a Staff Study (April 1979), 26.

12 A general treatment of the topic is found in Weinbaum, Marvin G., Food, Development, and Politics in the Middle East (Boulder, Cob.: Westview Press, 1982), pp. 147–148.Google Scholar

13 See especially an article by Amin, Galal in Al-Ahram Al-I ktisadi, Cairo (10 18, 1982).Google Scholar

14 For a good summary of the literature see Chilcote, Ronald H., Theories of Development and Underdevelopment (Boulder, Cob.: Westview Press, 1984).Google Scholar

15 Kinley, David, Levinson, Arnold and Lappe, Frances Moore, “The Myth of Humanitarian Aid,” The Nation (07 11–18, 1981), 42.Google Scholar

16 Agency for International Development, Cairo, “Country Development Strategy Statement for FY 1985” (April 1983), 25–26.

17 Bednar, James F., “Stopgap: U.S. Assistance in Buying Time for Development,” Agenda, Office of Public Affairs, Agency for International Development, 5, 2 (03 1982), 12.Google Scholar

18 U.S. Embassy, Cairo, “Economic Trends Report,” 4, 15.

19 U.S. Department of Agriculture, Foreign Agriculture (August, 1981), 5. Ibid. (February, 1984), 12.

20 Against the $2.8 billion the U.S. exported to Egypt in 1983, about one-third of Egypt's total imports, Egypt's exports to the U.S. were valued at only $303 million and 85 percent of this was crude petroleum. U.S. Embassy, “Economic Trends Reports,” 15, 23.

21 Much of the early investment in Egypt, especially private financing, came from the Arab countries and not the West. Roughly 20 countries in all were involved in aid to Egypt during the period 1974 to 1977. About 7 million of the $12 million total external assistance, including military aid, came from Arab sources. “Economic Support Fund Programs in the Middle East,” 8. The government-to-government Arab aid was initially used to restructure and ease Egypt's debt burden. Even after this aid dropped off sharply following Sadat's Jerusalem visit, and halted with the Camp David agreements in March 1979, private Arab investment in Egypt continued.

22 The distinction between dependence in terms of need and causal dependence or dependency in the sense of an undesirable relationship from the standpoint of the poorer country is well recognized in the literature. See for example, Caporaso, J.A., “Dependence, Dependency, and Power in the Global System,” International Organization, 32 (Winter 1978), 13–44.CrossRefGoogle Scholar Also see R.D. Duvall, “Dependence and Dependencia Theory: Notes Toward Precision of Concept and Argument,” Ibid., 51–78.

23 See White, 79.

24 For a discussion of the links see Waterbury, 22.

25 U.S. Embassy, “Economic Trends Report,” 11.

26 Al-Ahram al-Iqtisadi, Cairo (December 6, 1982), quoted in MERIP Reports (September, 1983), 18.

27 Waterbury, pp. 32–40.

28 An extended examination of exogenous factors is found in Agency for International Development, “Country Development Strategy Statement, FY 1985,” Annex D (February 1983), 26–28.

29 Those few sectors where Egypt has been regularly rebuffed in requests for financial assistance, such as land reclamation and public housing, are the exceptions. Funding is refused based on AID's cost-benefit analyses, along with a touch of Washington's free enterprise philosophy. Yet because both program areas are symbolically important and deal with development priorities of the government, the policy of AID is frequently questioned by the more politically-minded officials of the U.S. Embassy in Cairo.

30 This point is discussed at greater length in Weinbaum, Marvin G., “Politics and Development of Foreign Aid: U.S. Economic Assistance to Egypt, 1975–82,” The Middle East Journal 37, 4 (Autumn, 1983), 636–655.Google Scholar