The current law in the U.S. prevents it from giving aid to any country that has undergone a military coup. The $1.5 billion (roughly $3.80 per American citizen) in aid which is supposed to be paid to Egypt now hangs in the balance. As one of the largest recipients of American aid, Egypt has long depended on Washington’s beneficence, and the Obama administration, like its predecessors, has been reluctant to shut off the spigot, to keep the country committed to its longstanding peace agreement with Israel.
The aid question is the main reason why Obama has stopped short of calling the events in Egypt a coup. The Foreign Assistance Act says no aid other than that for democracy promotion can go to “any country whose duly elected head of government is deposed by military coup d'état,” or where “the military plays a decisive role” in a coup. The law allows no presidential waiver, and it says that aid cannot be restored until “a democratically elected government has taken office.”
Regardless of whatever decision the State Department’s legal adviser takes on whether the events are tantamount to a coup or not, one thing is for sure: Other than using aid money solely and only as a means of pressuring the Egyptian army to return to a democratic setup promptly, the U.S. need to stay out of Egyptian affairs.
Egypt is in dire need of money, but it also needs to be realized it has not been short on willing donors. On two separate occasions it has been bold enough (much to its credit) to refuse IMF loans that tend to almost always come with significant strings attached. Qatar provided Egypt with $5 billion after Morsi was elected in June 2012. It pledged an additional $3 billion in April 2013, which was released in the form of a low-interest loan the following month. Saudi Arabia announced a $4 billion aid package in mid-2011 and, by December 2012 had paid out about $1.75 billion of that, much of it as direct deposits. Turkey, meanwhile, announced a $2 billion loan in September 2012. The United Arab Emirates also pledged $3 billion in aid. Of all the countries, even war-torn Libya paid a $2 billion loan. To make the system work, what Egypt needs is a functioning and honest economic policy implemented by the government that addresses the basic needs of the people — something the Morsi government quite drastically failed to do.
Hence, the vast amount of money coming into Egypt from the Gulf countries might just limit the leverage the U.S. has over the generals. That having being said, the Egyptian military has enjoyed extremely close ties with the U.S. over the past few decades. Political and strategic reasons would also point in favor of maintaining good ties with the U.S. The generals are also aware of the fact that a very large portion of U.S. aid to Egypt goes directly to the army itself. Hence, although its options are limited, the Obama administration can still use a strategy of withholding aid and making it clear to the army that it would incur its displeasure if it fails to switch to a democratic setup as soon as possible.
Other than pursuing a limited agenda as described above, the U.S. needs to leave the governing of Egypt to the Egyptians. What Egypt needs now is a government with a firm foundation in electoral legitimacy and free from clandestine foreign backing and meddling. Democracies are not formed overnight. Switching from a dictatorship, especially one as entrenched as Hosni Mubarak’s, to a functioning democratic setup is bound to have its fair share of hurdles, disturbances, and challenges along the road. The Egyptian people have proved their worth not once but twice in a short span of time. Events such as the anti-Morsi protests and those that led to the ouster of Hosni Mubarak give credence and power to the voice of the people and will only go on to make sure that a truly democratic government comes to power and remains accountable to the sensitivities of the Egyptian people.