Now is not the time to cut U.S. support. Although we are no longer Egypt’s largest source of aid (Gulf states have provided far more financial support since 2011 and promised billions more last week), our contribution remains significant. The administration should leverage this influence to encourage the interim government and the military to adopt a transparent road map to political and economic reform, and an early return to a democratically elected government. By being smarter with its aid, Washington can promote transparency, rule of law, respect for individual rights (including, importantly, those of women) and the encouragement of a competitive political structure.
On the economic front, the United States should consult with the interim government and other business and civil society groups to determine the optimal role for the international community. Meanwhile, we should encourage Egypt promptly to resume talks with the International Monetary Fund (IMF), where the United States has an important voice.
In a perfect world, Egypt would await a democratically elected government to endorse an IMF program. But the reality is that Egypt is hemorrhaging foreign exchange to support misguided subsidy programs that do not reach the truly needy. Structural impediments, labor-market inefficiencies and corruption further stifle Egypt’s competitiveness. The discipline and oversight of an IMF program would unlock other international funds and bolster the confidence of potential foreign investors. By taking politically tough measures now, particularly given the financial cushion provided by Saudi Arabia, the United Arab Emirates and Kuwait, the interim government can bequeath to its successor a better structure in which to grow the economy and create desperately needed jobs.