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Egypt and US Defense Industry Not Likely To Break Ties, Analysts Say

Aug. 22, 2013 - 03:45AM   |  
By PAUL McLEARY   |   Comments
General Dynamics and the US Army are moving ahead with planned shipments of Abrams tank kits to Egypt, where the military will assemble them at their own facility near Cairo.
General Dynamics and the US Army are moving ahead with planned shipments of Abrams tank kits to Egypt, where the military will assemble them at their own facility near Cairo. (US Defense Department)
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WASHINGTON — Despite the temporary hold the US has placed on the shipment of four new F-16 fighter jets to Egypt, two other critical contracts for 10 Apache attack helicopters and 125 M1 Abrams tanks remain “under review” by the US government. Still, one of them has already been shipped to Cairo.

A US Army spokesperson confirmed that the US began delivering the first Abrams “tank kits” last month to a military-run factory in Cairo, where their final assembly will take place. The July shipment was the first under a $395 million deal signed in 2011 between the US Army and General Dynamics Land Systems to supply tanks to the Egyptian Army, bringing their Abrams fleet up to 1,130 by 2016.

With the release of ousted president Hosni Mubarak from prison on Thursday — he was flown to a military hospital in Cairo — the situation in the country remains highly unstable after the military takeover July 3 of the democratically elected government of Mohammed Morsi.

And despite the fact that the Egyptian military has killed more than 1,000 pro-Morsi protestors over the last several weeks, it appears unlikely that US military aid will dry up anytime soon, according to analysts.

While “everybody is very nervous about this new Egypt, if you sever the long-term relationship with the Egyptian military, do they then turn to the Chinese or the Russians, neither of which care much about human rights?” said Kenneth Pollack of the Saban Center for Middle East Policy at the Brookings Institution.

A group of Arabian Gulf states led by Saudi Arabia recently offered Cairo’s generals a $12 billion aid package if the United States pulls the plug. Still, Pollack doesn’t see that aid being accepted, nor does he see the American commitment to the Egyptian military ending. “At the end of the day, the Egyptian military likes to be on our side, and is really quite comfortable with the status quo,” he said.

What’s more, the United States depends on Egypt’s cooperation for hundreds of military overflights a year, and the dozens of times that US naval vessels transit the Suez Canal each year.

The generals in Cairo would also be loathe to part with $1.3 billion in annual US military aid, since the quality of American tanks, helicopters, aircraft, infantry vehicles, and ammunition simply can’t be matched by rival suppliers. But there is also the complex relationship that has been forged since the 1980s between the Egyptian military, the US government, and the American defense industry that both sides would like to see continue.

The Abrams deal is a case in point. While General Dynamics does the majority of the work on the tanks in the United States, it ships tank kits to a military-run factory near Cairo for final assembly.

The Egyptians “depend heavily” on American Foreign Military Financing, (FMF) said Robert Springborg, a professor at the Naval Postgraduate School in Monterey, Calif.

While “the Egyptian intent has always been to broaden out their manufacturing from the FMF core, they have not had much success,” he added, particularly when it comes to arms manufacturing.

Previous attempts to expand their capacity have drawn the ire of the US government, since FMF funding cannot be used for exports. “We inspect their factories regularly and have from time to time discovered violations. As far as I know these violations have always been dealt with in a sort of ‘off the record’ fashion,” Springborg added.

It’s difficult to estimate how important US military funding is for the Egyptian economy, however. While workers assemble tanks and other US-supplied equipment in Egyptian factories, the Egyptians have been unable or unwilling to establish their own long-term sustainment capability.

In 2012, for example, General Dynamics received contracts for almost $50 million for technical support at the Egyptian tank plant.

But the generals in Cairo do more than run military plants. They also have their hands in a variety of commercial businesses that do everything from making bottled water and kitchen appliances to running construction companies. There are no publicly released documents that can speak to how involved the military is in the private sector, however.

“In addition to companies owned by the military are those owned by retired officers whose business is principally provided through contracting with the state, especially the military,” Springborg said. “So, if one were to add the so-called ‘officer economy’ to the ‘military economy,’ one would have a very sizable figure indeed. In construction, for example, my guess would be that public works contracting is dominated by military and officer companies, and this is one of the economy’s biggest sectors.”

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