CQ TODAY ONLINE NEWS
May 23, 2011 – 9:27 p.m.
Obama's Middle East Aid Plan No Sure Thing in Congress
By Emily Cadei, CQ Staff
The Obama administration’s proposed economic assistance for the Middle East and North Africa has a relatively modest price tag, but it could face serious resistance in Congress.
In particular, President Obama’s proposal for expanded American investment and commerce in the region, outlined in a speech last week, risks becoming bogged down in the sort of domestic political disputes that have stalled many other trade initiatives with the developing world in recent years.
Obama, who will seek to rally U.S. allies to work with him on Middle East economic assistance during his European trip this week, called in his speech for the United States to “focus on trade, not just aid; and investment, not just assistance” for emerging democracies in Egypt and Tunisia, and possibly elsewhere depending on how uprisings in neighboring countries play out.
Such an approach would cost much less than traditional development assistance — among other things, it would marshal private sector resources and involve investments the government would likely recoup. That should help its viability in Congress, which has little appetite for expensive new foreign aid programs at the moment.
“No one should expect this Congress to pass a Marshall Plan for the Middle East,” Sen.
In a speech to the U.S. Institute of Peace, McCain said new members of Congress “were elected to cut spending, not to increase foreign assistance. . . . If we are going to help countries like Tunisia and Egypt to grow their economies, we will need to be much more innovative.”
A Different Model for Aid
Sarah Margon, an expert on development and conflict at the Center for American Progress, a liberal think tank, said a Marshall Plan-like approach would be wrong for the Middle East from a development perspective, as well.
Margon credited the president’s proposal for breaking with the historical approach to foreign assistance in the region that has been “overly focused on military assistance, top-heavy,” and “less flexible.” The new economic assistance plan, if well executed, will be more sustainable than past Middle East aid, as well as less costly, she said.
Elements of the approach the president is pushing include creation of enterprise funds to foster investment in local enterprise, lending or guaranteeing up to $1 billion in borrowing needed to finance infrastructure and support job creation through the Overseas Private Investment Corporation, and a $1 billion debt swap to help ease Egypt’s bilateral debt of more than $3 billion.
Senate Foreign Relations Chairman
The president also promised to launch a “comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa,” with a goal of increasing trade with the region, promoting greater integration with U.S. and European markets and opening “the door for those countries who adopt high standards of reform and trade liberalization to construct a regional trade arrangement.”
Obama's Middle East Aid Plan No Sure Thing in Congress
McCain called for Congress to press forward on those initiatives, as well. “We should move urgently to begin negotiations on free-trade agreements with Egypt and Tunisia — and to explore ideas for new free-trade areas in the Middle East and North Africa,” he said.
Plenty of Skeptics
But the administration proposal may be too ambitious in the current budgetary climate in the Senate and the House.
Even before Obama laid out his plans, lawmakers questioned the idea of substantial debt relief to Egypt, given its cost and uncertainty about the future government in Cairo.
“I don’t know if a billion dollars is doable,” Sen.
Casey, chairman of the Foreign Relations subcommittee that overseas the Middle East, was also skeptical of trade initiatives with the region. “One of the real concerns that folks like me have is that . . . our workers, our jobs, our economy, haven’t done real well when it comes with the ratification and implementation of trade deals,” Casey said. When it comes to future deals with “a region like the Middle East, I think we’re still back to the same issues and concerns about what it would mean for our workers and their jobs.”
Casey’s comments are the tip of the iceberg of resistance that trade preferences or agreements with Egypt, Tunisia or the region as a whole would face in Congress.
Backers of past efforts to authorize trade preferences with developing countries have pitched them as low-cost, high-impact ways to help boost the target country’s economy, often much more efficiently than through direct aid. But such proposals have been blocked by domestic concerns — because of labor issues as well as worries over competition to U.S. markets. A prime example is legislation to create trade preferences for exports from poor, rural areas — so-called reconstruction opportunity zones — in Pakistan and Afghanistan. That proposal fell out of a 2009 aid package (PL 111-73).
Despite the priority the administration has placed on development and civilian uplift in those two war-torn countries, and plenty of lobbying from the Pakistani government in particular, the legislation was stymied last Congress, thanks in part to labor disputes between the parties and in part to lobbying from groups including the cotton and textile industries.
Cotton and textiles are also among the leading industries — outside energy production — in Egypt.
“We can talk about trade partnerships, we can talk about opening up markets, but there’s going to have to be a lot of work here at home,” Margon said. “That is just going to take time.”