[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
            REFLECTIONS ON THE REVOLUTION IN EGYPT, PART II

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                     THE MIDDLE EAST AND SOUTH ASIA

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 20, 2012

                               __________

                           Serial No. 112-155

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/

                                 ______


                  U.S. GOVERNMENT PRINTING OFFICE
74-639                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California              deceased 3/6/12 deg.
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
RON PAUL, Texas                      ELIOT L. ENGEL, New York
MIKE PENCE, Indiana                  GREGORY W. MEEKS, New York
JOE WILSON, South Carolina           RUSS CARNAHAN, Missouri
CONNIE MACK, Florida                 ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida            BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio                   BRIAN HIGGINS, New York
BILL JOHNSON, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida                CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania             FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas                KAREN BASS, California
TOM MARINO, Pennsylvania             WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director
                                 ------                                

             Subcommittee on the Middle East and South Asia

                      STEVE CHABOT, Ohio, Chairman
MIKE PENCE, Indiana                  GARY L. ACKERMAN, New York
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
ANN MARIE BUERKLE, New York          DENNIS CARDOZA, California
RENEE ELLMERS, North Carolina        BEN CHANDLER, Kentucky
DANA ROHRABACHER, California         BRIAN HIGGINS, New York
DONALD A. MANZULLO, Illinois         ALLYSON SCHWARTZ, Pennsylvania
CONNIE MACK, Florida                 CHRISTOPHER S. MURPHY, Connecticut
MICHAEL T. McCAUL, Texas             WILLIAM KEATING, Massachusetts
GUS M. BILIRAKIS, Florida
TOM MARINO, Pennsylvania
ROBERT TURNER, New York

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. David Schenker, director, Program on Arab Politics, 
  Washington Institute for Near East Policy......................     6
Michele Dunne, Ph.D., director, Rafik Hariri Center for the 
  Middle East, Atlantic Council..................................    14
Jon B. Alterman, Ph.D., director, Middle East Program, Center for 
  Strategic and International Studies............................    19

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. David Schenker: Prepared statement...........................     8
Michele Dunne, Ph.D.: Prepared statement.........................    16
Jon B. Alterman, Ph.D.: Prepared statement.......................    21

                                APPENDIX

Hearing notice...................................................    42
Hearing minutes..................................................    43


            REFLECTIONS ON THE REVOLUTION IN EGYPT, PART II

                              ----------                              


                        WEDNESDAY, JUNE 20, 2012

              House of Representatives,    
                Subcommittee on the Middle East    
                                        and South Asia,    
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 1:30 p.m., in 
room 2200 Rayburn House Office Building, Hon. Steve Chabot 
(chairman of the subcommittee) presiding.
    Mr. Chabot. We're going to come to order. I believe the 
ranking member, Mr. Ackerman, will be here very shortly. The 
folks that are at the back, if you'd like to make your ways in 
a little bit and over here, I'm fine with that because I've 
been told that we're going to have to close the door at some 
point. I apologize for having a smaller meeting room. Two of 
the other subcommittees, yes, you can keep coming in. I know 
we've got some more folks out there. Normally, we're in the 
larger room. This is, I think, the first time in the last 2 
years we've been in the smaller room. Because two of the other 
Foreign Affairs subcommittees have a joint hearing going on. So 
they're in the larger room. But feel free to come over this 
way, too, if there's not sufficient room over there.
    I'm Steve Chabot. I'm the chairman of the Foreign Affairs 
Subcommittee on the Middle East and South Asia. As I said, I 
know the ranking member, Mr. Ackerman, will probably be here 
shortly. We believe we're going to be interrupted by votes here 
within the next 10 minutes or so. I think there are three votes 
which will take about \1/2\ hour. So we're going to try to get 
through as much of this as we can before the votes happen. Even 
when the bells go off for the votes, we have about 5 to 10 
minutes before we have to actually go, so we'll try to get in 
as much as we can. Maybe the introduction of the witnesses as 
well.
    In any event, I want to thank everyone for being here this 
afternoon. I want to welcome my colleagues who will be arriving 
shortly, and all the folks that have shown interest in this 
particular hearing on Egypt this afternoon.
    Just over 1\1/2\ years ago, Hosni Mubarak resigned as 
President of Egypt in response to massive and sustained 
protests by the Egyptian people. Unfortunately, as the last 
year has illustrated far too well, freedom rarely marches 
steadily forward in a straight line. A year and a half into the 
transition, Islamist groups have won a majority in the 
parliamentary elections. The Muslim Brotherhood candidate for 
President, Mohamed Morsi, appears to have won in the recent 
run-off election. The Egyptian economy is on the verge of 
collapse. The trial against civil society NGO workers is still 
ongoing and perhaps most disturbingly recently, measures 
implemented by the SCAF appear to have the effect of actually 
rolling back democratic progress.
    The events of the past week have been especially alarming. 
On June 13th, the Supreme Council of the Armed Forces, SCAF, 
reauthorized the use of military tribunals in cases involving 
Egyptian citizens. On June 14th, the Supreme Constitutional 
Court ruled that one third of the Egyptian Parliament was 
elected illegally. This prompted the SCAF to declare the entire 
Lower House of Parliament invalid. And on June 15th, the SCAF 
dissolved it and assumed full legislative authority.
    The Egyptian parliamentary leadership has refused to 
recognize the decision, prompting security forces to surround 
the Parliament building. The SCAF also has now invalidated the 
standing constituent assembly, the body which was charged with 
writing the new constitution, and has taken it upon itself to 
appoint the new panel.
    Finally, on June 17th, as the polls in the Presidential 
runoff election were closing, the SCAF issued an addendum to 
the March 2011 transitional constitution which, among other 
provisions, gives the SCAF veto power over any provisions of 
the forthcoming constitution.
    We all knew Egypt's path toward democracy was not going to 
be without its bumps. With the President and the nearly 47 
percent of the elected seats in the Egyptian Parliament going 
to the Muslim Brotherhood, and nearly a quarter to other 
Islamist parties, it is clear that Islamists will dominate the 
Egyptian political landscape in the near future.
    And we all knew that the Egyptian military was to no small 
degree operating in uncharted territory in its efforts to 
oversee a democratic transition. But I don't think anyone 
expected events to unfold quite as they have.
    While I continue to question the Islamist commitment to the 
principles of democracy, I believe the SCAF would have a 
positive and reinforcing effect, but unfortunately, far from 
calming the situation, I feel the recent decisions taken by the 
SCAF will only stoke already-inflamed tensions between the 
military and the public. And I also fear that the SCAF has lost 
a tremendous opportunity to be a force for good. Democratic 
transitions, even under the best of circumstances, are fraught 
with potential peril and a nascent Egyptian Government could 
have benefitted from a steady hand to help guide it forward. 
That opportunity appears to be departing and it is time for us 
all to face the fact that the genie, as they say, it out of the 
bottle.
    Equally disturbing, however, is the state of the Egyptian 
economy. Since the revolution began, spending on public sector 
salaries and food and energy subsidies have skyrocketed, 
leading to a predicted budgetary deficit of $23 billion. 
Authorities have been financing this deficit by borrowing from 
domestic banks and using the country's foreign exchange 
reserves which have fallen nearly 60 percent from approximately 
$36 billion in early 2011 to $15.5 billion in June 2012.
    The situation is fundamentally unsustainable. If foreign 
exchange reserves continue to dwindle, officials may be forced 
to depreciate the value of the Egyptian pound, a move that 
could boost interest rates and reduce asset values, potentially 
stalling any economic recovery. Sooner or later, Egyptians are 
going to have to face the fact that serious structural reforms 
are needed and they're going to need outside help. Although the 
International Monetary Fund and World Bank have offered 
assistance, some maligned officials, in particular, the 
Minister of International Cooperation, Fayza Abul Naga, have 
obstructed progress, citing the loan and its potential 
conditions as threats to Egypt's sovereignty. This is absurd 
and I would caution the forthcoming Egyptian Government to 
reconsider this stance as well as Abul Naga's role in any 
future government. Such a loan would offer Cairo the 
opportunity to make critical economic and governmental changes 
while continuing to provide for a Egyptian population in the 
meantime.
    Although Egypt's exact path to democracy remains unclear, 
what is clear is that Egypt is an important country, a very 
important country, that is going through an extraordinary 
transition. I hope to see power handed over to a civilian 
government that is committed to a pluralistic Egypt that 
remains an ally of the United States and committed to peace 
with Israel. Decisions about U.S. assistance to Egypt must 
ultimately be shaped by the choices and policies made by 
whatever Egyptian Government that the Egyptian people choose to 
elect.
    We have an interest in strongly supporting a democratic 
government that respects the rights of its citizens and rule of 
law, fosters greater economic opportunity and observes 
international obligations. We would obviously react very 
differently to any government that does not respect the 
institutions of free government, discriminates against or 
represses its own citizens, or which pursues policies which are 
destabilizing in the region. That said, we should be careful 
about making judgments too quickly. I suspect that the transfer 
of power, the government formation, and the constitutional 
revision process are going to take some time.
    For decades, Egypt has been a critical ally to the United 
States and the global war on terror and in pursue to Arab-
Israeli peace. Egypt has been, and I hope will remain, a leader 
in the Arab world and a force for peace in the region. I hope 
our witnesses here today can help us both understand the 
current state of affairs in Egypt and guide U.S. policy 
accordingly.
    And at this time I would like to yield to the distinguished 
ranking member of this committee, the gentleman from New York, 
Mr. Gary Ackerman.
    Mr. Ackerman. Thank you very much, Mr. Chairman. I want to 
start by thanking and commending all of our witnesses for 
appearing today and trying to help us to understand what's 
happening in Egypt and what it means for the United States and 
our national security.
    If making predictions is a sucker's game, then making 
predictions about Egypt must be a sort for mad men, degenerate 
gamblers, and otherwise distinguished, sane, and expert 
congressional witnesses. [Laughter.]
    Welcome. Every prediction about the Egyptian revolution, 
except for change, followed by uncertainty and capped off by 
the unexpected has failed. The path of the Egyptian revolution 
began not with Hosni Mubarak's expected death, but with that of 
a frustrated fruit peddler in Tunisia. President Mubarak was 
removed from power not by the masses, but ultimately by his 
fellow generals. And the generals of the Supreme Council of the 
Armed Forces, the SCAF, having seized power, have shown 
themselves alternatively painfully hesitant and spastically 
aggressive in their rule. What could not happen, did. What one 
expected now seems--what no one expected, now seems obvious. 
And what will finally come to be is not much clearer today than 
it was a year ago.
    One of our nation's greatest writers, William Faulkner, who 
chronicled the way of the American South, continued years later 
to be shaped and gripped by the drama of the Civil War and the 
failure of Reconstruction authored a brief, but compelling 
warning to all those who expected to move swiftly and cleanly 
from one period to another. ``The path,'' Faulkner wrote, ``is 
never dead. It's not even past.''
    The many twists and turns of Egypt's post-Revolutionary 
transition accord with this idea because with the notable 
exception of Hosni Mubarak, the people contending for power in 
Egypt today are by and large the same people they were on 
January 24, 2011. Their outlook, goals, prejudices, and 
experiences did not disappear or transform when Hosni Mubarak 
ceased to be President. Even this revolution, as in every 
revolution, it is power, power, who will have it, what limits 
there will be upon it, and upon whom and for what ends it can 
be applied, power that is the object of the current struggle.
    There was only one prediction that I heard that has held 
up. I heard it from one of the key actors in the present drama. 
About a year ago at a private dinner party, this top shelf 
player was being questioned aggressively about the prospects 
for the then upcoming parliamentary elections and what it would 
mean if the Muslim Brotherhood won. The elections, again and 
again, with almost impossible politeness, he deflected the 
question. ``Their victory,'' he asserted, ``was very unlikely. 
Really, almost inconceivable.'' But the questions continued to 
be thrown at him without respite.
    ``What would happen if they did win the elections? How can 
you be sure they're not going to win the elections? What if 
you're wrong? What if they have more strength than you think?'' 
After ducking and dodging throughout the meal and with dessert 
departing untouched and no relief in sight, he finally 
retreated with some tinge of anger and got to the bottom line. 
He actually answered a different question. ``The Muslim 
Brotherhood will never rule Egypt,'' he said.
    That statement wasn't a prediction or a pledge for our 
benefit. It was an expression of a commitment that was much a 
part of this man as the marrow in his bones. Subsequently, I've 
gotten to know him better. He's a man of his word. And like it 
or not, he promises and he delivers.
    It was in the wake of the Supreme Constitutional Court's 
action against the Parliament and in favor of the candidacy of 
the former prime minister following the outcome of the 
Presidential election and vote in the shadow of the newly SCAF-
issued amendments to the constitutional declaration. The 
question I wish had been pressed upon him once the Muslim 
Brotherhood is blocked from power, what then?
    I suspect his answer would be something along the lines of 
saying the Nile will continue to flow. I guess we'll see.
    Mr. Chabot. Thank you very much. And at this time I'm going 
to go ahead and introduce the panel. You've probably heard the 
buzzers going off which is us being called for a vote on the 
floor. If the second bell hasn't gone off by the time I get 
through the introductions we may get in one of the testimonies 
here before we head over there, but I'll go through these 
quickly.
    Our first witness will be David Schenker, who is the 
Aufzien Fellow and director of the program on Arab politics at 
the Washington Institute for Near East Policy. Previously, he 
served in the Office of the Secretary of Defense as Levant 
country director and was awarded the Office of the Secretary of 
Defense Medal for exceptional civilian service in 2005. Mr. 
Schenker holds an M.A. in Modern Middle Eastern History from 
the University of Michigan and a B.A. in Political Science and 
Middle East Studies from the University of Vermont.
    Next, we have Michele Dunne, who is director of the Rafik 
Hariri Center for the Middle East at the Atlantic Council of 
the United States. Prior to this, she was a senior associate at 
the Carnegie Endowment for International Peace, and editor of 
the Arab Reform Bulletin from 2006 until 2011. She was also 
previously a Middle East specialist with the U.S. State 
Department where her assignments included serving on the 
National Security Council staff, on the Security of States 
Policy Planning staff in the U.S. Embassy in Cairo, and U.S. 
Consulate General in Jerusalem in the Bureau of Intelligence 
and Research. She holds a PhD in Arabic Language and 
Linguistics from Georgetown University where she was a visiting 
professor for 2002 until 2006 and we welcome you here this 
afternoon, Doctor.
    And finally, we have Jon Alterman who holds the Zbigniew 
Brzezinski chair in global security and geostrategy and is 
director of the Middle East Program at CSIS. Prior to joining 
CSIS, he served as a member of the policy planning staff at the 
U.S. Department of State and is a special assistant to the 
Assistant Secretary of State for Near Eastern Affairs. Before 
entering government, he was a scholar at the U.S. Institute of 
Peace and at the Washington Institute for Near East Policy.
    The second bell went off, I didn't quite make it. However, 
we've been joined by the former chair of the Full Foreign 
Affairs Committee, Mr. Berman from California, and as is the 
practice of this committee, if he'd like to take a minute for 
an opening statement? Okay, unfortunately, we have to head over 
to vote and we may not make it, especially as we get older, we 
get a little slower getting over there. So--and we don't want 
to miss a vote, so at this time, we will recess and as I 
understand we have about three votes, so we should be back 
ballpark around \1/2\ hour. So we are in recess at this time.
    [Recess.]
    Mr. Chabot. Okay, we're back in session and unless Mr. 
Berman has changed his mind about making an opening statement 
we'll go right to the witnesses and I'm assuming by his grin, 
that he is not.
    So we've introduced the panel, so Mr. Schenker, you're 
recognized for 5 minutes. We again apologize for the 
temperature. I don't want to say it may be slightly cooler, 
because you've been here longer than I have. It doesn't feel 
quite as hot as it did, but we've got a lot of people in a 
relatively small room. We have a 5-minute rule. You have 5 
minutes. The yellow light will come on. You'll have 30 seconds, 
excuse me, 60 seconds to wrap up and we ask you to stay within 
that if at all possible. So you're recognized for 5 minutes, 
Mr. Schenker.

  STATEMENT OF MR. DAVID SCHENKER, DIRECTOR, PROGRAM ON ARAB 
      POLITICS, WASHINGTON INSTITUTE FOR NEAR EAST POLICY

    Mr. Schenker. Chairman Chabot, Ranking Member Ackerman, 
it's an honor to participate in this important hearing on the 
subject of vital national interest. I thank you for the 
opportunity to present my views to this committee today.
    Today's hearing could not be more timely, well, actually, 
given the dynamic nature of post-revolt politics in Egypt, 
tomorrow might have been somewhat better. Earlier this week, it 
seemed the Muslim Brotherhood's Mohammed Morsi had won Egypt's 
hotly contested Presidential election. Tomorrow, however, it 
would not be surprising if we had learned that erstwhile 
Mubarak Prime Minister Afhmed Shafiq is Egypt's new chief 
executive. At this very moment, we just don't know. What we do 
know is that regardless who Egypt's next President is, barring 
an unexpected retreat of political power, Egypt will continue 
to reside with the military. And in order to maintain this 
power, Egypt's military will likely have to take increasingly 
repressive measures.
    Meanwhile, this military, and whatever government emerges 
in Egypt, are together going to have to contend with a series 
of increasingly complex challenges that have in the last 16 
months reached the crisis point. Foremost among these 
difficulties is the economy which has deteriorated 
precipitously since last year's revolt. Foreign reserves 
plummeted, capital has fled, foreign direct investment has 
dried up, inflation is taking hold, and tourism has dropped to 
a fraction of its pre-2011 levels.
    In May, Minister of Finance Mumtaz Saad predicted that 
elections would quote unquote  deg.``be the beginning 
of the national economic recovery.'' His assessment was overly 
optimistic. The effort to revitalize the economy will be 
hampered not only by continued political uncertainty and 
unrest, but also by the worsening security situation. The 
immediate aftermath of the revolt saw a rash of prison escapes 
and a surge in violent crime in Egypt, including car jackings, 
armed robberies, and kidnapings, a situation that drove much of 
the appeal for quote unquote  deg.``law and order 
President candidate, Ahmed Shafiq.'' The security deficit is 
most conspicuous in the Sinai where armed groups are claiming 
allegiance to the ideology and agenda of al-Qaeda are becoming 
increasing active and Bedouin tribesmen have been kidnaping 
tourists and harassing the multi-national force and observes. 
Operations by Gaza-based terrorists against Israel are 
emanating from the Sinai are also on the rise.
    It's difficult to discern whether the Egyptian military is 
incapable or just unwilling to secure the Sinai. Both scenarios 
are troubling. Not only is insecurity in the Sinai unlikely to 
be contained indefinitely to the peninsula, should Israeli-
Egyptian ties further deteriorate, border incidents will become 
more subject to populist politics and difficult to manage.
    The bleak economic and security picture is accompanied by 
equally grim prospects for return to political normalcy. For 
the foreseeable future it seems, the Muslim Brotherhood and the 
SCAF will be locked in an ongoing and destabilizing struggle 
for power. At the same time, the Muslim Brotherhood will be 
challenged from the right by the Salafists, their chief 
political and ideological rivals, pushing the Brothers to take 
an even military line.
    Regardless who prevails in the Presidential contest, Egypt 
seems destined for a combination of populist, Islamist, and 
authoritarian politics. While this may not imply an end to the 
peace agreement with Israel or strategic ties to the United 
States, changes in policies that impact women, political 
pluralism and religious tolerance could complicate bilateral 
relations with Washington. At the same time, the absence of a 
Parliament and a President with limited powers will diffuse 
authority, making it difficult for Washington to work with 
civilian leaders in Cairo on issues of mutual interest.
    Continued military preeminence in Cairo may in the short 
term guarantee some long-standing U.S. strategic interests in 
Egypt: Priority access to the Canal, over slights, 
counterterrorism cooperation, and the maintenance of the peace 
treaty with Israel. But it is an inherently volatile situation. 
The opposition, Islamists and liberal alike, are sure to employ 
anti-U.S. populist politics as a cudgel against the military 
and should the military crack down and reinstitute draconian 
measures, it will further stress U.S.-Egyptian relations.
    Sixteen months on the transition in Egypt is not over. 
Indeed, it is just beginning. And with limited leverage, 
Washington is going to have to pick its spots with both the 
military and civilian leadership. Populism, along with the 
social justice imperative of the revolution, will make it more 
difficult to sustain a critical political commitment to 
economic reform in Egypt. Washington must encourage Egypt to 
remain dedicated to economic reform and continue to remind 
Cairo of the inverse relationship between radicalism and 
foreign direct investment.
    At the most basic level, however, Egypt is going to have to 
help itself. Already, the Salifists and the Muslim Brotherhood 
have opposed a Japanese loan to expand the Metro system in 
Cairo which Islamists consider is interest and prohibited by 
Islam. The Salifists are also opposed to the $3 billion IMF 
loan. It's not clear whether the Muslim Brotherhood and the 
SCAF will come down on this critical funding. At the end of the 
day, the sine qua non for maintaining the substantial U.S. aid 
package to Egypt is a continuity of the core elements of the 
strategic partnership. While the instinct may be to lower the 
standard for other less pressing issues, Washington should, in 
fact, take the opposite tact. If democracy in Egypt is ever to 
take root, regardless of who is at the helm, Cairo should be 
held to a high standard in this coming period in terms of human 
rights, religious freedoms, political pluralism, and women's 
rights. Revoking or reconfiguring the U.S. aid package right 
now would likely be more provocative than productive. Lest 
these issues fall by the wayside, a periodic congressional 
report requirement for the administration could keep this 
issues on the front burner.
    Egypt with 83 million people is too big and too important 
to fail. But a return to authoritarianism, either religious or 
secular, would also be a failure, dashing Egypt's aspirations, 
undermine U.S. interests in the region and ensuring continued 
instability in this critical state. Thank you.
    [The prepared statement of Mr. Schenker follows:]

    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Chabot. Thank you very much. I appreciate your 
testimony this afternoon.
    Dr. Dunne, you're recognized for 5 minutes.

   STATEMENT OF MICHELE DUNNE, PH.D., DIRECTOR, RAFIK HARIRI 
          CENTER FOR THE MIDDLE EAST, ATLANTIC COUNCIL

    Ms. Dunne. Thank you, Mr. Chairman, for the honor of 
testifying before the subcommittee. I'll summarize the written 
statement that I've submitted.
    With the conclusion of their first post-revolution 
Presidential election, Egyptians should have been celebrating 
this week, the transition from inter-military rule to 
government by elected civilians. Instead, they're back 
demonstrating in Tahrir Square. The question, Mr. Chairman, is 
whether the democratic transition in Egypt has gone 
irretrievably off the rails or whether it can get back on 
track.
    We're awaiting the final results of the Presidential 
election. Today, a coalition of judges who set out to do a 
parallel count of the vote announced that they agreed with the 
Muslim Brotherhood, that Freedom and Justice Party candidate 
Mohamed Morsi won by about 900,000 votes out of a total of 
about 25 million votes cast. But the Presidential Election 
Commission, whose decisions are final and cannot be appealed in 
court, is now reviewing complaints of irregularities by both 
campaigns and will announce the final results soon, perhaps 
tomorrow.
    Unfortunately, demonstrations and violence might well 
ensue, particularly if the Commission disqualifies enough votes 
to name former Prime Minister Afhmed Shafiq the winner. Sixteen 
months after promising to oversee a democratic transition, the 
Supreme Council of the Armed Forces, the SCAF, was as of last 
week on the verge of finally surrendering executive powers. But 
at the eleventh hour, as you know, the Supreme Constitutional 
Court invalidated the law under which the Parliament was 
elected and the SCAF acted quickly to reclaim legislative 
powers from what Egyptians call the Parliament of the 
revolution in which Islamists held a majority, as well as to 
limit the new President's power.
    So among the most troubling elements of this supplementary 
constitutional declaration issued by the SCAF on June 17th is 
that it gives the SCAF the power basically to control the 
writing of the new constitution, to control who will be on the 
assembly that writes that constitution, to set the timetable 
and to object to any article in the constitution. It also will 
allow the SCAF to retain legislative powers and budgetary 
authority for months, perhaps even through the end of this 
year, until--because now, parliamentary elections cannot take 
place until there is a--until the new constitution is already 
in place. And then, of course, there will need to be a revision 
of the electoral law and so forth based on the court decision. 
So this is going to draw out for quite a while. And the SCAF 
will, according to this decree, be able to remain free from 
control by the new President who will be unable to appoint any 
senior defense ministers or make decisions on any military 
matters.
    In sum, this constitutional declaration removed the 
Parliament as a counterweight, the SCAF, and it positions the 
military as a power separate from and above civilian 
authorities, and it forces the writing of a new constitution in 
haste and under the pressure of military rule.
    Now Egyptians are now asking whether this court ruling 
invalidating the Parliament was an impartial ruling, 
particularly after a series of indications from senior members 
of the judiciary that some of them now feel they need to take 
aside in this power struggle between the SCAF and the 
Brotherhood, which is truly unfortunate because the judiciary 
was among the most respected institutions in Egypt. But even if 
it was--let's say it was an impartial court decision to 
invalidate the law under which the Parliament was elected. It 
really doesn't justify the SCAF's declaration after that. The 
SCAF could have simply called for new parliamentary elections. 
It did not have to see some of the powers that the existing 
constitutional declaration would have given the President. And 
it certainly did not have to cease control of the writing of a 
constitution.
    This disruption and manipulation of the political 
transition--I have to say as I was thinking about this, the 
phrase Etch-a-Sketch transition came to mind. Every once in a 
while when the SCAF sees that it doesn't like the way things 
are going with the transition, they just sort of shake it up 
and start drawing it all over again. You know, it does come at 
the expense of Egypt's economy, as Mr. Schenker was just 
saying, as well as national security, because both of these 
things are going to suffer as a result of the on-going struggle 
between the military and the Brotherhood.
    Now the United States might not be able to control or 
change the behavior of Egypt's SCAF. They appear to be willing 
to pay any price to avoid bowing to the choices of the voters. 
But the United States can and should decline to use its 
taxpayers' funds to support such leaders. The United States 
should withhold assistance until the situation in Egypt 
clarifies, withhold at a minimum military assistance, while 
articulating a desire to build a new partnership with Egypt 
once it's on the road to becoming truly democratic, to 
respecting the rights of all its citizens, and to playing a 
responsible and peaceful regional role. Thank you very much.
    [The prepared statement of Ms. Dunne follows:]

    
    
    
    
    
    
                              ----------                              

    Mr. Chabot. Thank you very much.
    Dr. Alterman, you're recognized for 5 minutes.

  STATEMENT OF JON B. ALTERMAN, PH.D., DIRECTOR, MIDDLE EAST 
    PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

    Mr. Alterman. Thank you, Mr. Chairman, Ranking Member. It's 
a great honor and a pleasure to appear again before you this 
afternoon to discuss developments in Egypt. Watching Egypt for 
the last 18 months has been a humbling experience. I've been 
constantly surprised. And although conspiracy theories abound, 
I'm convinced that everybody is completely making this up as 
they're going along and they've been doing so for some time 
now.
    Each of status quo is deeply troubling to us as Americans 
and its allies, but it seems to me it's not sustainable. Our 
strategic goal has to be to try to influence Egyptian politics 
so they become more inclusive and ultimately more resilient. 
While I'm discouraged of what's happened in Egypt in recent 
months, I'm not yet ready to despair, nor should you be.
    Events in Egypt are disturbing, in part, because hopes were 
so high in February 2011. Egypt's protests then seemed to 
promise the rise of a more pluralistic and inclusive country. 
The image of Egypt that emerged from the revolution was a 
country that embraced young and old, rich and poor, Christian 
and Muslim, religious and secular, urban and rural.
    Through the Mubarak years, where I lived off and on in 
Egypt, there was often a sort of dour xenophobia that lurked 
under the surface. It seemed to me to reflect a certain 
insecurity and lack of self confidence among Egyptians, a 
manifestation of their awareness that they were once a world 
leading civilization, more recently that led the Third World, 
but they have fallen far behind former peers such as South 
Korea and ceded influence in the Arab world to the wealthier 
countries in the Gulf. All of that evaporated with the advent 
of the protests that brought down Hosni Mubarak. The world's 
eyes were on Egypt for the first time in a half century. 
Ordinary Egyptians were lionized and Egypt once again seemed to 
be in the vanguard of a movement that led hundreds of millions 
of people.
    With the military's reassertion of power, that hope has 
evaporated. The question of what U.S. policy should be in the 
midst of all this is both important and subtle. Long before the 
fall of Hosni Mubarak, there were pathologies in the U.S.-
Egyptian relationship that needed addressing, but weren't being 
addressed. We have to address those pathologies and define a 
relationship going forward that serves both our interests and 
our values.
    As I've told this committee before and as I've written 
other places, I've long thought it would be helpful to right 
size our aid relationship with Egypt. The steady provision of 
$1.3 billion a year in annual military assistance over more 
than 30 years has led to an environment in which each side 
feels deeply taken for granted. I can't tell you what the level 
of U.S. assistance to Egypt should be, nor is it my role to. 
Instead, the U.S. Government needs to sit down with the 
Egyptians, have a serious discussion about what we need, about 
what they need, and what each is willing to do for the other. 
The relationship has lost the intimacy of the 1970s and the 
eight figures should reflect that. In my judgment, reshaping 
the aid package will actually improve our relationship with 
Egypt in the longer term.
    I don't think--I do not think it's advisable to condition 
U.S. aid on political milestones in Egypt for two reasons. 
First, conditionality works best when it's quantitative, 
triggered by discrete and concrete metrics. Qualitative 
conditionality tends to invite endless debate and 
argumentation, not compliance.
    Additionally, conditioning the aid on political outcomes 
creates a powerful impulse on the part of the target state to 
demonstrate resistance and bravado and it's often 
counterproductive. We also have to be careful to take the long 
view. We're only in the middle of what will be a long and drawn 
out process of political change in Egypt. The Muslim 
Brotherhood and young revolutionaries aren't going to go away 
and the military is going to have to work hard in the coming 
months to preserve its legitimacy. Here, I think, we need to 
think about two relationships which I am sure members of this 
committee know better than I do, the U.S. relationship with 
Turkey, the U.S. relationship with Pakistan. We've had an 
uninterrupted relationship with Turkey and they have gone 
through military coups and had a more democratic evolution. We 
cut our military relationship with Pakistan in the 1990s. There 
are people who talk about the lost generation in the Pakistani 
military. It did nothing to heal the civil military tensions in 
Pakistan.
    Egypt has a growing economic problem and I think that will 
likely guide the leadership toward political compromise and 
more inclusive politics because if there's political turmoil, 
they simply won't be able to access international capital. They 
won't be able to get IMF loans and a whole range of things, I 
think, will be much more difficult and the Egyptian leadership 
needs it to be to have success on any terms.
    For Israelis who looked at events in Egypt with great 
alarm, I think the army's actions must come as a great relief. 
The Egyptian military has sophisticated understandings with the 
Israeli counterparts and the Egyptian military now remains in 
control. Overall, I think, Egypt's political evolution and that 
of the broader Arab world hasn't stopped. And in my judgment, 
this is another sign that Israel needs to build out its 
relations with Arab republics. There's already a sort of 
grudging acceptance of Israel and I think this is a sign the 
future is coming and Israel needs to reach broader.
    For the United States, this isn't where we thought we'd 
find ourselves 18 months ago. Our allies in the Egyptian 
military promised something different and we expected something 
different. Yet, it's important to remember that we're only in 
the middle of what will surely be a long transition to an 
unknown new status quo. We should hold fast to our interests 
and to our values in Egypt and in the long run, I'm confident 
that change is coming and the U.S. can play a constructive role 
influencing it in a positive direction.
    Going forward, one idea should guide us. We should aim to 
enlarge our partnerships in Egypt, not limit them, and build on 
that fertile ground that encompasses a shared interest between 
our two countries. Thank you.
    [The prepared statement of Mr. Alterman follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Chabot. Thank you very much and members now will have 5 
minutes to ask questions of the panel and I'll begin with 
myself.
    One element of both the NGO raids and Egypt's declining IMF 
financing which has gotten considerable attention has been the 
central role of Egypt's Minister of International Cooperation, 
Fayza Abul Naga. In an editorial, the Washington Post recently 
noted that--and this is kind of a long quote:

        ``The campaign against the International Republican 
        Institute, National Democratic Institute, and Freedom 
        House, along with a half dozen Egyptian and European 
        groups, is being led by the Minister of International 
        Cooperation, Fayza Abul Naga, a civilian hold over from 
        the Mubarak regime. Abul Naga, an ambitious demagogue 
        is pursuing a well-worn path in Egyptian politics 
        whipping up national cinema against the United States 
        as a way of attacking liberal opponents at home.''

    Referring to the U.S. funding of NGOs like IRI and NDI, she 
has reported to have said,

        ``Evidence shows the existence of a clear and 
        determined wish to abort any chance for Egypt to rise 
        as a modern and democratic state with a strong economy 
        since that will pose the biggest threat to American and 
        Israeli interests, not only in Egypt, but in the whole 
        region.''

That's her quote.
    It is also reported that financing from the IMF and World 
Bank were declined because according to Ms. Abul Naga, the 
terms of the loan were incompatible with the national interest, 
again, her words. She is reported to have added that ``the 
government would not accept conditions dictating by the World 
Bank or the International Monetary Fund.''
    It's my belief that--let's face it, the chief agent 
provocateur, since the revolution, this person has shown very 
clearly that she cannot be trusted as the custodian of American 
taxpayer dollars or even as an advocate for Egypt's own self 
interest. Do you believe Ms. Abul Naga's--that she'll continue 
to have a place in the forthcoming additional government? And 
if so, how should the United States react? And I would leave 
that up to anyone.
    Mr. Schenker?
    Mr. Schenker. Ms. Abul Naga has remarkable staying power. 
She is, for lack of a better term, Fahlul. She survived the 
Mubarak administration in fine shape and has the ears of the 
SCAF very clearly. Her star has risen and she's doing very 
well. I would say certainly that she, in my eyes, very clearly 
she was responsible for the NGO crisis. I think a lot of people 
see it as this was something that was engineered by her. I 
think she has been subsequently PNGed by the U.S. Government 
which I think was warranted.
    We've had a long history of problems with Ms. Abul Naga. If 
you go back and look back at these Wikileaks documents, you'll 
see a stack about this thick of complaints from the U.S. 
Embassy about how Ms. Abul Naga is undermining our efforts to 
improve the aid process or to really implement what we think 
was necessary for Egyptian development.
    Ms. Abul Naga has also had a very interesting response to 
the accepting of foreign funding, the IMF money. She has 
actually taken a leading role so far on this Japan issue where 
the Muslim Brotherhood and the Salifists say that they can't 
accept the money from Japan, some $450 million for the Metro 
system because it's interest. Ms. Abul Naga, we will call her 
Sheikha Abul Naga for her religious credentials, has come 
forward and issued an edict saying that no, no, it's not 
interest and we can take this because the Government of Japan 
is not a money-making endeavor. So it's a very odd role she's 
had, but it's persistent.
    Mr. Chabot. Does anybody else want to add anything? Yes, 
Dr. Alterman and Dr. Dunne.
    Mr. Alterman. I think she's not in as secure a position as 
she appears from Washington, partly because of her history. She 
was a close, personal friend of Suzanne Mubarak. A lot of her 
friends have been discredited. I think she is desperate in many 
ways. She has been trying to control the money and her 
objection to U.S. aid was that it bypassed her. She is about 
controlling the money and controlling all the international 
money that goes to Egypt.
    I think she sees Egypt slipping through her fingers. I 
think she sees the role slipping through her fingers. I think 
rather than seeing her as a powerful woman who is standing up 
to the United States, she is trying to build herself up as a 
powerful person who is standing against the United States to 
shore up what is ultimately a very, very weak position both in 
the broader Egyptian public and also in the current Egyptian 
Government.
    Mr. Chabot. Thank you. Dr. Dunne?
    Ms. Dunne. Yes, you know, in addition to the role that Ms. 
Abul Naga played in the whole NGO issue and I certainly agree, 
she drove the whole thing. I hope that Egyptians see the damage 
that she did to Egypt's relations and the foreign assistance 
that Egypt could have and frankly should have received in the 
last 16 months because she was so insistent basically on 
wanting cash budget support and was sure that that would come 
if Egypt held out and so they didn't take other kinds of 
assistance, for example, an IMF loan on very soft terms and so 
forth that they should have taken.
    I hope this is recognized within Egypt, but that's not for 
certain. And she has a very strong relationship with senior 
members of the SCAF and if they continue to hold sway, then we 
can't exclude the possibility that she would appear once again 
in a prominent position in the new cabinet that will be named 
in the coming weeks. So that is something the United States 
might want to raise privately.
    Mr. Chabot. Thank you very much. My time has expired. The 
gentleman from New York is recognized for 5 minutes.
    Mr. Ackerman. Well, now that we've burnished her street 
credentials, there was a play on Broadway in which right before 
the last act the audience every night got to vote on what the 
third act was going to be, how it was going to turn out or who 
done it or whatever it was. Of course, there were a limited 
number of possibilities and presumably whatever score they 
announced, that's what they did.
    We don't really get to vote in the last act anywhere, 
specifically Egypt. There's a well-known adage that countries 
don't have friends, they have interests. What would the outcome 
of this final act of this particular part of the play be in the 
interests of the United States? Would our interests be long 
term in democracy should always prevail and the will of the 
people should be adhered to? Not analogous in any way, but back 
in the '30s, the National Socialist Party seemed to have a slam 
dunk in the election. Nobody thought what Nazis did was a good 
thing. The world didn't approve, but certainly they didn't 
steal an election.
    What was in our interests to do business with them? To not 
do business with them?
    In Egypt, if the SCAF comes up short in votes, and I guess 
it depends on who's counting, but they really came up short in 
votes, is it in the U.S. interest that an organization that 
says things about adhering to national obligations and 
treaties, et cetera, remain in power? Or if the bad guys are 
promising terrible things, I mean I guess it's more analogous 
of what happened once upon a time, not too long ago in Algeria 
where the election yielded enough results for them to change to 
a new constitution that the majority party that was coming in 
agreed that they wanted to do and have an Islamic republic 
rather than a democratic country. And the President just voided 
out the election.
    Sometimes you root for the bad guy. I remember once as a 
much younger congressman trying to explain my vote before a 
newspaper editorial board and they wanted to know why I voted 
that way. And I just looked them in the eye and said sometimes 
you have to stand up and do the wrong thing.
    What's in our interests doing what we know? We don't want 
the outcome in most elections to go through and just ignore 
them or what?
    Dr. Alterman?
    Mr. Alterman. Mr. Ackerman, I think our interest is having 
some sort of hopeful stalemate which brings in----
    Mr. Ackerman. So group prayer.
    Mr. Alterman. Group prayer. Everybody hold hands, which 
brings in a wide variety of parties who come to believe that 
they can win in the future. It seems to me that the mark of a 
democracy is not people's willingness to win, but their 
willingness to lose because they feel if they lose one round, 
they can win a future round. And I think the great danger right 
now in Egypt, the reason why people fear tremendous violence 
over the coming weeks is a sense that if you don't lock in a 
victory now, you will never live to fight another day. That's 
what happened in Algeria and more than 100,000 deaths as a 
consequence.
    I think to my way of thinking the best possible outcome is 
one where the military feels they have a stake in making it 
work. The Muslim Brotherhood feels they have a stake in making 
it work. The young revolutionaries who had so much hope of 
where this would all go, so you know, well, we don't like Morsi 
or Shafiq, but we could live to fight another day. We could 
have a better set of candidates in the future, and ultimately 
bringing all these groups to feel if they hold their nose and 
it's good enough because they will be able to compete again I 
think is the best we can hope for right now. And it's not 
certain we're going to get there.
    Mr. Ackerman. Does Egypt have a long enough tradition of 
free and fair elections to be able to base the hopes that you 
live to fight another day, but that day may be fought for by 
your great, great, great grandchildren?
    Mr. Alterman. I think they have enough tradition of good 
enough. And Egypt has been getting by on good enough for a long 
time and I think good enough is politically the best outcome we 
can hope for right now.
    Mr. Chabot. The gentleman's time has expired. The gentleman 
from Florida, Mr. Bilirakis, is recognized for 5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it 
very much. I have a couple of questions. Since the fall of 
Mubarak, we may have seen the end of authoritarian regime, but 
we have yet to see the rise of a new democratic leadership. 
Late last year, a few of my colleagues and I called for an end 
to the unconditional aid, U.S. aid to Egypt as long as the 
persecution and attacks on Coptic Christians and other 
religious minorities continue. For a brief time, we thought we 
had a victory. We thought we were successful. The House 
released its Fiscal Year 2012 funding bill and placed 
conditions on the U.S. aid.
    As we know, things continue to get worse in Egypt. There 
was a crackdown on--you mentioned the program of democracy NGOs 
and their staffs including the U.S. citizens. Before moving 
forward, I want to remind the committee that the Egyptian 
Government has yet to drop the charges on the U.S. citizens and 
I want to hear an update on that.
    But Secretary Clinton, and of course, the Obama 
administration, decided to waive the new restrictions and 
continue to provide U.S. taxpayer dollars and military aid to a 
country that disregards the basic principles of human rights 
and religious freedom. Now months later, it is clear that their 
decision to waive was not only untimely in my opinion, but 
wholly without merit.
    The trial, I understand, is scheduled to convene on July 
4th and our U.S. citizens will be tried in absentia. With all 
that said, I'd like to ask a couple of questions. How do we 
engage Egypt to ensure that human rights and religious freedom 
for Christians and all religious minorities are respected? Can 
we expect the new Egyptian Government to drop charges against 
the U.S. citizens? What's the status there?
    Also, how do we ensure that whoever comes to power in Egypt 
can protect Israel, of course, our important ally from any 
threats or attacks? And of course, to keep the peace agreement 
between Israel and Egypt?
    For the panel.
    Mr. Chabot. Whoever would like to answer.
    Mr. Bilirakis. Whoever would like to take the question.
    Mr. Chabot. Dr. Dunne?
    Ms. Dunne. Congressman, you've raised some extremely 
important issues here. And I think in a way it links back to 
Congressman Ackerman's question because you know what we really 
need to be in favor of in Egypt is the development of a strong 
democratic system. And this is, I think, what Dr. Alterman was 
saying in somewhat more picturesque terms, but a system in 
which people believe that there will be accountability through 
the ballot box and so forth and also that there's a--they can 
work out these issues such as how the rights of all citizens 
will be protected. And that's certainly something the United 
States has to stand up for.
    But I think it's only going to happen in a system where 
Egyptians can work out their differences in a peaceable way.
    I really worry that if we take a narrow view of this and 
say well, we'd rather see the military than the Brotherhood in 
power and therefore, you know, forget about this whole 
democracy thing, that it will lead to a situation of ongoing 
conflict and violence. We really can't turn the clock back 5 
years or something like that. Egyptian society, it isn't where 
it was. And I don't think people will accept it. So it will 
lead to a situation of ongoing conflict and a lot of that will 
be taken out against Christians and other minorities inside of 
Egypt, I'm convinced.
    Mr. Bilirakis. How do we engage? Excuse me for--what is 
your suggestion?
    Ms. Dunne. I think that we do need to continue to provide 
support to NGOs and stand up for them. Now before this 
Parliament was just dismissed, there was a draft new law on 
NGOs that would have allowed much better conditions. Maybe not 
absolutely perfect, but much better operating conditions for 
both Egyptian and foreign NGOs. And that--and although it's not 
directly related to the case against the Americans which will 
resume in court on July 4th, people felt that if a new NGO law 
was passed, that somehow it would make the case easier to 
resolve against the people who are on trial.
    Now, you know, all of that has been absolutely thrown up 
into the air, since there now won't be a Parliament for many 
months in Egypt. They won't be able to pass a new law. And so 
the current conditions will continue to go forward. And that's 
going to make it very difficult to have the sort of engagement 
that we really would like to have with the Egyptian Government 
on these issues.
    Mr. Chabot. The gentleman's time has expired.
    Mr. Bilirakis. That's fine. Can someone comment on the 
peace treaty with Israel?
    Mr. Chabot. If somebody would like to briefly comment.
    Mr. Bilirakis. Thank you.
    Mr. Ackerman. That's a brief subject. [Laughter.]
    Mr. Schenker. It's quite alarming, a lot of what we're 
hearing, but we do have certainly the military being the 
leading supporter of the peace treaty in Egypt and we also have 
statements from senior officials in the Muslim Brotherhood 
saying that while they find that certain provisions of Camp 
David to be abhorrent or inappropriate, that they're not 
calling for war. I think that you're going to have a very 
deteriorating bilateral relationship between Egypt and Israel. 
I think you can see very clearly a trajectory where the Israeli 
Ambassador and the highest level of representation of the two 
countries no longer exists, that there's no longer an 
ambassador, et cetera. But whether the bilateral relations are 
broken or peace treaty, I don't think that's on the table any 
time in the immediate future. And that will be the case as long 
as the military has a say and the constitution that the 
military is busy writing, they have a provision that they will 
have to be consulted by the President in terms of declaration 
of war. We'll see if that sticks.
    I'm more concerned about how these states are going to get 
along as security deteriorates in the Sinai. I think that there 
are--just the number of land mines that are out there with 
these al-Qaeda affiliates or wannabes that are taking hold, 
with the lawlessness, with--even the MFO, the Multinational 
Force Observers, are being limited in their operations now, 
that are meant to oversee and ensure the ongoing commitments of 
the peace treaty. And I think this is very problematic. The 
question is in terms of the next crisis whether there will be 
somebody for the Israelis to call and get a response.
    It came very close, perilously close, to having six Israeli 
diplomats lynched last year after one of these incidents. In 
the future, if there's this type of populist politics, you may 
not have a mechanism that works efficiently to prevent a 
tragedy.
    Mr. Chabot. The gentleman's time has expired. The gentleman 
from Connecticut, Mr. Murphy, is recognized for 5 minutes.
    Mr. Murphy. Thank you, Mr. Chairman. I wanted to ask Mr. 
Ackerman's question maybe a different way. He asked about what 
our interests were and Dr. Alderman gave, I think, a very good 
summary what the best case scenario might be. So let me ask it 
maybe the opposite way.
    You know, sometimes you engage in policies designed to 
encourage something you want and other times you engage in 
policies to discourage something you don't want. And so the 
opposite or the flip side of Mr. Ackerman's question is what's 
the worst case scenario for the United States of all of the 
various things that could play out between the existing parties 
or parties to come, the Salifists, for instance, what do we 
want to guard against happening here?
    Mr. Schenker. I think the worst case scenarios are 
imaginable here, an Islamist President, an Islamist Parliament, 
that is authoritarian in nature in its own right. This is 
democracy unfulfilled. You have the process. You have the 
institutions and yet it goes the wrong direction. I think if 
you look even worse than that, you're going to have the 
Brotherhood sitting in a Parliament eventually, depending on 
what happens in the best case scenario. A freely elected 
Parliament looks somewhat like it looks right now and you're 
going to have the Salifists on the far right, basically 
pressing the Brotherhood to take even more militant positions 
and they're going to give in and go to this more populist, more 
Islamist route. That's not going to be good for minorities in 
Egypt. It's not going to be good for U.S.-Egypt relations.
    You've got basically two Turkey models competing right now 
in Egypt. One is the old Turkey model where the military 
maintains control and shores the national security issues. And 
you've got the new Turkey model where the Islamists may, in 
fact, be looking to have civilian control, are looking for 
civilian control and bringing the military to heel and then do 
whatever they want with the civilian system. And I can see many 
bad things emanating from that.
    Ms. Dunne. Congressman, if I might briefly give another 
worst case scenario, it is that the military that was once in 
power behind the scenes is in power explicitly and you know is 
tampering with the democratic process and violating human 
rights, putting civilians to military trials, cracking down on 
civil society, meanwhile, enjoying a great deal of American 
assistance and therefore, the United States is incurring the 
hatred of many, many people in Egypt because the United States 
is seen as supporting all of that. And that is the current 
situation. It's the current worst case scenario.
    Mr. Murphy. So we've got one is the Islamist President. One 
is the status quo.
    Mr. Alterman. The third is if you combine these two 
scenarios that you have a military crackdown which creates a 
violent and increasingly radicalized opposition, increasing 
amounts of violence, tens or hundreds of thousands of deaths, 
populist politics that ultimately push the military from power 
and what you have is not some sort of restrained, deal-seeking 
Islamist political party that's trying to work within an 
Egyptian context, but instead a radicalized, anti-American, 
anti-Israeli, populist force which is as totalitarian as 
anything the world has seen and which not only affects Egypt 
and its immediate neighborhood, but also begins to spread some 
of those ideas and ideology more broadly through the Middle 
East affecting a whole range of American interest. I don't 
think it's likely, but I think if you're talking about that's 
the worst case, I think you combine those two, you get that, 
and then you project it out to the rest of the Middle East and 
that's what you could be looking at.
    Mr. Murphy. So does that mean as scared as we may be of 
what the Muslim Brotherhood brings to the presidency or to the 
Parliament, the best U.S. policy in the short term is to get 
the SCAF out of the way or get the military out of the way as 
quickly as possible?
    Mr. Alterman. My argument would be--it's unclear the extent 
to which they've been willing or could be made willing to work 
with each other. There are constant rumors of deals involving 
the SCAF and the Muslim Brotherhood. I think our best case 
scenario, my judgment, is finding ways for them and others to 
work out some sort of comity to go forward and preserving 
struggles for the future.
    Mr. Chabot. The gentleman's time has expired. We'll go to a 
second round now and I'll recognize myself for 5 minutes.
    I know all of you have mentioned some of the economic 
implications and the problems that exist right now and in fact, 
I guess the bottom line is Egypt stands on the threshold of a 
potential economic disaster. With cash reserves dwindling, 
budget deficits skyrocketing, and little sign of the political 
will to execute requisite economic reforms, a true crisis may 
be just around the corner.
    What measures does Egypt need to take to ensure its near-
term and long-term economic viability? And how can the U.S. 
best encourage Cairo to institute these measures? And what 
happens if the Egyptian economy does collapse? I'll perhaps go 
down the line unless somebody wants to take it.
    Doctor, do you want to take it?
    Ms. Dunne. The Egyptian Government, who is ever in power, 
needs to be careful about their budgetary situation and they 
have started to do this. They have started to roll back fuel 
subsidies. Fuel subsidies, in particular, are the thing that 
have been devouring the Egyptian budget and so forth. But to be 
honest with you, I mean beyond that the economic conditions in 
the political transition are closely linked. The reason that 
there's no IMF deal right now is because of the political chaos 
in Egypt and the fact that this transition keeps being 
interrupted and prolonged and changed and so forth.
    Whether it is international financial institutions or other 
donors, they want to give money to a government that they 
believe is going to be there long enough to live out the terms 
of the agreements and also that the money is going to be used 
wisely and not going to be just gobbled up immediately. This is 
really a problem. They need to get the political transition 
moving forward as it should have been this week moving forward 
and then they will be able to get the economy back on its feet.
    The security situation is also extremely important. They're 
not going to get tourists returning until they get the security 
situation in Sinai and elsewhere under control. And that's 
going to require police reform which is something that--reform 
of the police and internal security and getting them back 
operating normally, that still hasn't happened 16 months into 
this transition.
    Mr. Murphy. Thank you. Mr. Schenker.
    Mr. Schenker. We're facing, I think, potentially, and I 
think the SCAF pointed this out about a year ago that if things 
don't improve that you will have a second revolution being a 
revolution of the hungry, that the traditional World Bank 
numbers say that 40 percent of the people in Egypt live on less 
than $2 a day. I think a year after the revolution, it's 
probably closer to 50 percent of the people in Egypt.
    If you talk to people and there's polling immediately after 
the revolution, people said that 80 percent of the people 
expected that their standard of living would increase after the 
revolution. I think just the opposite has happened. Meanwhile, 
you have a heavy pressure notwithstanding this great step that 
was taken toward the fuel subsidies. I think there's going to 
be a heavy pressure to keep and even increase some subsidies 
and government salaries and a pressure to hire more people with 
the high unemployment rates. The Government of Egypt needs some 
7 percent growth per year to create the 600,000 or 700,000 jobs 
a year that are just needed to remain at an even unemployment. 
And to get the kind of growth, you need security. You need 
stability. You need a political process and confidence in the 
Government of Egypt and that's not going to happen any time 
soon.
    Mr. Chabot. Before I run out of time, let me just get one 
more question in. And Dr. Alterman, if you'd like to take this 
one. Analysts disagree to some degree over how the Muslim 
Brotherhood will ultimately react depending on how much it's in 
power and how this all plays out, but whether it will moderate 
its traditionally religiously inspired hard line traditions or 
not. What do you expect to occur? What is reasonable to expect? 
I know we're speculating to a considerable degree here. And how 
do Islamists or anybody who is in power there expect to revive 
the heavily European dependent tourist industry, for example, 
if they're legislating restrictions on women's dress or ban 
alcohol or other things which may well be on the horizon?
    Mr. Alterman. First, I think nobody knows and they don't 
know. I mean this is a movement which has been going through a 
tremendous change as it has come into the public, as it's 
engaging in politics. So I think there's a part about the 
future of the Muslim Brotherhood, its future unity, the extent 
to which hard liners and old line guys versus the young 
generation versus more political people versus more religious 
people, how that whole battle turns out, I think, remains 
uncertain.
    My guess is if they want to legislate different regulations 
for tourists, that's very easy to do. There are a number of 
countries in the Gulf, for example, where tourists can drink, 
tourists can gamble, nationals cannot, and I could certainly 
see that happening in Egypt.
    But I think that part of this also depends on what the 
political evolution over the coming year or so is. I mean if 
the Brotherhood is competing for votes and is looking for the 
center of Egyptian politics, there are a lot of people in the 
center of Egyptian politics, Christians, secular Egyptians, 
even religious Egyptians who are skeptical about the 
Brotherhood, who say you have to convince me. And I think there 
are ways that that can turn into moderation of some of the more 
extreme forms. If you radicalize the Brotherhood, the radicals 
will come to the fore.
    I was just in Moscow yesterday and I was talking to a Turk 
who said, you know, the Brotherhood is more democratic in 
Turkey, but we were moderating them for 20 years. And I think 
there are some people who have had the experience of Islamist 
politics in Turkey who will tell you that there's nothing wrong 
with Islamists in government, just don't give them everything 
up front. Make them compete for the middle. Persuade people 
that their intentions are good and then you can live with them.
    Mr. Chabot. Thank you very much. My time has expired. The 
gentleman from New York, Ranking Member Mr. Ackerman is 
recognized for 5 minutes.
    Mr. Ackerman. So who is going to tell the Egyptians we 
figured out what they should do? [Laughter.]
    We're kind of playing at the margins right here of all 
sorts of theoreticals and in some scenarios we may be able to 
actually have a little bit of influence and in some absolutely 
none and in others whatever we do to influence, will have the 
complete opposite effect.
    I think I heard that one of the better outcomes would be if 
everybody had some kind of a compromise. I think we've got a 
pretty clear indication that the SCAF is able to compromise. 
They're very pragmatic. They know what their needs are. They 
know what their creature comforts are. They seem to know how 
much that would cost and that there's a price tag on it and 
they know where to send the bill.
    Can the street or better yet, the brotherhood, or can the 
people to their right, Salifists, and whoever else that might 
be out there, can they compromise? Can the ideologues 
compromise? The generals, it appears to me, are not ideologues 
at all, ever. And anybody, I think, who has ever met with them, 
going there or coming here, they have needs and wants and what 
they're willing to do. It's not pie in the sky. It's not 
religion. It's all practical.
    Can you compromise--can the other side compromise?
    Mr. Alterman. Sir, I think in many ways, the Brotherhood 
since 1928 has been finding ways to compromise on and off. They 
have been playing a long game. They have agreed not to be an 
official political party for decades until they just became a 
political party for this election. They have agreed to play a 
long game to try to win social support and Islamize the 
society, rather than control the government.
    I think in point of fact, the Brotherhood has some people 
who would not feel uncomfortable making the kinds of deals that 
you make in Congress. There are ideologues to be sure, but I 
think there are a lot of people who are political pragmatists, 
who are very good at getting out the vote, who are very good at 
doing things for the constituents and who would be at home in 
any political body anywhere in the world. And I think it's 
people like that who are the promise for making a deal both 
with the military and with the U.S. Government and with the 
Israelis.
    Mr. Ackerman. These are the people who initially pledged 
that they weren't going to contest for the presidency and they 
compromised by going back on what they said they weren't going 
to do.
    Mr. Alterman. One explanation for that is that they 
believed that the army was going to shut them out and the only 
way to guarantee that they had a role was to compete for the 
presidency. We don't have insight into their decision making, 
but that's an explanation that's been offered.
    Mr. Ackerman. I don't mind betting $10 million with 
somebody because I don't have it. I'll get into the ring with 
Jersey Joe Walcott or Killer Kowalski or something because I 
know that's not going to happen. And if I think I could beat 
them, then it happens. I'm older than you. [Laughter.]
    That was when wrestling was real. [Laughter.]
    It's a matter of they're not going to do it. They're not 
going to put up a candidate for President until they think they 
can win the presidency. That's the practicality of it. But I 
think it's also an indication not that they're practical, but 
it's an indication of it's a way of getting to what they want. 
Do they want an Islamist state? There's a question. I know the 
military answer. It's a hell no. Where are the Salifists on 
this? Where is the Brotherhood? Where is the street? Where are 
all the people who didn't vote? We don't know these big 
answers. It makes it pretty dangerous.
    Mr. Chabot. The gentleman's time has expired. The gentleman 
from the Commonwealth of Virginia, Mr. Connolly, is recognized 
if he would like to ask questions.
    Mr. Connolly. I thank the chair. Before I do, I just want 
the record to show emphatically, in large print, Mr. Ackerman 
admitted he's much older than I am. [Laughter.]
    Mr. Ackerman. I'm a politician. Just disregard anything I 
say. [Laughter.]
    Mr. Connolly. He's also retiring, so he----
    Mr. Ackerman. It costs him nothing.
    Mr. Chabot. He's open to say pretty much anything he wants.
    Mr. Connolly. Let me ask our panelists, and welcome to all 
of you and forgive me for being late. I'm in a markup at the 
Oversight and Government Reform Committee that is bound and 
determined, God knoweth why, to issue a contempt citation 
against an honorable man. That's a different subject.
    I am concerned about the status of the NGO personnel. I 
know our colleague from Florida talked about the Americans, but 
what about the Egyptians? I met them when I was last there a 
few months ago and these are terribly dedicated patriots trying 
to effectuate change in civil society and they are being put in 
the dock, in the cage, particularly for the women among them. 
It's very humiliating and very hard to explain back home to 
their families and so forth.
    I want the United States to stand with those brave 
Egyptians and we don't want the word to spread that somehow we 
only care about your nationality if you're an American. We 
actually, I hope, are sort of blind with that respect. We care 
about all of the people who work at these NGOs who are trying 
to make theirs a better society.
    So I'd be interested in your take on their status and what 
more the United States can and should be doing or not to try to 
assist it.
    Dr. Dunne, do you want to begin--whoever.
    Mr. Schenker. Congressman, fortunately, the NGOs, IRI, and 
NDI, et cetera, are actually continuing to pay the Egyptian 
nationals who remain in Egypt and are on trial. They're also 
paying their legal fees. This makes sense, obviously. There's 
also one American who has remained in Egypt to fight the 
charges on his own volition.
    I think that this is going to go on for some time and it's 
helpful that the United States Government or these NGOs have 
stepped forward to support this personnel, but this is going to 
be an issue that is ongoing for some time and there's--we can 
make statements and if the judicial process works and Egypt has 
had a history of judicial independence for some time, although 
that's come into question of late, this ridiculous political 
trial should be thrown out in which case these NGO workers may 
have difficulty finding work going forward, although it may 
also be a badge of honor to have done this for them.
    Ms. Dunne. Congressman, the Egyptian employees and the 
Americans are all still on trial. The next hearing is to be 
July 4th and there was to be a new draft NGO law that might 
have made it easier for NGOs, both foreign and Egyptian, to 
operate. It was in the Parliament. It was in the committee and 
would have been voted on, but now the Parliament, of course, is 
dissolved. And there probably isn't going to be another 
Parliament for months. So this unfortunate situation is going 
to continue.
    I think the United States has to be discussing with the 
Egyptian Government, with the new President and the new 
government that will be appointed, how civil society is going 
to be treated in the future and make it clear that this is 
going to determine not only to some extent how the U.S.-
Egyptian relationship is going to go, but also Egypt's 
relations with Europe and so forth. This whole struggle has 
caused a lot of programs to be suspended, even though as Mr. 
Schenker noted, maybe some of the employees are still being 
paid, but all of the activities that those NGOs were supposed 
to carry out are all just suspended. Nothing is happening. No 
new money is moving.
    Meanwhile, Egypt is going to have lots of elections and so 
forth and things where those NGOs could have been making an 
important contribution. And it's a real shame. We were 
discussing a little bit earlier, Minister of International 
Cooperation, Fayza Abul Naga, and whether she would be 
appearing in the new government or not. So this is clearly one 
of the issues that the United States needs to take up behind 
the scenes with the Egyptian Government.
    Mr. Connolly. Thank you. Mr. Alterman.
    Mr. Alterman. Congressman, if I could just say, I was an 
election observer in the second round of Egyptian elections in 
December, and I just want to echo what you said about not only 
the patriotism, but the dedication and the true qualities of 
the Egyptian NGO workers I came across. It was inspiring, not 
because they were serving American interests, but because of 
how passionately they believed they were serving Egyptian 
interests. It's a credit to us and we should stand by them.
    Mr. Connolly. I thank you. My time is up. Thank you, Mr. 
Chairman.
    Mr. Chabot. Thank you. The gentleman's time has expired and 
I want to say that I agree with the comments the gentleman made 
relative to the NGO folks. And the only thing I disagree with 
was his non-germane comment relative to the attorney general 
and the case that's going on in another committee which we 
shall not debate in this committee. So in any event, that 
concludes the business that we have before this committee. And 
I want to thank the witnesses this afternoon for testifying. I 
think this was very helpful to the members. We will convey this 
to our colleagues who were not able to be here today. 
Procedurally, the members have 5 days to revise and extend any 
statements or submit any additional questions. And if there's 
no further business to come before the committee, we're 
adjourned. Thank you.
    [Whereupon, at 3:32 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

                              ----------                              


     Material Submitted for the Hearing RecordNotice deg.





               \\ts\



                                 
