DOMESTIC POLITICS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000801440001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: August 11, 2010
• Sequence Number: 1
• Publication Date: November 23, 1983
• Content Type: REPORT

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EGYPT
Domestic Politics
We see no immediate danger to Mubarak's continued rule
unless there is an unexpected deterioration in domestic economic
conditions. Although not particularly popular, Mubarak has
slowly gained respect.
-- The refurbishing of Egypt's nonaligned credentials and
improved relations with other Arab states have been well-
received by the Egyptian public.
-- The legal opposition is poorly organized, lacks effective
leadership, and has found no single issue to rally popular
support. Also, radical elements on the left and the
religious right have been contained by Egypt's security
forces.
Mubarak, however, faces a difficult third year in office.
Next year's parliamentary elections inevitably will focus public
attention on his policies and the opposition will seek to exploit
his vulnerabilities.
-- Opposition groups will criticize Mubarak's political,
economic, and strategic ties with the United States and
his adherence to Camp David.
-- They will try to underscore government mismanagement of
the economy, and will complain about corruption and the
lack of political freedoms.
-- The recent legalization of the New Wafd Party (a revived
version of the party that dominated Egyptian politics
before the 1952 revolution) presents an additional
political challenge to the government.
Mubarak's ruling party will not lose its parliamentary
majority, but opposition rhetoric could erode support for the
regime. Difficult economic conditions and foreign debt problems
could become potent issues during the campaign.
NESA M# 83-1032SCX
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 Sanitized Copy Approved for Release 2011/08/12 : CIA-RDP85T00287R000801440001-6 25X1
The Military
Egypt's military was long the largest and probably the most
effective force in the Arab world, but its combat capabilities
have eroded in recent years.
-- Since the Soviet arms cutoff in 1975, there has been a 25X1
steady decline in Egypt's ability to defend itself or
provide military assistance to other Arab states
The US provided $4.275 billion in Foreign Military Sales
from 1979 through FY83--with $3.65 billion in 30-year credits and
$625 million in grants.
At least five years and considerably more equipment than
is in current and pending US aid packages would be
required to produce significant force improvements,
however.
The US military assistance program as it now stands will
only help stem the decline in Egyptian weapons
inventories, and will not enable Egypt to match Israel's
quantitative and qualitative advances.
Although Egyptians accept this fact, they are rankled by
US preferential treatment toward Israel in the sale of
advanced weaponry.
Egypt is attempting to speed up military improvements and to
reduce its dependence on the US for arms by purchasing weapons
from Western European countries--France, Italy, and Spain--and
Eastern Europe and China.
Economic Situation
The period of rapid economic growth and improved foreign
payments situation of the past few years is coming to an end, and
the troubled state of the economy constitutes the greatest
domestic challenge to the government.
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-- Egypt is moving toward a foreign debt crisis. It has had
problems making FMS interest payments to the US
We believe that Egypt's financial situation will
deteriorate further in the months ahead. 25X1
-- The need for economic reforms--such as reducing consumer
subsides, stopping wasteful investment projects, and
boosting low domestic energy prices--to reduce the budget
deficit and limit import growth conflicts with popular
expectations of improved living standards.
Egypt hopes to avoid the adverse domestic political
repercussions that would accompany economic austerity measures,
although the deteriorating foreign payments position may make
this impossible.
-- The government fears a repeat of the January 1977 riots
over increased bread prices and also wants to avoid the
appearance of having economic and welfare policies
dictated by the IMF and foreign donors.
-- Talks with the IMF concerning a standby agreement were
recently suspended after Egypt decided to postpone a rise
in the price of bread.
Egypt is looking primarily to the US for help in avoiding an
economic crisis. Specifically, it seeks:
-- Relief in repayment of past military debt.
-- More lenient terms for future military assistance, with a
greater proportion of military aid as grants rather than
loans. (FMS funding for FY84 is $1.365 billion, including
$465 billion as grant aid.)
-- Conversion of US economic aid to a cash transfer basis,
such as that received by Israel.
-- A repeat of. last year's subsidized USDA wheat flour sale,
which was in addition to the $1 billion economic aid
program.
Egypt has key economic links to the US that go beyond our
large economic and military aid programs.
-- US wheat sales provide one out of every three loaves of
bread consumed in Egypt.
-- One US firm--AMOCO--discovered and developed oil fields
that provide 75 percent of Egyptian oil production--
700,000 b/d in the year ending June 30.
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Political and Strategic Relations with the US
Israel's invasion of Lebanon last Year generated internal
and regional pressure on Mubarak to put some distance between
Cairo and the United States.
-- Mubarak is aware of the importance to Egypt of US economic
and military assistance, however, and took care to avoid a 25X1
serious break in relations.
-- Cairo's stance toward the Reagan initiative is still
positive, although Egypt believes that the US has not
pushed the initiative strongly enough and that the US
presidential election campaign will further delay efforts
to reach a Middle East peace settlement.
Relations with Israel and the Peace Process
The Isreali invasion of Lebanon also caused Cairo to freeze
normalization of relations with Tel Aviv. A "cold peace" exists
between the two countries. Cairo, however, remains committed to
the Camp David peace treaty and to a negotiated settlement as the
best chance for the Palestinians to achieve self-determination.
-- Cairo's conditions for returning the Egyptian ambassador
to Tel Aviv have hardened since earlier this year.
-- Cairo also has said it will not resume the autonomy talks
without broader Arab participation. 25X1
Relations with the USSR and the Nonaligned Movement
Relations with Moscow have thawed somewhat since Sadat
expelled the Soviet ambassador and other personnel in September
1981. Some technical cooperation and purchases of minor military
spare parts have taken place, but Mubarak remains wary of the
Soviets.
-- Egypt is concerned over possible US reactions to improved
ties with the USSR. Recently Foreign Minister Ali told US
officials that Cairo had turned down a Soviet offer of
low-cost helicopters.
-- Mubarak recently stated that he will not resume
ambasadorial relations with Moscow until the Soviets stop
interfering in Egypt's domestic affairs.
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Cairo is trying to reassert its influence within the
Nonaligned Movement (NAM), in part to weaken charges that Egypt
is overly dependent on the US.
-- Cairo is attempting to boost moderate influence within the
NAM and to deny a leadership role to such radical states
as Cuba, which it sees as a Soviet surrogate.
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1 - DDO
2,3,4,5 - CPAS/IMD/CB
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6 - C/PES
7 - D/NESA
8,9 - NESA/PPS
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10 - NESA/AI
11,12,13 - NESA/AI/E
DDI/NESA/AI/E-S
(23 Nov 83)
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