The Relationship between Power and Wealth in International Relations: A Case Study of USAID to Egypt

THE RELATIONSHIP BETWEEN POLITICAL POWER AND ECONOMIC WEALTH IN

INTERNATIONAL RELATIONS:

A CASE STUDY OF US AID TO EGYPT

Ahmed Mohamed Mahmoud Aref

Master of Arts

(International Development)

Graduate School of International Studies

Korea University

July 2010

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Abstract

In order to understand the international relations’ issues well, first we need to

clarify the relationship between political power and economic wealth. By

analyzing almost of the events in international relations, it will be clear that the

relationship between the both variables is rooted behind these events.

This thesis tries first to take a look on all the dimensions that can be included in

this intersected relationship between political power and economic wealth in

international relations in general. Then the focus and the scope of the study are

narrowed down by picking up a particular dimension within this relationship.

This dimension is how can countries use their economic wealth to support their

political power and achieve political goals? And how can countries use their

political power to gain more economic wealth? On the light of these questions; the

thesis chose a case study of the US aid to Egypt to be applied to prove this

particular relationship. This case study is regarded to be very clear evidence on

using economic means to achieve political goals, and using political power to gain

more wealth.

Acknowledgments

I would like to dedicate my sincerely gratitude to my supervisor, Professor.

Moonsung Kang who provided professional guidance in details. Without his

assistance and patience I wouldn’t have been able to find the right path

completing my thesis.

And I am deeply gratitude to my advisory, Professor. Jin-sang Lee who taught me

about foreign aid, and through his class; the thesis topic came to my mind. He

gave me sincere advices not just in thesis but also in life.

Also I would like to express my thanks and gratefulness to Professor. Mi-Kyeng

Jeong who deserves a very warm greeting for her efforts to put me on the right

way of doing thesis from the smallest thing to every thing and encouraged me all

the time.

I wish to thank Korea International Cooperation Agency (KOICA) and Korea

University for the wonderful opportunity they gave me to study the Master in

Korea.

A sincere greeting and appreciation is to Mr. Tamer Auf, the chief of the Political

communication bureau of Egyptian Prime Minister. For me, he is not only my

boss, but also he is an elder and kind brother who supports me in everything in my

life. Working with him is a medal of honor and pleasure.

A deeply thankfulness is to my family who have never stopped supporting me. It

is to them I dedicate my humble work.

Table of contents

Abstract ……………………………….………………….……...……III

Acknowledgments …………...………………………………….……IV

CHAPTER 1: INTRODUCTION ……………………………...…….…...1

1.1. Background ………………..……………………………………………1

1.2. Research Questions ………………………………………………….…..2

1.3. Objectives …………………..………………………………………...…2

1.4. Definitions ……………………………………………………..……..…3

1.5. Research methodology …………………………………………………..7

1.6. Scope and limitations ……………………………………………………8

1.7. Overview on previous studies …………………………………….……..9

CHAPTER 2: THE RELATIONSHIP BETWEEN POLITICAL POWER

AND ECONOMIC WEALTH IN INTERNATIONAL RELATIONS …….…12

2.1. Significant Changes in Economic Relations due to the International

Political Negotiations ………………………………...………….……..13

2.2. International Conflict/Cooperation: A Result of Seeking more

Wealth…………………………………………………………………..14

2.3. Political Considerations and Economic Decisions ……………….……16

2.4. Nation’s Economy and its International Political Power ………………17

2.5. State Sovereignty and FDI (Foreign Direct Investment) ……………....17

2.6. Powerful states: A Control over International Economic

Institutions……………………………………………………………...21

2.7. Effect of Domestic Relationship between Power and Wealth on

State’s Foreign Policy …………………………………….….…...……22

2.8. Strong Economic Relations and Harmonizing Political Attitudes ……..23

2.9. Using Wealth to Gain More Power and Using Power to Gain

More Wealth ……………………………………………………….….24

CHAPTER 3: THE CASE STUDY OF US AID TO EGYPT ……..….26

3.1. A Historical Background of the Aid in US-Egyptian Relations ….…...26

3.1.1. Early Years of US-Egyptian relations ……….…………....26

3.1.2. The 1952 Revolution ……………………….……………..27

3.1.3. Abdel Nasser years ………………………….…………….27

3.1.4. The Sadat Administration ……………………….…...……29

3.1.5. Camp David Accords ……………………...…….………..30

3.2. US Aid to Egypt …………………………...………………….……….30

3.2.1. Preface of US aid to Egypt ………………………….……30

3.2.2. Using economic wealth to achieve political goals…….…..33

3.2.3. Using political power to gain more economic wealth …....37

CHAPTER 4: CONCLUSION ………………………………………...42

REFERENCES ………………………………………………….….….44

CHAPTER 1

INTRODUCTION

1.1. Background

Social science in general and particularly political science are characterized

by the high complexity of its phenomena and also its questions are open ended.

One of the most complex phenomena is the relationship between political power

and economic wealth in international relations. In order to have a proper

understanding of international affairs and events -in the history, now and in the

future- we need to understand the intersection between political power and

economic wealth, its dimensions and implications.

The relationship between political power and economic wealth in international

relations has a lot of dimensions like; powerful states are using their power to

control over international economic institutions, international political

negotiations can lead to significant changes in economic relations, seeking more

wealth may lead to international conflict or international cooperation, political

considerations form economic decisions, etc… And one of the dimensions on the

relationship between wealth and power and which will be the essential focus of

the thesis as the main argument is that by using economic wealth; countries can

support their political power, also with political power; countries can gain more

economic wealth.

So a hypothesis can be derived from this argument, which is if a country has

economic wealth, it can use it to support its political power. And if a country has

political power, it can use it to gain more economic wealth. The thesis will deal

with the case study of US aid to Egypt as evidence to prove this argument.

1.2. Research Questions

The raised questions are:

- What is the relationship between economic wealth and political power in

international relations?

- As a case study, within this relationship between wealth and power in

international relations; Why USA gives aid to Egypt?

Ü How can countries use their economic wealth to achieve political goals?

Ü How can countries use their political power to gain more economic

wealth?

1.3. Objectives

The Objective of this thesis is to prove the research hypothesis (by using

economic wealth; countries can support their political power, also with political

power; countries can gain more economic wealth). And that will be proved

through analyzing the relationship between both variables (political power and

economic wealth) in International relations in general, through dealing with the

dimensions of this relationship in the 2nd chapter. And then the evidence to prove

this particular dimension in the hypothesis will be provided through the case study

in the 3rd chapter.

1.4. Definitions

First of all at this definition part, it is worth to start with the fact that in social

science, definitions and meanings of the terms are not straightforward and there is

no universally agreed upon definitions. Different definitions and concepts have

been put forth by different authors and in different contexts.

Ø International relations:

International relations (IR) is defined as the study of foreign affairs and global

issues among international actors within the international system; including the

roles of states, inter-governmental organizations (IGOs), non-governmental

organizations (NGOs), international nongovernmental organizations (INGOs), and

multinational corporations (MNCs). It is both an academic and public policy field,

and can be either positive or normative as it both seeks to analyze as well as

formulate the foreign policy of particular states(waltz 1979, 9). It is often considered

a branch of political science (especially after 1988 UNESCO nomenclature), but

an important sector of academia prefer to treat it as an interdisciplinary field of

study (Wendt 1999, 33).

International relations as an interdisciplinary field or as a political science branch,

draws upon other diverse fields as economics, history, international law,

philosophy, geography, sociology, anthropology, psychology, and cultural studies.

It involves a diverse range of issues including but not limited to: globalization,

state sovereignty, nuclear proliferation, nationalism, economic development,

global finance, terrorism, organized crime, human security, human rights, foreign

interventionism and one of the important issues that the field deal with is the

relation ship between wealth and power which is the concern of this thesis.

Ø Wealth:

As mentioned in the introduction of this definition part, there are no universally

agreed-upon definitions in social and political sciences. To define wealth let’s first

take a look on how the term defined in different scientific dictionaries, then we

can sum up;

Wealth of the state is the status of being rich and affluent; having a plentiful

supply of material goods and money, or an abundance of material possessions and

resources (Princeton online dictionary). It can be also defined as an abundance of

valuable resources or material possessions that state is owned at a point in time.

And it is simply used as a contrast of poverty to be rich or wealthy, or a great

quantity or store of money, valuable possessions, property, or other riches (The

American Heritage Dictionary of the English Language).

So according to all the previous mentioned definitions of country’s wealth, simply

it can be stands for the status of being rich, having a plentiful supply of material

goods, money, abundance of material possessions and resources. It refers to the

economic status of the country. By this meaning, and as a fact, USA is the biggest

economy, so it can be said that it is the wealthiest state allover the world.

Ø Power:

Power in general is the core concept in the study of political science, as political

science could be defined as the study of power or power relations. Particularly

when we are taking about international relations, Power is the most important

phenomenon which almost of the international events can be interpreted by

power.

Power in international relations is defined in several ways. It can be defined as a

psychological relation between those who exercise it and those over whom it is

exercised. It gives the former control over certain action of the latter through the

impact which the former exert on the latter's minds (Morgenthau and Thompson 1985,

32). Power also can be defined as influence in international relations means actor's

ability to exercise influence over other actors within the international system

(Evans and Newnham 1998, 522), another definition of power is "the ability to

influence the behavior of others" with or without resistance.

Political power is reflecting the victory in conflict and the attainment of security.

It can be also defined as a measure of influence or control over outcomes, events,

actors and issues. Another definition of power is to control over resources and

capabilities. Also political power is the ability to achieve political goals and

national interests (Princeton online dictionary).

So what we mean by political power of the state from all the previous definitions

is the ability to influence others, reflecting victory in a conflict, attain security and

achieve political goals.

Ø Foreign Aid:

Foreign aid is a very important term because it is intersected in a lot of fields;

international development, international relations and comparative regional

economy. As the nature of the previous definitions of wealth and power, also

foreign aid can be defined in a different ways, but at the end all of them are

similar to a large extent;

It can be defined as the international transfer of capital, goods, or services from a

country or international organization for the benefit of the recipient country or its

population. Aid can be economic, military, or emergency humanitarian

(Encyclopedia Britannica Online). Or aid (such as economic or military assistance) is

provided to one nation by another (Catrinus 1991, 3). It can de defined as economic,

technical, or military aid given by one nation to another for purposes of relief and

rehabilitation, for economic stabilization, or for mutual defense. (Online Dictionary)

The proper definition which intersected with all the previous definitions is “All

official grants and concessional loans, in currency and kind, that are broadly

aimed at transferring resources from developed to developing countries” (Lee, Jin-

Sang 2009).

1.5. Research methodology

This thesis employs the hypothetical-deductive method (HD method). It is a very

important method for testing theories or hypotheses. It is one of the most basic

methods that commonly used in all scientific disciplines, whether it is political,

economic and social discipline. The starting point on this method is the theory or

the hypothesis, then going to the data to test the hypothesis. This method divided

into the following stages:

1- The researcher state the theory (Theory statement),

2- Hypothesis or research questions are derived from the theory,

3- Definition of key concepts, Analyzing the theory and Hypothesis,

4- Collecting data, applying on the hypothesis,

5- Verification of the hypothesis (Hart 2002, 192).

This method exactly meets with the thesis objective, so starting from the general

theory which is the relationship between political power and economic wealth in

international relations (theory statement), deriving the hypothesis which is by

using economic wealth; countries can support their political power, also with

political power; countries can gain more economic wealth, then going forward to

data which is the case study of US aid to Egypt, ending up with verification of the

hypothesis through applying the case study as an evidence.

1.6. Scope and limitations

The spatial scope of the study is Egypt. And the temporal scope of the study is

from (1979-2009). 1979 was the beginning of US aid to Egypt so that this year

will be the start of temporal area of the thesis. The case study of US aid to Egypt

will be limited by focusing on the intersected relations between political power

and economic wealth in this case. So the main focus through this case will be how

can countries use their economic wealth to achieve political goals, and how can

countries use their political power to gain more economic wealth? So this will be

the main target of the case study regardless the study of need, effectiveness and

affects of the aid or other variables.

1.7. Overview on previous studies

On their book “International Political Economy: The Struggle for Power and

Wealth”, Thomas D. Lairson and David Skidmore (2002) focus on the dynamics

of conflict and cooperation among nations as each pursues power and wealth

through international economic exchange. The authors depict the international

political economy as a real of both struggle and cooperation. They show how

these contrary imperatives coexist and how the mix between the two varies over

time, across countries, and among issues, in pursuing this theme. This book helps

to understand how and why major economic powers rise and fall, what are the

domestic roots of power and wealth in the name of domestic political economy,

how political negotiations can lead to significant changes in economic relations,

etc. This balanced blend of history, theory, and policy makes the book suitable to

interpret many international events that power and wealth are behind it.

Another important book that benefited the thesis research a lot is “Cases in

International Relations: Portraits of the Future” 2008, by Donald M. Snow. This

book presents 16 case studies that focus on the current and enduring issues facing

the international system. Each case provides an original and integrated approach

to examining global issues in the context of international political economy and

Security. That benefited the thesis to know how to apply the relationship between

wealth and power in international relations in different cases, therefore to be able

to apply the deductive method into the thesis case.

One of the most useful books at the theme of this thesis is “. From Wealth to

Power: The Unusual Origins of America's World Role” Which was written by

Fareed Zakaria in 1999. At his book, Zakaria tried to answer some important

questions that contribute some dimensions of wealth and power in international

relations, those questions are; what turns rich nations into great powers? How do

wealthy countries begin extending their influence abroad? Once a country become

wealthy; why it aims to build a huge military, intervene in foreign policies and

seeking international influence? In From Wealth to Power, Fareed Zakaria tried to

answer these questions by examining the most important case of a rising power in

modern history which is the United States of America.

Another important book that provided the thesis with an appreciated background

about the intersected dimensions in the relation between wealth and power is

“Power, Wealth and Global Equity: an International Relations Textbook for

Africa” Which was written by Pat McGowan, Scarlett Cornelissen and Philip Nel

in 2006. This book presents an introduction about international relations in

general, and one of the topics inside is the relationship between wealth and power

in international relations. This book was very useful in opening the mind to take a

look at different cases that was a subject to intersected wealth with power.

All the previous mentioned literature is useful for understanding in general the

relationship between power and wealth in international relations. As for the case

study; there is a MA in Economics presented in faculty of economics and political

science, Cairo University in 1987. The topic is “The Impact of Economic US aid

on Egyptian Economy” which was written by Dena H. Ibrahim. The author argued

that the bilateral aid is not usually allocated because of humanitarian needs. There

is always exchange of interests behind the bilateral aid. The scope of this study

was from 1979-1985. And she provided well empirical research that can be useful

for economic analysis about US aid to Egypt. She asked some research questions;

almost of the questions were burley economic because it is a MA in economics

but one of the questions was about the political consequences behind US

economic aid.

CHAPTER 2

THE RELATIONSHIP BETWEEN

POLITICAL POWER AND ECONOMIC

WEALTH IN INTERNATIONAL RELATIONS

“Understanding international affairs is exceedingly difficult and

perhaps impossible without a clear sense of how politics and

economics are related.” (Lairson and Skidmore 2002, 1)

This was the first statement that Thomas D. Lairson and David Skidmore

started their book “International Political Economy: The Struggle for Power and

Wealth” with. All social and political phenomena are highly complex. One of the

most complex phenomena is the relationship between wealth and power in

international relations. In order to have a proper understanding of international

affairs and events -in the history, now and in the future- we need to understand the

intersection between power and wealth. That’s why there is a new field called

international political economy or global political economy that shows how much

there is entanglement between power and wealth in international relation.

The complexity of intersections within this relationship between power and

wealth in international relations has many dimensions which can be discussed as

followed:

2.1. Significant Changes in Economic Relations due to the

International Political Negotiations

International political negotiations can lead to significant changes in economic

relations. With some frequency after 1975, United States and Japan have

experienced a lot of political conflicts over their trade relations. First over

textiles, then automobiles, next semiconductors, then with automobiles again,

the both countries have struggled to manage the level of their trade. Conflict

over trade is neither new nor usual; nations have often turned to political

negotiations trying to resolve economic disagreements. The US-Japanese

conflict is noteworthy within this theme because these are the two largest

economic powers in the world, US-Japanese economies are linked by large

and increasing amount of trade, investment technologies and at the same time

they are bound together in a very close security alliance. So leaders in both

countries engaged in a debate over the merits of free trade and protectionism

and over the nature of US and Japanese economies. Negotiations focused on

politically arranged trade outcomes and alternations in the basic structure of

each nation’s economic system. “Voluntary” restrictions on Japanese auto

sales in United States, a quota for sales of US semiconductors and autos in

Japan, reduction of US budget deficit and changes in Japanese public spending

were among the deals (Cohen 1991, 152-155).

2.2. International Conflict/Cooperation: A Result of Seeking

more Wealth

Seeking more wealth may lead to international conflict or international

cooperation. One of the most famous contributions to understand international

conflict and cooperation is what was provided by Edward Azar and Thomas

Soloan in their book “Dimensions of interactions: a source book”. They

provided a scale including all dimensions of international cooperation and

international conflict which used by a lot of international organizations

including United Nations and World Bank in doing their research analysis of

international events. In their scale, war is the extremist type of international

conflict, and unification is the extremist type of international cooperation (Azar

and Soloan 1975, VIII-X). Taking a look at international events and analyzing the

causes of the two extreme types of conflict and cooperation –war and

unification- we will find that in a lot of cases that the wealth is the reason

behind wars or unions.

For example the US war on Iraq, one side of the debate why US invaded Iraq

sees that seeking Iraqi oil is the explanation of this war. Regardless the

announced justifications from Bush administration to the war, the reality

proved that the oil was behind the war. There are substantial evidences that

US interest in Iraq is motivated by oil, not just national security. Those

evidences like; In Saddam’s era, US oil companies was excluded from Iraqi

oil, after the war US allowed messiness everywhere in Iraq even banks,

cabinet, and ministries except oil ministry and oil fields and another evidence

is that “President Bush’s Cabinet agrees in April 2001 that Iraq remains a

destabilizing influence to the flow of oil to international markets from the

Middle East and because this is an unacceptable risk to US military

intervention is necessary”1. That provides clear evidence that oil “wealth” was

the reason for this war2.

Another example on how wealth can be a basis for power is the European

Union. In 1950, the European Coal and Steel Community was the starting

point economically of EU, this community between the six founders; Belgium,

France, Germany, Italy, Luxembourg and the Netherlands began to unite

European countries economically and politically in order to secure lasting

peace. A lot of stages in between until it they reach European Union which

became a very strong entity economically and politically with its 27 European

countries. That gives a clear evidence of how wealth or economic interests

leads to political power internationally.

1 Sunday Herald newspaper (UK), Official: US oil at the heart of Iraq crisis, 6 October 2002 2 For more details see: Proof War on Iraq is For Oil; http://www.thedebate.org/thedebate/iraq.asp

2.3. Political Considerations and Economic Decisions

The relationship between United States and Iran is one of the best evidences

on this theme. Iran is a state that based on Islamic revolution and all the time

in a tension with US because of two reasons, first is the US concern about

Iranian nuclear file, second is the ideology of Iran which seeks expanding

influence in the region and its animosity towards Israel which was expressed

in Ahmadinejad's words “World will be better without Israel”.

This was about the political tension, so why are American companies not

investing in Iran despite the opportunities of abundant natural resources such

as crude oil that the country offers? Because of the power politics between US

on one hand and Iran on the other hand, multinational corporations in US do

not want to invest in Iran despite the economic benefits. This shows how

political considerations form economic decisions.

Not only the matter of American multinational corporations that provide an

evidence of how political considerations form economic decisions, but also the

economic sanctions that usually imposed on Iran by the Security Council can

be considered as an additional evidence. US as a super power work through

the Security Council to impose economic sanctions from time to time on Iran.

This also confirm how political considerations form economic decisions.

2.4. Nation’s Economy and its International Political Power

International political power of a nation resets largely on the dynamism of its

economy. The ability to support a large military system depends on a nation’s

wealth, and its success in war depends on a how this wealth and productive

capability compares to other nations. Both the technological prowess of a

nation and its ability to turn its developments into profitable products and

implements of war are central to gaining the nation’s objectives in the

international arena. Over the past 150 years, international competition has

been defined by an ever tightening relationship among economic process in

one hand -which supplies military and technology - and political processes in

another hand (Lairson and Skidmore 2002, 7).

United States as a Super power now supplies its military and technology by its

wealth and that can be the independent variable that interprets US political

hegemony (Zakaria 1999, 49).

2.5. State Sovereignty and FDI (Foreign Direct Investment)

First we have to distinguish here between two terms IPE (International

Political Economy) and GPE (Global Political Economy). International

Political Economy is literally distinguished from Global Political Economy.

While International Political Economy actors are mainly states, Global

Political Economy main actors are broadly wide like International

Governmental Organizations, Multinational Corporations, International Non-

Governmental Organizations, militias, terrorists, etc... Scholars that talk

about issues like State Sovereignty and Foreign Direct Investment –or issues

like drug trafficking, illegal arms deals, smuggling goods and people, and

laundering their financial products- They prefer to use the term Global

Political Economy not International Political Economy because GPI goes

beyond relations between nations including issues like the previous mentioned

(McGowan 2006, 68).

Also of interest is how sovereign state when it becomes a host country

especially when it is developing country maybe obliged to give up some

power and independence in exchange for the wealth and benefits

Multinational Corporations may bring. So Multinational Corporations have

grown to the extent that they have a strong effect not only on the economies of

states but also on the governments and on state sovereignty.

One of the clearest cases of how economic wealth -FDI in this case- intervenes

in the political affairs of sovereign states is the case of the United Fruit

Company (UFCO) and the 1954 Counterrevolution in Guatemala.

Throughout the last half of the 19th Century and the first half of the 20th

Century, American entrepreneurs, following the example of the British in Asia

and the Pacific, were dedicated to what they themselves called “the

commercial and industrial conquest of the American tropic.” This conquest

would gradually take the form of neocolonialism, as Multinational

Corporations started to grow enormously in small states, especially in Central

America and the Caribbean. These states had an agricultural economy, with

very little or null modern infrastructure and unstable governments. American

multinationals made it their civilizing mission to bring infrastructure and

international trade into those countries. Since government instability was bad

for business, they would have to intervene in order to secure their investments

and bring welfare to the historically poor tropical regions.

Following these basic premises, The UFCO grew in Guatemala until it became

the strongest economic actor in the country. It owned more than 40 percent of

the lands and had a monopoly in the railroad industry, transport ships,

electricity service, radio emissions, the telegraph and the post office. This is

why The UFCO has been called “a State within a State”.

In the sake of stability, The UFCO supported the dictatorial regimes of

Manuel Estrada Cabrera and Jorge Ubico, who compensated The UFCO with

considerable privileges, such as tax exemptions, important government

contracts and the repression of workers’ movements. However, in October

1944, a sudden revolution led by the urban middle classes and young military

officers overthrew the government and started a period of democratization that

would last for ten years. The UFCO now had to pay taxes and a minimum

wage to its workers. And in 1952 the Law of Agrarian Reform was issued. It

included the expropriation of thousands of acres of The UFCO’s land. The

UFCO responded by lobbying in the US Government. The situation was

staged as a communist infiltration in the Guatemalan Government, affecting

not only American economic interests, but also its national security. The CIA

orchestrated Operation, which consisted of overthrowing the government and

placing in its place a pro-US regime. The coup worked thanks to the support

of the US, which caused the Guatemalan Army to surrender without a fight.

This event would be known in Guatemalan history as the Counterrevolution of

1954, which triggered a series of events that led to a 36 year Civil War (Streeter

2001, 52-63).

The UFCO’s involvement in Guatemala’s domestic political affairs is a

perfect example of how wealth and power are quite related to each other. It

tells about how economic wealth can give a private actor enough influence to

successfully intervene in the political affairs of sovereign states in the name of

profit.

A lot of examples can be within this sector, another example is the tripartite

military aggression from Britain, France and Israel against Egypt in 1956.

When Egypt nationalized Suez Canal which was ruled by British and French

companies, then the countries of these companies with the support of Israel

decided to attack Egypt. So it is also another example to here that how

economic wealth can give private actors enough influence to intervene in the

political affairs of sovereign states to the extent that can reach military attack

to a sovereign state.

2.6. Powerful states: A Control over International Economic

Institutions

Powerful states are using their power to control over international economic

institutions. Decisions at the international economic organizations like the

International Monetary Fund and World Bank reflect the views of powerful

states, in another words the shareholders, and not the wider population at

large. This is because votes are allocated by financial contribution, meaning

that United States alone has the largest voting share of 17 percent and that

developed countries have 37 percent of the overall vote. This allows them to

exercise more sway in the decision making, for example, by convention the

US may nominated the President of the World Bank while Europe nominates

the Director of the IMF. These decision-making practices exclude the less

developed countries who are the main customers of the institutions (Mounce

2006).

Taking this fact into consideration, Always there are doubts and a lot of

criticism to such institutions, Are they in the interest of poor countries or they

are just biased towards the powerful countries? In another words richer and

developed countries are the key players and the main winners within their

power in those institutions. And that shows to a large extent how much the

intersection between power and wealth as the powerful states make use of

their power and wealth to control over international economic institutions.

2.7. Effect of Domestic Relationship between Power and

Wealth on State’s Foreign Policy

It is worth here on this theme to ask; does this relationship between power and

wealth in international relation find its roots in the domestic arena? In other

words, can we say that there is a relationship between power and wealth

domestically that can affect state’s foreign policy and then international

relations? This question immediately will take us to one of the most famous

books that led to a huge debate in international relations which is “The Israel

Lobby and U.S Foreign Policy” by John J. Mearsheimer and Stephen M. Walt.

They argued that Israel lobby in US is working through using huge amounts of

money (wealth) to have a tangible number of congress seats, get positions in

key agents and committees, funding the president campaigns and having

influence over media by owning almost of media channels. Using their wealth

by doing all those activates is ending up with US Foreign policy that is always

in the favor of Israel (Mearsheimer and Walt 2007, 23-168).

2.8. Strong Economic Relations and Harmonizing Political

Attitudes

“The Obama administration is working to improve relations with Latin

American leaders, in part, to counter the growing influence of China, Iran and

Russia.”

These words said by Secretary of States Hillary Clinton in 2nd of May 2009. It

manifests the fact that strong economic relations between states are considered

to be the basis for understanding political attitudes. If we ask ourselves why

China and Russia are still insisting on Iranian right to have own its nuclear

energy for peaceful purposes contradicting with US situation towards Iranian

nuclear energy. The economic relations between these three countries; China,

Russia and Iran –especially the oil relations among them- is the main reason

for harmonizing their political attitudes (Gertz 1997).

A lot of examples in international relations can be evidences to prove this

dimension, for example why US after invading Iraq held a security agreement

with Iraq which said there will be US military basis in Iraq even after the

withdrawal of U.S. troops? A lot of scholars return to some extent the reason

behind this agreement is to secure the flow of Iraqi oil to US. Even in the US

Congress Report named “US-Iraqi Agreements: Congressional Oversight

Activities and Legislative Response”, it is mentioned that protection of Iraqi

Oil is one of the main interests behind this agreement (Weed 2009, 38). So in

general strong economic relations harmonize political attitudes and leads to

security allies.

2.9. Using Wealth to Gain More Power and Using Power to

Gain More Wealth

As we see from all the previous dimensions, the relationship between power

and wealth in international relations is one of the highly complex phenomena.

And one of the most important dimensions within this phenomenon is that:

By using economic wealth, nations can support their political power. Also

with political power; nations can gain more economic wealth. That is exactly

the thesis concern. In order to understand what makes US give aid to Egypt as

a case study on this thesis we need to analyze the relationship between wealth

and power from this dimension. In a glance, US aid to Egypt started after

signing the peace treatment between Egypt and Israel in 1979, after Egypt

strongly defeated Israel in 1973 war. Egypt in this time was in a powerful

position and US wanted to end the war situation and make Egypt accept the

peace situation by signing this treatment.

And of course according to US strategic relation and mutual interest with

Israel, keeping the peace situation between Israel and Egypt is one of the US

political goals which was achieved by economic mean or by using wealth in

the form of giving Egypt annually a very big amount reached 1.3 US$ billion

as a military aid and 815 US$ million as an economic aid. That support the

first part of the argument, by using economic wealth, nations can support their

political power and achieve their political goals.

The second part of the argument which is; with political power, nations can

gain more economic wealth. At the same case we can see this fact. Egypt as

mentioned after defeating Israel was in a powerful position, Without Egypt’s

position at this time as a political power; it has nothing to do to bargaining to

gain any wealth in the from of US aid. Also if we ask ourselves why still US is

giving aid to Egypt? The answer will be also in one word “power” as Egypt in

the eyes of US now is a strategic partner in the Middle East region that plays a

very important role in the process of peaceful settlement of Palestinian-Israeli

conflict. Also Egypt has its word among Arab countries that is related to its

position politically, strategically and historically in this region. So this

powerful position of Egypt “political power” used to gain US aid “economic

wealth”. That was in a brief, and chapter 3 will deal with the case in details.

CHAPTER 3

THE CASE STUDY OF US AID TO EGYPT

3.1. A Historical Background of the Aid in US-

Egyptian Relations

Egypt is considered one of the United States' strongest allies in the Middle

East and Arab World. However this was not always the case. The relationship was

shaped by regional and global conflicts and calculations, causing it to fluctuate

from discord during the Abdel Nasser years to cooperation during the Anwar Al-

Sadat and Hosni Mubarak years, and this fluctuation in the relations between both

countries affected the issue of US aid to Egypt.

3.1.1. Early Years of US-Egyptian Relations

US had foreign relations with Egypt along time ago. These relations started

from the 19th century. The starting point for these relations was in 7th May 1830

when there was a trade agreement between US and the Ottoman Empire, then the

first US consular representation started in Alexandria in 12th January 1832.

In 1947 the Egyptian army chief of staff visited US and asked officially for an

American mission to come to Egypt to train Egyptian army (Marefa Online

Encyclopedia).

3.1.2. The 1952 Revolution

In the 23rd of July 1952 there was a revolution led by a group of young nationalist

Egyptian officers called “The free Officers” who were disillusioned by what they

perceived as the continued legacy of British intervention in Egyptian politics

leading to internal politics that frequently favored foreign nationalist over

Egyptians. Additionally the revolution was seen as a response to an internal feudal

system that led to a concentration of power among limited elite.

In 23rd July 1952 a representative from Egyptian Revolutionary Command

Council went to US embassy in Cairo to inform US that the previous kingdom

system of Egypt has collapsed and there is a new republic system after the success

of the revolution. And US recognized the new republic system in Egypt (Egypt State

Information Service).

3.1.3. Abdel Nasser years

In 1953 United States Secretary of State John Foster Dulles visited Egypt after

electing Eisenhower as a president to US. John Foster Dulles tried to convince

Egypt to be a part of US allies in front of Soviet Union. This time the relationship

between US and Egypt started to see some disputes as there was a different ideas

and expectations between Abdel Nasser in one side who believed in Arab

Nationalism and The principle of non-aligned, and US in another side which has

strategic relationship with Israel.

President Abdel Nasser asked the United States for military support. When US

denied support, Nasser turned to the Soviet Union which supplied Egypt with the

weapons, which pushed Egypt closer to the Soviet camp. This, combined with

U.S. fear of Nasser's Arab Nationalism, led the United States to work toward

undermining the Egyptian regime.

In 1956 there was a dispute between Egypt and US to fund the High Dam project.

But at the same year US supported Egypt at The tripartite aggression –Britain,

France and Israel- against Egypt after Egyptian Nationalization of the Suez Canal.

In 1959 US held an agreement with Egypt to sell wheels to Egypt by Egyptian

pound. US also at this time gave Egypt 300 scholarship to Egyptian students to

study in different fields in US.

In 1961 the US President John Kennedy sent to President Abdel Nasser telling

him that US aims to solve Arab-Israeli conflict. Abdel Nasser replied that there

will not be any solution without giving back our rights which means turn Palestine

territory to Palestinians. So there were some contradictions between both

countries at Abdel Nasser’s years (Egypt State Information Service).

From 1965 the relations between US and Egypt was in strong tension. In 1976

these relations deteriorated because US helped Israel in the war against Egypt in

1976, and then there was a severance of diplomatic relations between both

countries (Porter 2008, 2-4). So Abdel Nasser’s years were combined between almost

conflict situations and some times cooperative situations.

3.1.4. The Sadat Administration

In general the relations between the both countries were in a cooperative situation

since President Sadat then continued with President Mubarak. President Nasser

died in 1970. The new president, Anwar Al-Sadat, actively worked to move Egypt

closer to the United States, and Egyptian-American relations gradually improved.

This improvement in the relationship between the both countries was symbolized

by Sadat asking the Soviet military advisors to leave Egypt and U.S. President

Richard Nixon’s request for Congress to authorize 250 million US$ in aid for

Egypt (US Embassy in Cairo).

3.1.5. Camp David Accords

The Camp David Accords signed in 17th September 1978. These accords brought

an end to the conflict between Egypt and Israel and acted as the pre-requisite to

the 1979 peace treaty. The event was a milestone for U.S.-Egyptian relations

because the accords signed by President Anwar Sadat of Egypt and Israeli Prime

Minister Menachem Begin and were mediated by U.S. President Jimmy Carter.

As an incentive for Egypt to sign the accords, the United States promised a

substantive aid packages for Egypt including military aid and economic aid that

continues till today –this part will be in details in the following analysis of US aid

to Egypt- . From this time, U.S.-Egyptian relationship has been steadily and

obviously improved.

3.2. US Aid to Egypt

3.2.1. Preface of US aid to Egypt

In 1979 United States has provided Egypt with an annual average of aid that is

over 2 US$ billion; 1.3 US$ billion as a military aid and 815 US$ million as an

economic aid, and this aid remains till now with some changes in the economic

aid, as from 1999 US congress approved to cut 5 percent of economic aid

annually, and remaining of military aid as it is. See the table below:

Table 3-1 U.S. Foreign Assistance to Egypt

(US$s in millions)

Fiscal Year Economic Military IMET3 Total

1948-1997 23.288.6 22,353.5 27.3 45,669.4

1998 815.0 1,300.0 1.0 2,116.0

1999 775.0 1,300.0 1.0 2,076.0

2000 727.3 1,300.0 1.0 2,028.3

2001 695.0 1,300.0 1.0 1,996.0

2002 655.0 1,300.0 1.0 1,956.0

2003 911.0 1,300.0 1.2 2,212.2

2004 571.6 1,292.3 1.4 1,865.3

2005 530.7 1,289.6 1.2 1,821.5

2006 490.0 1,287.0 1.2 1,778.2

2007 450.0 1,300.0 1.3 1,751.3

2008 411.6 1,289.4 1.2 1,702.2

2009 250.0 1,300.0 1.3 1,551.3

Total 30,570.8 37,911.8 41.1 68,523.7

(Source: Jeremy M. Sharp. 2009. Egypt: Background and U.S. Relations. Washington:

CRS Congress Reports, 36)

When we take a look at table 3-1 we will notice that the aid started from year

1948 not as mentioned in the scope of the study in this thesis from 1979. Because

3 I.M.E.T. = International Military Education and Training

from 1948 or after the end of WWII US started to allocate some money to Egypt

and other countries in the form of assistance, joint economic programs,

commodities exchange and trade agreements, that was a part of US strategy to

form alliances with other countries to face Soviet Union alliances. But the regular

and annual aid which will be the focus scope of this study started from 1979 with

the peace treaty between Egypt and Israel (USAID)4.

The circumstances behind this aid go back to the October 1973 war between

Egypt and Israel which called “The 1973 Yom Kippur War”. Egypt started this

war against Israel to take back Egyptian territory in Sinai which was occupied by

Israel since 1967. In this war Egypt defeated Israel strongly and took back

Egyptian Sinai and challenged Israel Security theory that Israel can not be

defeated.

After this case of war, US started to mediate between Egypt and Israel to contract

a peace treatment between Egypt and Israel. So US made the Camp David

Accords in September 1978 as a first stage or a pre-requisite to 1979 peace

treatment between both countries. Then the year 1979 witnessed the peace

treatment between both countries which signed by President Anwar Sadat and

4 USAID. 2004. USAID/Egypt Strategic Plan Update for Fiscal Years 2000-2009. 6-10. http://pdf.usaid.gov/pdf_docs/PDACA516.pdf

Israeli Prime Minister Menachem Begin by the mediation of US President at this

time Jimmy Carter. The US aid to Egypt was one of the offers which US provide

in order to pressure Egypt on acceptance to the peace treatment (Sharp 2005, 12-13).

3.2.2. Using economic wealth to achieve political

goals

This part and the next part are the main analysis to see within this case study

how countries can use their economic wealth to achieve political goals, and how

countries can use their political power to gain more economic wealth.

First at this part the analysis will be focused on using economic wealth to support

political power or to achieve political goals. That can be proved within this case

study through the following evidences:

The beginning of US aid to Egypt was to achieve a political goal which

was keeping Israeli peace and security with its strong neighbor Egypt after

1973 war between them. After Egypt won this war, Israel – which has

strong strategic relations with US- was threaten. Keeping Israeli peace and

security is regarded as one of the main political interests of US due to the

strong and strategic alliance between them. So US president at this time

Jimmy Carter invited Egyptian president Anwar Sadat and Israeli Prime

Minister Menachem Begin to settle the situation and to negotiate about a

peace treatment between Egypt and Israel, which ended up with Camp

David Accords in September 1978. These accords were the basis for the

1979 peace treatment between Egypt and Israel. In order for US to end up

with this treatment to keep Israeli peace and security with Egypt, US used

an economic mean as one of the main incentives provided from US to

Egypt to accept this treatment. This economic mean was the US aid to

Egypt which started in the year of the peace treatment 1979. US allocated

annually 2 US$ billion aid to Egypt; 1.3 US$ million as a military aid and

815 US$ million as an economic aid. This aid is still received by Egypt

from 1979 till now. From 1979 time till 2002 Egypt was the second

receiver of US aid after Israel5.

A question here is deserved to be raised, what makes US allocate all this

amount of money to Egypt although there are much poorer countries than

Egypt that deserve aid? The answer finds its roots deeply in using

economic wealth to achieve political goal. US aid in this case is for

achieving such a political goal which is keeping Israeli peace and security

with its strong neighbor Egypt. So US used its economic wealth by giving

huge aid to Egypt in order to achieve such political goal.

5 After 2002 the aid to Afghanistan increased and after 2003 the aid to Iraq increased, so these two countries exceeded Egypt in terms of US aid (http://www.usaid.gov/)

Another evidence can be added here is the discussions that take place

every year in the US congress to put some political conditions on Egypt –

which is related to Israeli demands- in order to take this aid. Since 2004,

there have been seven attempts in Congress to cut or reallocate US

economic or military aid to Egypt; one of them was enacted on 15th

February 2007 which rescinds 200 US$ million in previously appropriated

economic aid to Egypt (Sharp 2008, 4).

Every year some of Jewish lobby members in the congress suggest that US

has to put some political conditions on Egypt to cooperate more with Israel

in order to take the aid. The last pressure made by congress was in 2008

which bestirs Egypt to cooperate more with Israel to prevent arms

smuggling from Egypt to Gaza through tunnels along the boarders between

Egypt and Gaza6. US in this case used its aid “economic wealth” as a tool

to achieve a political goal which is one of the Israeli demands, and put

pressure on Egypt to follow US-Israeli demand, which Egypt already is

doing. Egypt started to build a separation wall between Egypt and Gaza in

order to prevent arms smuggling. Although there is opposition from some

Egyptian parliament members, public opinion from Egypt and Arab

countries, saying that Egypt by this way is surrounding and putting Gaza 6 Since Israel unilaterally dismantled its settlements and withdrew its troops from the Gaza Strip in August 2005, it has repeatedly expressed concern over the security of the Egypt-Gaza border. Israel claims that ongoing smuggling of sophisticated weaponry into the Gaza Strip could presumably shift the balance of power in Hamas’s favor. Israel also asserts that Egypt is not adequately sealing its side of the border (Sharp 2008, 4).

population under a siege and that is against the 1950 Joint Arab Defense

Treaty and then what is the difference between Egyptian separation wall

and Israeli separation wall?, but Egypt decided to cooperate with Israel and

continue building this wall (BBC News, 11th Jan 2010).

More than that Egypt has closed The Rafah border crossing gate which is

the main way for Palestinian people in Gaza to enter Egypt. In 1st January

2009, President Mubarak said that “Israel is responsible for secure all its

territory including occupied territory, so any issue regarding opening

Rafah crossing gate has to be discussed with Israel, and Israel has the

right to observe what is going to enter its territory” (Egypt State Information

Service). In 21st January 2010, 54 democratic members in congress wrote a

message to president Obama said that “The people of Gaza have suffered

enormously sine the blockade imposed by Israel and Egypt following

Hamas’s coup... This concern must be addressed without resulting in the

de facto collective punishment of the Palestinian residents of Gaza Strip…

The humanitarian and political consequences of continued near-blockade

would be disastrous7”. So to that extent Egypt decided to cooperate with

Israel under the pressure from US to fulfill Israeli demand and participate

with Israel in a blockade over Gaza.

7 The full text: http://www.thestruggle.org/54_call_ease_blockade.pdf

More evidences on how US is using its aid to fulfill its political interests is

seeking Egyptian assistance in invading Iraq. The US aid to Egypt

increased in the year of invading Iraq 2003 by 256 US$ million from the

previous year. In This year 2003, US have an interest in Egypt to open the

Suez Canal to US Naval Fleet, regardless the 1950 Arab Joint Defense

Treatment. And that is what Egypt has been done.

Another evidence can be also provided to support this part is that in 1996,

Congress authorized the creation of Qualified Industrial Zones (QIZ) in

order to entitle goods jointly produced by Israel and either Jordan or Egypt

to enter the United States duty free. In December 2004, Egypt finally

reached an agreement with Israel to designate several QIZs in Egypt under

the mandate of the U.S.-Israeli Free Trade Agreement. Goods produced in

Egyptian QIZs allow Egyptian-made products to be exported to the United

States duty-free if the products contain at least 10.5 percent input from

Israel (Sharp 2009, 16). So it is clear here that US uses economic means to

achieve political goals at the end to normalize all the relations with Israel

even the economic ones.

So from the previous mentioned evidences we can conclude at this part that it is

very clear within the intersected relation between economic wealth and political

power that countries are using their economic wealth to support their political

power achieving political goals, that what exactly US did in Using its aid as an

economic mean to achieve political goals which are in the sake of Israel.

3.2.3. Using political power to gain more economic

wealth

In order to answer the main question; why US gives aid to Egypt? The previous

part speaks about using economic wealth to achieve political goals as the first part

to answer this question which was proved by evidences. Then this part is going to

deal with the second part of the answer, which is by using political power;

countries can gain more economic wealth. So this analysis will deal with the

second sub-question within the main question; how can countries use their

political power to gain more economic wealth within this case study of US aid to

Egypt? The answer will be through providing the following evidences:

The starting point of the US aid to Egypt -as mentioned at the previous

part- was the peace treatment between Egypt and Israel 1979 with the

mediation of US after Egypt strongly defeated Israel in 1973 war. So

Egypt at this time was regarded as a powerful state in the region compared

to Israel based on the militarily defeat in the war between them. Without

Egypt’s position at this time as a political power, it couldn’t gain any

wealth “US aid” and it has nothing to do to receive all this aid without this

powerful position. So power here brought wealth to Egypt.

If we analyze why US keep giving this aid to Egypt till now? If in a certain

point of history Egypt defeated Israel and this aid was a prerequisite to

accord on a peace treatment between both countries, then why US still

allocating all this amount of money to Egypt? The answer to this question

is in one sentence; using political power to gain more economic wealth;

First; after Egypt signed the peace treaty with Israel, Egypt was regarded

at this time –by US- as a model for the rest of Arab countries to normalize

the relations with Israel which already happened, after Egypt normalized

the relations with Israel a lot of Arab countries started to normalize the

relations too, like Jordon signed another peace treaty with Israel 1994.

Second; Egypt in the eyes of US now is a strategic and powerful partner in

the Middle East. Egypt has its powerful position and has its word among

Arab countries so US is depending on Egypt to fulfill its policies in the

region. Egypt is the main mediator in the Palestinian- Israeli conflict. One

of US Congress reports speaks about the US interests in Egypt saying that

“One of U.S. interests in good relations with Egypt is to sustain Egypt’s

moderate voice in Arab councils, and in some cases to rely upon Egypt to

persuade less moderate Arab states of the wisdom of compromise.

President Mubarak serves as a conduit carrying the various peace

proposals among the Syrian, Lebanese, U.S., Israeli, Jordanian, and

Palestinian negotiators and has counseled leaders of Libya, Sudan, and

Iraq” (Sharp 2005, 5). In a current example, the United States appreciates

Egypt’s active opposition to terrorism and welcomes Egyptian influence in

convincing other Arab states to cooperate in the war on terrorism (USAID)8.

Third; the Strategic geographical location, Owning Suez Canal and

Military cooperation, all these factors adds to Egyptian power and adds to

US interests on Egypt. At the same congress report that speaks about how

US needs Egypt in the Middle East, it mentioned “Another reason for

maintaining good U.S.-Egyptian relations is defense cooperation in

opposing threats or aggression against regional friends, as was

demonstrated in Egypt’s active participation in the 1991 liberation of

Kuwait and in Egypt’s military cooperation with U.S. forces in the 2003

invasion of Iraq. Cooperation between U.S. and Egyptian armed forces in

joint military exercises over the previous decade (the “Bright Star”

exercises) prepared the way for the 1990-1991 defense of the Arabian

Peninsula (“Operation Desert Storm”). The most recent Bright Star

exercise took place in October and November 2001” (Sharp 2005, 5).

Fourth; the Iranian issue; throughout history, Egypt and Iran have, at

times, been fierce rivals, a natural outgrowth of the region’s balance of

power. Egypt envisions itself as the standard-bearer of Arab nationalism,

and Persian Iran serves as a foil. During the Cold War, Egypt was

militarily aligned with the Soviet Union while Iran was a US client state.

8 USAID. 2009. Audit of USAID/ Egypt’s Democracy and Governance Activities. 16-17. http://www.usaid.gov/oig/public/fy10rpts/6-263-10-001-p.pdf

Then, in the late 1970s, as a result of the Camp David Peace Accords and

the Iranian revolution, Egypt and Iran essentially traded places in their

regional allegiances. Egypt’s peace treaty with Israel resulted in a much

closer relationship with US, while Iran’s revolutionary theocratic

government perceived US, its moderate Arab allies, and Israel as its

primary adversaries in the Middle East, and Iran developed a closer

relationship with Russia. For over 30 years. Iran and Egypt severed

diplomatic ties in 1980, a year after the Iranian revolution. Iran not only

objected to Egypt’s peace treaty with Israel, but also to its hosting of the

deposed Shah and its support for Iraq during the 1980-1988 Iran-Iraq war.

Currently, Egypt is concerned about Iran’s support for Palestinian

militants, particularly Hamas, Iran’s influence in Iraq, and Iran’s nuclear

program. All these issues are US concerns. So according to US, Egypt is

considered to be an important and powerful actor in order to balance

Iranian power and influence in the region (Sharp 2009, 11-13).

Fifth evidence can be added here, it is not just Egypt that uses its power to

gain more wealth which is US aid, but also US as a powerful state or as

the super power use also its power to gain more wealth. In another words,

Egypt turned around 40 percent of the US aid back to US in the form of

importing US goods. It was mentioned in one of the reports issued by the

Egyptian Ministry of planning in 2007 that about 40 percent of US aid to

Egypt along the 26 years from 1979-2006 is going back to American firms

in the form of importing goods and services (Egyptian Information Decision

Support Center).

So from the previous evidences at this part, we can conclude that within the

relationship between wealth and power in international relations countries can use

their political power to gain more economic wealth. It is very clear from the

presented evidences that depending on Egypt’s political power, it gets more

economic wealth “US aid”.

CHAPTER 4

CONCLUSION

It has been clear that the relationship between political power and economic

wealth intervenes in almost of international relations issues. In order to have a

good understanding of international relation issues we need to consider this

intersected relationship between both variables.

The first chapter presented the main hypothesis which is “If a country has

economic wealth, it can use it to support its political power, and if a country has

political power, it can use it to gain more economic wealth”. And then we

presented the research questions which were about, first; what is relationship

between political power and economic wealth in international relations in general?

Second within this relationship between both variables; Why US gives aid to

Egypt?

In order to answer the first question, the second chapter put an overview about all

the dimensions within the relationship between political power and economic

wealth in international relations in general like; powerful states are using their

power to control over international economic institutions, International political

negotiations can lead to significant changes in economic relations, seeking more

wealth may lead to international conflict or international cooperation, political

considerations form economic decisions, international political power of a nation

resets largely on the dynamism of its economy, effects of FDI on state

sovereignty, effect of domestic relationship between power and wealth on state’s

foreign policy … etc

Then the main focus of the third chapter was to answer the second question by

examining one of these dimensions which is “By using economic wealth,

countries can support their political power. Also with political power; countries

can gain more economic wealth” within dealing with US aid to Egypt as a case

study. Chapter three presented all evidences to prove this particular dimension

applying the case study of Egypt by dividing it into two main parts;

The first part proved that countries can use their economic wealth to achieve

political goals and support their political power which applied to US using of

economic means by giving huge aid to Egypt to achieve political goals in the

Middle East, especially related to Israel as; The beginning of US aid to Egypt

(economic tool) was to achieve a political goal which was keeping Israeli peace

and security with its strong neighbor Egypt, that was after Egypt defeated Israel in

war between them 1973. US Congress every year tries to put some conditions on

Egypt to receive the aid, for example, one of these conditions in 2008 was to make

Egypt cooperate more with Israel in preventing of arms smuggling from Egypt to

Gaza Strip through tunnels, which is one of Israeli demands, and which Egypt

followed by starting to build a separation wall between Egypt and Gaza in order to

prevent arms smuggling. The US aid to Egypt increased in the year of invading

Iraq 2003 by 256 US$ million, This year US has an interest in Egypt to open the

Suez Canal to US Naval Fleet, regardless the 1950 Arab Joint Defense Treatment,

and Egypt allowed US Naval Fleet to cross Suez Canal. So US is using its aid as

an economic mean to achieve political goals.

The second part proved that countries can use their political power to gain more

wealth as Egypt used its relative powerful position in the region to gain more

wealth which is US aid as; after defeating Israel 1973, Egypt was regarded as a

powerful state in the region. Without Egypt’s position at this time as a political

power, it couldn’t gain any wealth “US aid” and it has nothing to do to receive all

this aid without this powerful position. So power here brought wealth to Egypt.

And after Egypt signed a peace treatment with Israel, it was regarded at this time

as a model for the rest of Arab countries to normalize the peaceful relations with

Israel. Also Egypt in the eyes of US now is a strategic and powerful partner in the

Middle East. Egypt has its word among Arab countries so US is depending on

Egypt to fulfill its policies in the region. Added to that; the Strategic geographical

location and Owning Suez Channel. Another thing is that according to US, Egypt

is considered to be an important and powerful actor in order to balance Iranian

power and influence in the region. So without Egypt’s political power, it couldn’t

gain this aid “wealth” from US

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