Cablegate: Cooperation Minister Abul Naga On Fy 09 Esf;


DE RUEHEG #2697 2461513
O 031513Z SEP 07




E.O. 12958: N/A

Sensitive but unclassified. Please protect accordingly.

1. (SBU) On September 2, Ambassador met with Minister for
International Cooperation Fayza Abul Naga , accompanied by
Acting USAID Mission Director John Groarke and Econcouns
(notetaker). The meeting was at Abul Naga's request, and
focused on the recent notification by the USG to the GOE of
the Administration's FY 09 ESF request and alleged USAID
directed funding of Coptic organizations in Egypt.

2. (SBU) Minister Abul Naga opened by reviewing GOE concerns
about the ESF program, both in terms of "form and substance"
of the notification of proposed levels for FY 09 and after.
She repeated her comments to the Ambassador of last week,
that the GOE had received no response to its proposal for the
establishment of an endowment, presented in Washington by
Ambassador Fahmy in June. She said that she understands that
Ambassador Fahmy will call on A/S Welch in Washington on
September 4, and said that he would make a proposal for an
"endowment" that would set up a mechanism for "$200-250
million" in ESF to cover repayment of non-PL 480 debt. Abul
Naga said that debt service on this debt is about $150
million per year, and it should be completely paid off by
2021. (The GOE has evidently agreed to leave the PL 480 debt
out of the discussion, in part because their understanding
that payments go back into a fund for additional PL 480
programming, and also because proposed ESF levels will not
cover the $280m in annual PL 480 debt service.)

3. (SBU) Abul Naga again noted that the GOE would welcome a
delegation to Egypt to discuss the economic assistance
program, and would also be able to send a delegation to
Washington. She urged the USG to consider this because there
are currently some "very important programs" now being
implemented in Egypt including support for the administration
of justice, training for judges and democracy, as well as
health, education, and economic reforms. These, she
observed, could not all continue under the reduced funding
levels, and the two governments should "agree jointly on what
should be done."

4. (SBU) Abul Naga, citing an August 14 Inter Press Service
story, accused the USG, through USAID, of providing directed
funding to Coptic NGOs without notifying the GOE. She
pointed in particular to a statement in the IPS report that a
Congressional report accompanying the House Foreign
Operations bill for 2008 "explicitly called for funding
politically active Christian NGOs." This, she said was
"extremely, extremely" sensitive, and was an "absolute red
line." She noted that under the jointly agreed-upon economic
assistance program, the GOE had never consented to USAID
funding of Coptic NGOs and that the USG had not informed the
GOE that such funding was being provided. According to Abul
Naga, "credible" reports of USG funding had come to the GOE
not just from the press but from governors, and civil society
groups in the governorates. She cited one specific example
of an alleged $4 million grant to a Coptic organization to
carry out media monitoring. The minister insisted that these
grants were taking place outside of the established "direct
grants" program under USAID's Democracy and Governance
funding, and that the GOE had not been notified of these
alleged grants.

5. (SBU) The Ambassador and USAID Acting Director responded
that USAID does not direct funding to organizations based on
their religious affiliation, and that the USG has no policy
of directing funding to Coptic NGOs. USAID's policy is to
fund groups whose proposals merit it irregardless of their
religious affiliations. Direct funding to NGOs, the USAID
Acting Director reminded the minister, took place only under
USAID's Democracy and Governance program. The GOE, he said,
is notified of all the grants made under this program. He
agreed that some Coptic-run NGOs were included in this
program, and noted that USAID also has important health,
education and other programs in areas where there are large
Coptic populations. In response, Abul Naga asked that USAID
confirm that facts about the alleged $4m media grant, and
reiterated that this is a "national security" issue for
Egypt. She noted that over the summer, she had received
formal questions from the Parliament's National Security
Committee on the subject, and predicted that discussion of
the issue would continue once Parliament returned to session
this fall.

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