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News Link • Military Industrial Complex

Jobs at Home Drive Obama Administration’s Egypt Aid Decision

• Nicole Gaouette and Tony Capaccio, Bloomberg

The Obama administration’s decision to begin releasing $1.3 billion in annual military aid for Egypt will avert a disruption in arms sales that might have cost thousands of U.S. jobs and as much as $2 billion in contracting penalties for the U.S. government.

Secretary of State Hillary Clinton, invoking U.S. national security interests, today used her authority to waive congressional conditions on the aid that require Egypt to demonstrate democratic progress. Her decision, assailed by human rights advocates, also took account of domestic factors that are important in an election year.

The administration considered the potential loss of U.S. jobs in Ohio, Texas and elsewhere generated by Egyptian military contracts with companies such as General Dynamics Corp. (GD), which sells M1A1 tanks, and Lockheed Martin Corp. (LMT), which sells F-16 jets, according to State Department officials who briefed reporters on the condition of anonymity. In addition, under the contracting terms, the U.S. government might have been liable for as much as $2 billion if the Egyptian aid money were withheld, according to one of the officials.

“It’s actually quite difficult to shut down that aid because it means jobs for Americans here,” said Ken Pollack, an analyst at The Brookings Institution, a Washington policy group.

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