6 Major Corporations that Profit from U.S. Aid to the Egyptian Military
by Noel Brinkerhoff and Danny Biederman, AllGov
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Geopolitical reasons have been cited repeatedly to explain why the United States continues to provide more than $1 billion in military aid to Egypt since the overthrow of President Mohamed Morsi and the subsequent crackdown on his political party, the Muslim Brotherhood. But there are also many American domestic reasons—at least six—that clarify why the Obama administration is reluctant to cut off Egypt’s military support.
About $1.3 billion is authorized each year to bolster Egypt’s military, one of the most powerful in the Middle East. That aid covers 80% of all of Egypt’s military purchases, according to a recent congressional assessment (pdf). This assistance has totaled nearly $42 billion since 1948, and nearly all of it has gone to buy American weaponry and hardware.
In fact, the appropriated funds never make their way directly to Egypt. “It goes to the Federal Reserve Bank of New York, then to a trust fund at the Treasury and, finally, out to U.S. military contractors that make the tanks and fighter jets that ultimately get sent to Egypt,” wrote Julia Simon of National Public Radio (NPR).
Presently, six U.S. defense contractors benefit from the billion-dollar assistance given to Cairo.
“It’s clearly a major subsidy program for these companies,” Shana Marshall, an expert on military aid to Egypt and associate director and research instructor at the Institute for Middle East Studies at George Washington University, told AlterNet. “It’s kept open their production line when they would have otherwise been closed down and it’s a source of really reliable profits for them.”
One of the companies is Lockheed Martin, manufacturer of fighter jets like the F-16. Under the terms of a 2010 arms deal worth $2.5 billion, Lockheed Martin was supposed to provide 20 F-16s to the Egyptian military. So far, 14 aircraft have been delivered, with the remaining six scheduled for delivery by December 2014. For now, the last shipment of planes has been delayed, while the Obama administration decides how to handle the ongoing crisis in Egypt.
Lockheed Martin also has benefited from a $46 million contract given to one of its Florida subsidiaries to supply night vision sensor systems for Apache helicopters in Egypt.
The Apache helicopter is made by another U.S. arms merchant: Boeing. The second largest military contractor in the world has made nearly a billion dollars since 2000 selling the attack helicopter as well as related equipment to Egypt.
Then, there is General Dynamics, manufacturer of the M1A1 tank. Egypt has purchased more than 1,000 of them at a cost of $3.9 billion over the years.
A fourth company benefiting from Egypt’s assistance is L-3 Communications, which produces communications, surveillance and reconnaissance equipment. In 2010, the company made $24 million to assemble a sonar system for the Egyptian navy, and this year, L-3 Communications was awarded a $10.5 million contract to provide high-frequency transceivers for Egypt’s military.
Two more contractors making out from the Washington-Cairo relationship are General Electric, which signed a $13.6 million deal to provide “service life extension kits” for engines used in the Lockheed F-16s owned by Egypt, and Exelis, a Virginia-based company specializing in electronics, communications, cybersecurity and intelligence that has made at least $30 million over the past two years in deals with Egypt.
Although U.S. law mandates that aid to Egypt be ended in the event of a coup, which is what recently occurred, the profits realized by these corporations may continue to make that an unlikely prospect.
“Every time someone mentions a suspension of aid or rethinking the aid program, they send a team of defense industry lobbyists to Capitol Hill to knock on doors to make sure that there’s no suspension of the aid program,” Marshall told AlterNet.
Perhaps most telling is the fact that much of the military hardware that the U.S. provides to Egypt is neither used nor needed. Speaking of the 1,000 M1A1 tanks, Marshall told NPR, “There’s no conceivable scenario in which they’d need all those tanks short of an alien invasion.”
Indeed, more than 20% of the tanks have never been used, according to Robert Springborg, an Egyptian military expert at the Naval Postgraduate School. “They are crated up and then they sit in deep storage, and that’s where they remain,” he told NPR.
