The U.S. and Egypt Sure Look Like Allies, at Least on Military Matters

On Wednesday night, President Barack Obama said of Egypt, during an interview with Telemundo, "I don't think that we would consider them an ally, but we don't consider them an enemy." The White House has since clarified that Obama wasn't declaring a major shift in U.S. policy. The statement had many U.S. Egypt-watchers scratching their heads, considering the $66 billion in aid the U.S. has sent the world's most populous Arab nation since 1979, and given that Egypt is officially designated as a "Major non-NATO Ally."
Perhaps Obama targeted his comments at Egyptian President Mohamed Morsi, whose party demanded the prosecution of the filmmakers behind the inflammatory The Innocence of Muslims and called for protests just a couple of blocks from the embassy even after the walled compound's storming on Tuesday. Maybe Obama simply wanted to communicate that his patience towards Egypt, whose previous, military-led government arrested and ransomed American NGO workers and their Egyptian partners back in February, is nearing its limit. Unsurprisingly, Obama has not elaborated further on his statement. But it's worth looking at the depth of the U.S.-Egypt relationship, whether it's a capital-A Alliance or not, and just how many ally-like gestures the two countries make toward one another.
In 2011, the U.S. gave over $1.3 billion in military aid to the Egyptian government. According to the Congressional Research Service, 30 percent of the aid package to Egypt is typically dedicated to the development of new weapons systems. Much of the country's military hardware is left over from President Gamal Abdel Nasser's leadership of Egypt, in the 1950s and 1960s, when the country received extensive
military aid from the Soviet Union. Egypt also receives "hundreds of millions of dollars" a year in Excess Defense Articles, or military hardware that the U.S. no longer needs. In 2008, the U.S. sent 300 "excess" Chaparral Missiles to the Egyptian military; in 2006, it sent two Continuous Wave Acquisition Radar systems and a missile transporter. The U.S. doesn't just give the Egyptian military its obsolete weapons -- it helps the country produce new weapons as well. The M1A1 Abrams Tank (which has been replaced by the next-generation M1A2 in America's armored corps) is assembled and partly produced in Cairo, with the help of U.S. personnel and contractors.
But the relationship goes beyond hardware, research, and production. The U.S. and Egyptian military engage in extensive bilateral training operations, including Bright Star, a program that the Congressional Research Service describes as "a multinational training exercise ... that helps foster the interoperability of U.S. and Egyptian forces and provides specialized training opportunities for U.S. Central Command Forces (CENTCOM) in the Middle East." The Egyptians also have the unusual ability to keep the monetary component of their military aid in an interest-bearing American bank account:

In addition to large amounts of annual U.S. military assistance, Egypt benefits from certain aid provisions that are available to only a few other countries. Since 2000, Egypt's FMF funds have been deposited in an interest bearing account in the Federal Reserve Bank of New York and have remained there until they are obligated. By law (P.L. 106-280), Congress must be notified if any of the interest accrued in this account is obligated. ... Cash flow financing allows Egypt to negotiate major arms purchases with U.S. defense suppliers.

Although the law itself allows for strict congressional and Defense Department oversight concerning Egypt's use of the account -- Congress must approve every individual weapons purchase and has rejected Egyptian requests in the past -- the Egyptian military still has a financially appreciating fund that it can spend on state-of-the-art American-produced weaponry. The Egyptians also have access to U.S. military officials based at the U.S.'s Office of Military Cooperation in Cairo. According to David Schenker, who oversaw the Department of Defense's relationship with Levant countries between 2001 and 2006 and is now a fellow at the Washington Institute for Near East Studies, the U.S. stations a "flag officer who is both the defense attaché and the head of the [Office of Military Cooperation]" in Cairo, whose staff "works with the Egyptian military to determine requirements jointly."
An end-of-year U.S. government report (see 2011 links) gives a sense of exactly what kind of arms the Egyptians have been purchasing here. In 2011, the year that widespread protests forced Hosni Mubarak to resign the presidency, Egypt bought over $400 million in defense products and services, including $54 million in aircraft and related equipment, as well as $36 million in "optical and guidance control equipment."
This arrangement gives the U.S. a certain degree of leverage over the Egyptian government. Congress could freeze the Federal Reserve bank account, or merely limit arms purchases, if the Egyptian government were overthrown or did something to sufficiently upset Washington. Still, the Egyptians are given unusually wide latitude in terms of how they can deploy American aid. This setup, known as "early dispersal" in the defense policy world, is enjoyed by only one other country: Israel, a state that Obama has never referred to as anything other than a close ally.
Historically, ""there's never been any civilian oversight in how the Egyptian military was acquiring weaponry from the U.S. or anybody else for that matter," according to Steven Cook of the Council on Foreign Relations. Before the turmoil of the past 18 months, this meant the relations between the two countries were reliably smooth, at least in terms of security. The Egyptian military maintained tight controls on the country's border with the Hamas-ruled Gaza Strip, and cooperated with the U.S. and Israel in countering weapons smuggling in the Sinai. Egyptian political leaders have served as mediators at crucial junctures of the Israeli-Palestinian peace process, a major point of shared interest with the U.S. Perhaps most importantly, armed conflict between Israel and Egypt -- who fought three wars with each other between 1956 and 1973 -- is practically unthinkable now, even with the uncertainty of Egypt's political transition.
With Al Qaeda-affiliated terrorism and weapons trafficking turning the Sinai Peninsula into an ungovernable no-man's land, and in light of Egypt's geopolitical centrality in the Arab world, the country is--for better or worse--still a valuable partner.