Part of what the White House billed as a major policy speech from President Obama today centered on the creation of a new financial assistance plan to boost the fledgling economies of Egypt and Tunisia.
The plan, full details of which will surely be discussed during the upcoming G8 summit, involves forgiving $1 billion in debt owed by Egypt to the U.S., and allowing the Arab nation to invest those funds directly on job creation. In addition, the U.S. would also make an additional one billion available in loans to Egypt through its Overseas Private Investment Corporation, and would call on its European partners to provide a package worth up to several billions more over the next few years to both Egypt and Tunisia.
“Just as democratic revolutions can be triggered by a lack of individual opportunity, successful democratic transitions depend upon an expansion of growth and broad-based prosperity,” Obama said.
Egypt’s economic forecast has taken a severe hit since a popular revolt began in January, ultimately giving way to the resignation of longtime ruler Hosni Mubarak. Since Mubarak’s ouster, the country has struggled mightily to establish a new government, and has been defined by political instability and public unrest.
Due to a lack of tourism revenue and foreign investment, Egypt’s GDP is expected to grow at a miniscule rate of 1% this year, thereby necessitating aid from the U.S., according to a senior administration official who spoke to reporters late Wednesday evening. Furthermore, Egypt’s unemployment rate is roughly 30%, a statistic that has Washington worried that failure to create jobs could lead to continued instability there.
“Politics alone has not put protesters into the streets,” Obama said. “The tipping point for so many people is the more constant concern of putting food on the table and providing for a family.”
The White House believes that if Egypt and Tunisia can undergo a difficult transition to become democratic societies, the two nations can serve as a model for others in the region such as Syria, where flickers of revolution have been quelled violently by an oppressive regime, to follow suit.
In his speech, Obama shared this view, and used it to justify the aid package. He said that his administration is cognizant of the fact that corruption in government exists in both countries, but that his plan includes safeguards to ensure that funds go toward economic development, and do not end up in the hands of anti-democratic groups.
“Prosperity also requires tearing down walls that stand in the way of progress – the corruption of elites who steal from their people; the red tape that stops an idea from becoming a business; the patronage that distributes wealth based on tribe or sect,” he said.
The President also addressed new sanctions his administration has imposed on Syria’s President, Bashar Assad, the diminishing prospects of a new peace agreement between Israel and Palestine, and ongoing efforts by the Islamic regime in Iran to develop nuclear weapons.