Top Defense Firms Participate in U.S. Trade Delegation to Egypt

Major Pentagon contractors — including Lockheed Martin, Bechtel, Boeing, ITT Exelis, Raytheon and Sikorsky — will be among agroup of 50 American corporations headed to Cairo this weekend to scout business opportunities.
The Sept. 8-11 trade delegation, one of the largest-everorganized by the U.S. Chamber of Commerce, will include more than 100 business executives as well as State Department and White House officials.
The Obama administration, which is working to arrange a $1 billion aid package for Egypt to help stabilize the country’s economy following a year of political turmoil, regards this trade mission as both economically and politically important, said Lionel C. Johnson, vice president for Turkey, Middle East and North Africa affairs at the U.S. Chamber of Commerce.
There are no specific military-equipment related discussions on the agenda, according to Johnson. But defense firms still regard this trip as a valuable opening to assess possible future needs of the Egyptian government under its new president Mohamed Morsi and to gauge upcoming opportunities in the larger Middle East market, Johnson told reporters Sept. 7.
“Egypt is a jumping off place for much of the Middle East,” he said.
The State Department is enthusiastic about the possibility of expanding U.S. private sector business in Egypt, said Deputy Secretary of State for Management and Resources Thomas R. Nides. “This is part of the State Department’s ‘whole of government’ approach to Egypt,” he said during a Sept. 7 news conference. “Whole of government” is a catchphrase to describe U.S. government reliance on a multitude of agencies and private sector organizations to achieve foreign-policy goals. In the case of Egypt, the priority is to stabilize the economy and spur the democratically elected government, Nides said. “There are national security interests in a successful, healthy Egypt.”
Analysts see the administration’s push for economic assistance as a sign that it worries that if the United States doesn’t act soon, Iran might step in and seek to strengthen ties with Morsi, who is the leader of the Muslim Brotherhood party.  
The trade mission “sends a strong message that we believe in the future of Egypt,” Nides said. He stressed that the U.S. government is not paying for the travel costs of any of the 50 participating companies. If companies are coming on their own dime, he said, it is because “they fundamentally believe there are opportunities in the region.”
Michael Froman, White House deputy national security advisor for international economic affairs, said the administration will seek assurances from Egypt’s leaders that the country will offer a business-friendly climate. “Issues such as transparency, rule of law, intellectual property protection and governance [are important] for the private sector to flourish,” Froman said.
Johnson said the biggest opportunities are likely to be in the manufacturing and infrastructure rebuilding sectors, which are key to propping Egypt’s battered tourism industry. Information technology and financial services also are seen as areas with huge needs that could be met by U.S. firms, he said.
The United States gives Egypt about $1.3 billion a year in economic and military aid. For U.S. businesses, there could be much bigger prizes on the horizon, Johnson said. With a growing population of more than 85 million people, Egypt represents a burgeoning market for U.S. products and services.  
During trade meetings this weekend, defense firms will be searching for clues on what might be next in terms of big-ticket weapon sales in the region.
Sales of U.S. weapons to Egypt became a sensitive subject during the country’s popular uprising last year, when images of U.S.-made tanks and tear gas canisters were broadcast around the world.
Since the signing of the  Israel-Egypt peace treaty in 1979, military assistance to Egypt has been a cornerstone of U.S. Middle East policy, intended to cement the Egyptian-Israeli peace, promote regional stability, and support counterterrorism initiatives, a Center for Strategic and International Studies report said.
U.S. military assistance accounts for 80 percent of Egypt’s weapons procurement costs, and as much as a third of its entire defense budget, the report said. “This military aid acts as a gift card for U.S. military goods: from 1978 to 2008 Egypt spent nearly all foreign military financing on arms exports from the United States, as required by law.” The vast majority of exports to Egypt, more than 93 percent, are handled via foreign military sales in which the U.S. government makes a direct agreement with a foreign government, the CSIS study said. Direct commercial exports by U.S. defense companies have been far more erratic and were consistently below $10 million per year from 1993 to 2003. Since the beginning of the foreign military financing program, the United States has sold 36 Apache helicopters, 220 F-16 aircraft and 880 M1 Abrams tanks.
Photo Credit: U.S.-Egypt Business Council

Topics: Business Trends, Business Development, International