Kerry Calls For Egypt  Reforms

Billions in Aid From U.S., IMF Held Back

Cairo — Well-known political opposition figures stayed away from meetings with visiting Secretary of State John F. Kerry yesterday, some for fear of appearing too close to the United States in the still-unsettled politics of Egypt two years after the fall of a U.S.-backed dictator.

Kerry encouraged Egypt’s Islamist-led government to take politically difficult economic steps that are crucial to securing international loans and outside investment. President Mohammed Morsi, whom Kerry will see today, has been unable to marshal support for such economic measures.

His opponents accuse him of reneging on pledges of political and religious openness.

Meanwhile, some $450 million in U.S. aid to Egypt has been frozen in Congress and the International Monetary Fund has held off on loans and debt relief worth more than $4 billion. Egypt has been the most important Arab ally of the United States for decades, with ties built largely on Egypt’s peace treaty with Israel.

Egypt’s foreign currency reserves have fallen by roughly two-thirds since the 2011 revolution that overthrew longtime secular ruler Hosni Mubarak. Morsi’s government is trying to slow a run on the U.S. dollar. Unemployment is rampant, and a diesel-fuel crisis has led to waits of several hours at gas stations.

“We expect from friends, and particularly from the United States as a strategic partner, to stand by Egypt in this period, especially on the economic issues,” Egyptian Foreign Minister Mohamed Amr said after a meeting with Kerry.

The ruling Islamists are at an impasse with secular and leftist opposition parties. The umbrella National Salvation Front has called for a boycott of upcoming parliamentary elections in protest of a national constitution whose strong Islamist stamp also worries some in the United States.

Political liberals and secular parties resent U.S. urging to take part in voting they say will only further divide the country. They say the United States is showing favor to Morsi and Islamists.

Kerry addressed Egypt’s intertwined political and economic problems by meeting with opposition political and religious leaders, human rights activists and business leaders. For some, Kerry’s visit is an unwelcome public reminder that the United States is Egypt’s principal international benefactor, and that the money comes with strings.

National Salvation Front leader Hamdeen Sabbahi refused to meet with Kerry, who had invited a mix of opposition figures to a roundtable meeting at his hotel. After Sabbahi’s announcement Friday, fellow NSF leader Mohamed ElBaradei also decided against the meeting. Kerry spoke to him by phone after arriving in Egypt yesterday.

Opposition figure Amr Moussa declined the group invitation but held a private session with Kerry, out of the view of cameras.

Kerry told reporters later that he had not heard anything from opposition figures to suggest they will change their minds about the vote boycott.

Ahead of the meetings, a senior State Department official traveling with Kerry said he would press squabbling politicians to comply with IMF preconditions to hike tax revenues and cut energy subsidies. That will not only bring direct economic relief but “unlock” other foreign investment from the United States and elsewhere, the official said on condition of anonymity to preview Kerry’s message.

Kerry called his closed-door session with opposition leaders productive, but he emerged with a warning.

“It is paramount, essential, urgent, that the Egyptian economy get stronger, get back on its feet,” Kerry said.

He offered U.S. help but said investors are spooked.

“To attract capital, to bring money back here that will invest and give business the confidence to move forward, there has to be a sense of security, and here has to be a sense of economic political viability,” Kerry said.

He added that the United States has no political favorites in Egypt.

“I come here on behalf of President Obama committed not to any party, not to any one person, not to any specific political point of view,” Kerry said.

The belt-tightening is widely unpopular, and Kerry’s appeal comes as political parties and Morsi’s Muslim Brotherhood-backed government jockey ahead of parliamentary elections set to begin April 22.