In Egypt, Corruption Cases Had an American Root http://islamtimes.org/vdcgw79qwak9zx4.5jra.html

Beginning two decades ago, the United States government bankrolled an Egyptian think tank dedicated to economic reform. A different outcome is only now becoming visible in the fallout from Egypt’s Arab Spring.

Formed with a $10 million endowment from the U.S. Agency for International Development, the Egyptian Center for Economic Studies gathered captains of industry in a small circle — with the president’s son Gamal Mubarak at the center. Over time, members of the group would assume top roles in Egypt’s ruling party and government.

 

Today, Gamal Mubarak and four of those think tank members are in jail, charged with squandering public funds in the sale of public resources, lands and government-run companies as part of a dramatic restructuring. Some have fled the country, pilloried amid the public outrage over insider deals and corruption that toppled President Hosni Mubarak.“It became a crony capitalism,” Magda Kandil, the think tank’s new executive director, said of the privatization program advocated by its founders. Because of the corruption, the center now estimates, the assets that Egypt has sold off since 1991 have netted only about $10 billion, $90 billion less than their estimated worth.

 

The privatization saga is a cautionary tale about the power and perils of U.S. foreign aid — most notably the nearly $8 billion that the United States has provided to Egypt since the 1990s to push the country toward economic reforms.Gamal Mubarak, 47, and the others deny any wrongdoing and are fighting corruption charges filed by the new Egyptian government, saying they have been trumped up to placate street protesters calling for retribution. The defendants also assert that the deals were legal under existing laws.

But the arc of the American-backed privatization effort in Egypt recalls years of questions from critics about the transparency and effectiveness of the more than $70 billion in military and economic assistance to that country over the past six decades, the most aid given to any country other than Israel.Although U.S. officials have not publicly raised questions about the funding to ECES, as the economic think tank is known, they expressed concerns in confidential cables that privatization efforts could lead to high-level corruption, according to a review of hundreds of WikiLeaks documents by The Washington Post.

 

“The privatization and economic opening of recent years have created new opportunities for ‘vertical corruption’ at upper levels of government affecting state resources,” said one confidential State Department cable written by an unidentified diplomat in 2006, quoting Hitler Tantawi, a former chief of an internal government financial watchdog called the Administrative Control Authority.Officials at USAID declined to discuss their support of the Egyptian think tank, privatization efforts in the country or the sentiments shared in the confidential cables.