WASHINGTON — Nearly 16 months after pledging to help Egypt’s failing economy, the Obama administration is nearing an agreement with the country’s new government to relieve $1 billion of its debt as part of a US and international assistance package to bolster its transition to democracy, administration officials said.
The administration’s efforts, delayed by Egypt’s political turmoil and by wariness in Washington about new leaders emerging from its first free elections, gained new urgency in recent weeks, even as the United States risks losing influence and investment opportunities to countries like China.
In addition to the debt assistance, the administration has thrown its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund.
Last week it dispatched the first of two official delegations to work out details of the proposed debt assistance, as well as $375 million in financing and loan guarantees for US financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.
The assistance underscores the importance of shoring up Egypt at a time of turmoil and change across the Middle East, from the relatively peaceful uprisings in Egypt and Tunisia to the still-unfinished transition in Libya, and from the showdown over Iran’s nuclear program to the war in Syria.
Given Egypt’s influence in the Arab world, the officials said, its economic recovery and political stability could have a profound influence on other nations in transition and ease wariness in Israel about the tumultuous political changes underway.
The administration’s revived push came after Morsi won the presidency in June and overcame a constitutional showdown with the country’s military rulers. President Mohammed Morsi and his party, the Muslim Brotherhood, have since made it clear that the struggling economy is their most urgent priority, brushing aside reservations about US and international assistance and outright opposition to it from other Islamic factions.