Our law and review our policy towards egypt and our assistance to egypt including special privileges that egypt receives such as cash flow financing for Foreign Military financing. The u. S. Should carry out its own internal review as well as a dialogue with egyptians inside and outside the Egyptian Government with the stated intention of resuming assistance as soon as the country is clearly back on a democratic path. In the meantime, we should do a review of the kind of military and economic assistance we offer egypt, which should not be kept on autopilot. Rather, it should be updated in order to provide the kind of assistance when it is rescinded resumed that is truly suitable to promoting a stable, prosperous, democratic egypt that plays a vital and responsible role in the middle east. The u. S. Understandably is wary of damaging its longstanding relationship with the Egyptian Government but it should avoid pursuing a policy that appears to be cynical and unprincipled. We should not make the mistake of concluding that the u. S. No longer has any influence in egypt. In fact, the fact that egyptians pay such close attention to what our Officials Say and have been very critical of our policy means that we still have quite a lot of influence to exert. Thank you. Thank you, ambassador. Thank you very much for the invitation to be here today and to you, senator menendez, thank you for your service on behalf of all of us and for our nation. Having spent seven years living in egypt while serving our country in foreign service, i cannot tell you how excited i have been to see a people long under the yoke of authoritarianism and dictatorship striving to define who it is they are and what it is they want to be come a how they want to shape their society. This has been largely a revolution to define egypts identity and to establish a constitutional basis, a legal basis, for egypt to pursue its own form of democracy. We are looking for a Second Chance for this revolution. This revolution is likely to continue to go through phases as the egyptians wrestle with these pressing large issues on their agenda. I would offer three comments in addition to the written testimony that i submitted for the record. First of all, we need to understand that this is an ongoing dynamic process. We are in round three or four of what might be termed a heavyweight bout. There are forces in egypt that will continue to contest for political power. The egyptian public is as we know badly divided, almost evenly divided among these various forces, including those who look to the military and Security Services for stability and law and order him including those who would like to see egypt defined by an islamist agenda. For those who were not that unhappy with the previous regime and since we want to return to some form of stability while enjoying some liberty and freedom. We need to do is be patient. The revolution is only in his third year. As revolutions go, they normally take a long time to unfold. As we take a look at the last few weeks in egypt, we should be struck by the way in which the form of popular will was expressed both in the petition that added many millions of signatures as well as a demonstrations on june 30 and afterwards that persuaded the military to oust the former president. I know we are debating the question of whether this fits the definition of a coup according to our law and we should be debating that as the lawyers look at legal issues. We need to be mindful that millions of egyptians took to the street from all classes, all sectors of society, not just cairo, but upper egypt as well, alexandria, and the delta to say they did not like what resident Mohamed Morsi was doing to the country. He fired judges and basically a certain powers and accrued powers only to himself. Having turned the other cheek and eye when it came to the massacres of Coptic Christians and others. The egyptian people basically said that we were ready to go to the streets to push Hosni Mubarak out of office and we were ready to go to the streets to push Mohamed Morsi out of office. Third point, the question of leverage. We need to understand that the egyptu. S. Relationship that we have enjoyed now for more than three decades is changing. It is changing rather rapidly. The degree to which our assistance of the late 1970s, 1980s, and 1990s contributed to major changes in egypt. We helped to transform the Egyptian Military from a military alliance on the soviet doctrine, training, and weapons, to a military that is basically interoperable with ours. That military provides significant assistance to egypt to whatever we do in the middle east and beyond the middle east. We have created a partnership with egyptian agencies, intelligence, counterterrorism agencies, that has been of direct benefit to the u. S. In our own efforts to Counter Terrorism against us and against our interests. We have helped to change the egyptian economy from a statist economy that Hosni Mubarak inherited to an economy which is largely dominated by the private sector. There are still changes that need to be effected to make this economy providing its benefits fairly to all people. The investment we have made has paid off and it is an investment that we need to consider as we think about what we want to do in the future. Our leverage with respect to egypt today is reduced and we need to understand that. The degree to which we do can help us see egypt through what some are calling a Second Chance in its own revolution. A Second Chance also for us to redefine this important strategic relationship. In that respect, i think it would be shortsighted to cut aid to the Egyptian Military at this time. In fact, as i say in my testimony, we should have considered doing this years ago. Egypts needs have largely been economic. To cut that aid off now would lose us the one partner that has proven to be stable and reliable in pursuit of our own strategic objectives. We should see egypt through this crisis. We should provide advice quietly. We tend to say too much publicly and we tend to react too much to daily events. Quiet advice may be the order of the day. Secondly, i think our own actions in this respect need to be tempered as well. Understanding that the egyptian people, a proud people, are going to define their own future. We can help them do it but we cannot make demands of them and expect them to follow our demands simply because we are providing assistance. Thank you, mr. Chairman. Thank you all for your testimony. It is very insightful. As both diplomats and academics, you need more than five minutes to do, but it was all very worthwhile. Let me start off i am concerned, and i would like to hear your views. I think that Egyptian Society believes that the u. S. Sided with the brotherhood in a way that was against their will. I sense that from conversations, from Civil Society, from reading. If we were to cut off the aid now, would that not in that Civil Society reinforce the view, that that is in fact the position of the u. S. . What would you say to that . I think that that would be the effect. Whether the perception was correct or not is immaterial. It would be seen as being a statement that we were siding with the brotherhood against majority of the public. I am not saying it is wide majority but i think it is the majority of the public. I think it would produce a backlash. It would not yield us any benefits. That is one of the reasons i dont favor it. Does anyone else want to comment . Senator menendez, youre quite correct that a lot of egyptians think the u. S. Sided with the brotherhood and before that they thought that we sided with the Supreme Council of the armed forces. Egyptians, of all kinds, whether they are secular or islamist, take a dim view because they have looked at it as having no principle and being self serving. We stuck close to mubarak when he was in power, and then morsi he was in power. There have not been any principles motivating our policy. That is one issue. The other issue is how would egyptians react to a suspension of our aid. What the ambassador said is a danger, but this will depend on how the Egyptian Military will play this. They can drum up antiu. S. Sentiment if they like to. Or they could choose to say, the u. S. Is suspending the assistance temporarily. That is their law, but we will see through a democratic transition. And so, it is not a problem. The assistance will be resumed because we fully intend to come through on the transition to democracy. First of all, to underscore what dr. Dunne said, the fact is that egyptian public perceives american policy only in line with its own views. When the Supreme Council of the armed forces was in power, we were seen to be holding them together. When the Muslim Brotherhood came to power, we were seen as supporting them. Now, we are supporting this interim government. It is trying to play to the sentiment of a public that is trying to sort out its own political views will be quite difficult. One of the problems in terms of this aid cutoff question is, as you suggested, the implications. It is not just an implication defined by how the public would absorb this, or, even as dr. Dunne suggested, how the military might react, but whether or not it serves our interests. They are trying to calm the situation in the sinai peninsula, which is extraordinarily dangerous, and which jihadists only from gaza but elsewhere, have fought to use that peninsula as a launching pad for attacks against egyptian and israel. They are also closing tunnels used for smuggling between sinai and gaza for the first time in decades. Those tunnels are now in debt in jeopardy. The military continues to provide the support we have a needed to move our personnel and our equipments where they have to be. As long as we have deployments east of egypt, we will require support and assistance from the military to do so. In the short term, it may be that the military could live with a temporary cutoff. We would be cutting off our own noses to spite our face. It would not serve american interests to do that. It seems to me the question is some leverage versus no leverage at the end of the day. Personally, i believe using the leverage is an appropriate use. I also think about cutting off aid totally at this time, as some have suggested, at a time in which egypts economy is in a downward spiral. The potential effect of that, there may be others we will try to replace. It would mean we would have no influence. They would replace, to some degree, the resistance. It would still be a significant blow to the economy. Is that an additional concern . Secondly, some of the language in the appropriation bills that are beginning to move are citing three conditions for the disbursement of u. S. Military assistance to egypt. One is a political process, to use democratic elections and governments that protect the rights of religious minorities and women. Do you think those are the appropriate conditions and precisely what steps should the military and the interim government take to satisfactorily check those . First, i do think it has the potential on the economy, not just in terms of the objective realities, but psychologically, it has some potential impact. I would worry less about the economy and more about our ability to affect the Egyptian Military to exercise restraint. I am worried about what the general said yesterday, that if we have little influence in the situation and they turn more to the gulf, understand one thing. The saudis, for their own reasons, they want a very tough suppression of the Muslim Brotherhood. They see it as a mortal threat to them. If we will put the military close in the arms, any prospect of restraint goes out the window. If part of our aim is to try to enhance the prospect of egypt evolving over time in a much more favorable direction, if we take ourselves out of this equation right now, the prospect of restraint disappears. I agree with something dan said earlier. We are more likely to have an effect if we try to do it quietly. The more it appears in the eyes of egyptians, it seems we are telling him what to do, the more we may trigger a nationalist backlash. It does not mean we take away the potential to say things quietly or publicly. They should understand what we say in private is not going to remain in private. They should understand they do lose the connection to us and they want it. If we do it in a way that they see as too heavyhanded, it will be used against us. There is a long history here of the United States saying certain things in public that trigger an impulse. I go back to the 1960s. Nasser said we could go drink all the water from the mediterranean and the red sea. Do either one of you want . Yes. If i could comment on the economic crisis egypt is facing, you are exactly right. Our focus on military assistance has to do with the legislation and the definition of what happens. Egypt has been in economic crisis for two years since the revolution began, which is quite ironic, because if you look at the numbers before the revolution, egypt was on a significant upward return with respect to its Manufacturing Sector and its Tourism Sector and exchange earnings. They are now at a point where the gap in financing is approaching 3 million a month. In a situation where Foreign Exchange has been depleting rapidly, this represents a very significant crisis. As i suggested my original testimony, there may be a need if egypt can reach an agreement with the International Monetary fund, to think about Emergency Assistance for egypt in order to get egypt over the economic hump. The second issue, the conditionality that is being written into legislation, as one who lived in egypt for seven years, and worked with egyptians for a very long time, when i hear of conditionality, even if the conditions support and complement what they want to do, their back gets up and they become very challenged by it. I hope we can talk about these as goals we and the egyptians share, goals for an inclusive political process in which the rights of women and minorities are protected. To the extent these become the equivalent of dictates from the United States, i think we will see pushback from the egyptians. That will present its own kind of problem for us. Thank you. May i comment on this question . You know, i would like to move to other members. But i appreciate, maybe at the end, if other members have had their opportunity. Let me, before i turn to the senator, recognize and welcome to the committee senator markey of massachusetts. He has a long history in the house of representatives, where i had the privilege of serving him. He has cared about International Issues for some time and has been a leader in Climate Change and Nuclear Issues. We welcome them to the committee and look forward to his service with us. Senator corker. Thank you. Welcome, senator. Dr. Dunne, since we have this new spirit in the air here, if you want to take 30 seconds of my time to answer, go ahead. Thank you. Senator menendez said there is a question of some leverage versus no leverage. The United States has kept the military assistance going and has never used it as leverage. I think we are reaching the point where, really, there is not much credibility here, of having any leverage with that assistance. Ambassador ross said he would be in favor of using it at a future point if there were no responsiveness. My understanding is the administration reached out assertively to argue against a military coup. There was no responsiveness. We are already at that point. Thank you. Mr. Chairman, again, thank you for having this hearing. For what it is worth, i appreciate the testimony. I do think our nations role in egypt right now should be an instrument of confidence. We make these issues about us and what we will do. Unfortunately, it is one of the great diseases we have here in washington. Really, this is about them and it is about an orderly transition and hopefully moving through the democratic process. I appreciate the comments relative to that and think that should be our role as we move forward. I agree much of our advice should be happening privately and not so much divisiveness occurring here. I very much appreciate the comments regarding that. Let me ask you this question. The transition plan put in place by the military, do we view that timeframe as something realistic . I made a reference to the testimony of monitors coming in. If the International Community, in terms of observing corrections, were to say more time were to prepare, i would favor that. I do agree with what michelle said. Preparing the constitution in advance of elections is the right thing. It was important to put out a date for elections. I would like it to be guided by the right kind of preparation, above anything else. You think it is unrealistic . I am a little worried it was not necessarily realistic. The sequence is more appropriate this time than last time. I would still like the ground to be prepared and i would like to create more potential for inclusion, which will be difficult to produce. I agree. I think the sequencing is good but we have the constitution is to be rewritten by a Small Committee and looked that five people appointed by the president. This is all supposed to happen in a couple of months. It is probably unrealistic. If egypt must have an opportunity where there is a broader buyin than last time, it will probably take longer and involved a lot more people. You made the comments of the Muslim B