US nears deal for $1 billion in Egypt debt relief

Washington seeks to help Cairo shore up its ailing economy; slow progress reflects caution over Egypt's President Morsy.

WASHINGTON - The Obama administration is close to a deal with Egypt's new government for $1 billion in debt relief, a senior US official said on Monday, as Washington seeks to help Cairo shore up its ailing economy in the aftermath of its pro-democracy uprising.

US diplomats and negotiators for Egypt's new Islamist president Mohamed Morsy - who took office in June after the country's first free elections - were working to finalize an agreement, the official said.

Progress on the aid package, which had languished during Egypt's 18 months of political turmoil, appears to reflect a cautious easing of US suspicions about Morsy and a desire to show economic goodwill to help keep the longstanding US-Egyptian partnership from deteriorating further.

The United States was a close ally of Egypt under ousted autocratic President Hosni Mubarak and gives $1.3 billion in military aid a year to Egypt plus other assistance.

Obama ultimately called for Mubarak to step down as he faced mass protests in early 2011 but the US president was criticized for taking too long to assert US influence.

Washington, long wary of Islamists, shifted policy last year to open formal contacts with the Muslim Brotherhood, the group behind Morsy's win. Morsy formally resigned from the group after his victory. JP