How have recent coups affected US aid?

A military tank wheels into Tahrir Square amid cheers by Egyptian protesters in July 2013. U.S. lawmakers have not agreed yet on whether or not to cut aid to the country. Photo by: Zeinab Mohamed / CC BY-NC-SA

Days after Egyptian President Mohammed Morsi was removed from office by the country’s military, debate on the future of U.S. aid to Egypt continues across Washington.

On Sunday, U.S. Senator John McCain (R-Ariz.), the former Republican presidential nominee, became the latest U.S. lawmaker to urge the Obama administration to suspend U.S. military aid to Cairo. On the other side of the aisle, Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.) made the case that the administration should leverage U.S. aid to Egypt to press the military to swiftly return Egypt to civilian rule.

Each year, Egypt receives about $1.55 billion in U.S. foreign aid, of which $1.3 billion is directed to the military. The Obama administration has earmarked the remaining $250 million to civilian aid programming, mostly in the economic development sector.

Under a long-standing provision of U.S. law — section 508 of the Foreign Assistance Act — the United States must cut aid to “any country whose duly elected head of government is deposed by military coup or decree.” In the aftermath of Morsi’s ouster, U.S. President Barack Obama has directed relevant aid agencies to review their compliance with U.S. law.

The U.S. president has, however, noticeably refrained from calling developments in Egypt a “coup” — which some analysts say is a deliberate effort on the part of the administration to skirt section 508. Humanitarian aid and democracy-promotion assistance are exempt from section 508.

Be it Pakistan back in 1999 or more recently in Mali, Washington has seen this movie before. Prompted by U.S. law, succeeding administrations have had to reevaluate their aid programs in countries where democratically elected governments are toppled by military coups.

Devex analysis of earlier cases reveals that the U.S. aid regime has consistently exercised leeway when applying section 508, which is likely to bode well for Egypt. After the Sept. 11 attacks, for instance, U.S. lawmakers granted the Bush administration waiver authority to resume aid to Pakistan, which remained under military rule following a coup.

In both Madagascar and Mali, humanitarian imperatives appear to have pushed the Obama administration to continue providing U.S. aid to these countries, albeit through largely nongovernmental channels. Meanwhile, following a 2009 coup in Honduras, the administration only gradually suspended assistance, apparently in a bid to influence negotiations for a political settlement.

The performance-based U.S. aid agency, the Millennium Challenge Corp., has also flexibly applied section 508. Following both the Madagascar and Mali coups, the MCC fully terminated its compacts with both countries. MCC’s compact with Honduras, on the other hand, was subject only to a partial termination following the 2009 coup in Tegucigalpa.

Pakistan, 1999

Just three days after General Pervez Musharraf seized power in a bloodless military coup, in October 1999, Clinton administration officials invoked section 508 and announced that the United States would withhold foreign aid to Pakistan. The move was largely symbolic. Since 1990, Washington had suspended the bulk of its military and development aid to Pakistan, in light of Islamabad’s alleged nuclear activities.

Following the attacks of Sept. 11, 2001, however, the United States was quick to change course on its aid engagement with Pakistan. Keen on enlisting Islamabad as a key ally in counterterrorism efforts, the U.S. Congress granted President George W. Bush the authority to waive section 508 with respect to Pakistan in October 2001. U.S. military and development aid to Pakistan would rise dramatically under his administration — from $24 million in 2000 to $974 million in 2008. Bush exercised his waiver authority on section 508 until Pakistan held democratic elections in February 2008.

Since then, while Pakistan has not been spared from cutbacks in the Obama administration’s U.S. aid spending, the country has maintained its standing as one of the largest recipients of U.S. foreign assistance. For fiscal 2014, Obama has requested $1.2 billion in assistance to Pakistan, of which $766 million is development aid. Last month, Nawaz Sharif — the man whom Musharraf ousted from office back in 1999 — was elected for a third term as prime minister in Pakistan’s first civilian transfer of power.

Thailand, 2006

On Sept. 19, 2006, Thai Prime Minister Thaksin Shinawatra was deposed by the military, the country’s first coup in nearly 15 years. Acknowledging that a military coup had occurred, within days the Bush administration suspended $24 million in military assistance to Thailand. Historically, Thailand has not been a major recipient of U.S. development aid.

Thailand would not hold general elections until December 2007. In February 2008, a little over a week after a Shinawatra ally was confirmed as prime minister, then-U.S. Deputy Secretary of State John Negroponte certified to Congress that Thailand was once again under a democratically elected government.

In a bid to shore up Thailand’s fragile democratic institutions, the Obama administration has since stepped up U.S. democracy and governance assistance to Thailand. For fiscal 2014, the administration has requested $4.6 million in democracy and governance aid to Thailand, compared with $5.5 million in military aid.

Madagascar, 2009

Hours before the army-backed opposition leader Andry Rajoelina was inaugurated as president in March 2009, the Obama administration moved to suspend nonhumanitarian aid to Madagascar. Madagascar President Marc Ravalomanana had stepped down days earlier when the army stormed his offices in the capital, Antananarivo. The Obama administration has labeled the transfer of power to Rajoelina a “military coup.”

Citing the undemocratic change of government, two months later, the MCC board authorized the termination of its $110 million, five-year compact with Madagascar. Madagascar’s compact — which entered into force in 2005 — was the first to be terminated by the MCC.

Four years on, Rajoelina remains in power and is expected to contest long-delayed presidential elections set for August. While U.S. nonhumanitarian aid is still officially on hold, the Obama administration has since channeled tens of millions of dollars in U.S. health assistance to Madagascar through nongovernmental channels. In fiscal 2014, Madagascar is slated to receive $49 million in U.S. health assistance, representing the entirety of the administration’s aid budget for the country.

Honduras, 2009

A day after Honduran President Manuel Zelaya was whisked into exile by the military in June 2009, U.S. President Barack Obama called his removal a “coup” and acknowledged that he remained the country’s duly elected leader. That same day, however, U.S. Secretary of State Hillary Clinton indicated that cuts to the U.S. aid program in Honduras were not on the table. Some critics charge that the administration was in no hurry to sanction the new military-backed leadership in Tegucigalpa, having replaced the left-leaning Zelaya.

The administration, however, quickly reversed course and over a week later announced the suspension of $20 million in nonhumanitarian aid to Honduras. The State Department did not actually formalize this suspension until September, a move which was arguably timed to influence negotiations for resolving the political standoff in Tegucigalpa.

MCC also signed off on $11 million in cuts to its Honduras program. The performance-based aid agency, however, held off on fully terminating its five-year, $215 million compact with Honduras.

In March 2010, a month after the swearing-in of newly elected Porfirio Lobo as president, U.S. Secretary of State Hillary Clinton certified to Congress that democratic governance had been restored to Honduras. Despite lingering questions from Democratic members of Congress over Tegucigalpa’s human rights record, the administration quickly resumed its aid engagement in Honduras. In March 2013, the MCC board approved $15.6 million in assistance to Honduras aimed at assisting the country in becoming eligible for a second compact. The administration has requested an additional $54.5 million in aid to Honduras for fiscal 2014.

Mali, 2012

A week after renegade soldiers toppled President Amadou Toumani Toure’s government in March 2012, the Obama administration froze about $70 million in nonhumanitarian assistance to Mali. In May 2012, the MCC board also authorized the early termination of its five-year $460 million compact with Mali, which had been scheduled to conclude later that year. The administration has since called Toure’s ouster — which followed the seizure by al-Qaida-linked militants of the country’s northern region — a “coup d’état.”

As in the case of Madagascar, however, Mali has continued to receive U.S. development assistance — including $83 million in health support — through largely nongovernmental channels. The United States also pledged an additional $32 million in emergency aid to Mali at a donors’ conference in May. According to the State Department, funding for U.S. aid programs in Mali has been allocated on a case-to-case basis.

Earlier this year, a French-led military offensive drove most of the al-Qaida linked militants out of Mali, paving the way for presidential elections at the end of this month. The Obama administration is keen on bolstering its aid engagement with Mali, in no small part due to the country’s geostrategic importance. The administration’s $180 million assistance request for Mali in fiscal 2014, however, is not expected to kick in until a newly elected government is formed in Bamako.

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About the author

  • Piccio

    Lorenzo Piccio

    Lorenzo is a contributing analyst for Devex. Previously Devex's senior analyst for development finance in Manila, he is currently an MA candidate in international economics and international development at the Johns Hopkins School of Advanced International Studies in Washington. Lorenzo holds a bachelor's degree in government and social studies from Wesleyan University.

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