What to Do About Egypt

With the Muslim Brotherhood sidelined for the time being and the military once again firmly in charge, the Egyptian political landscape has settled into a three-way stalemate between the Islamists, secular liberals, and old-guard elites. Thomas Carothers of the Carnegie Endowment for International Peace, Former Ambassador Daniel C. Kurtzer, and Shibley Telhami of the University of Maryland discuss with CFR President Richard N. Haass what the goals of U.S. foreign policy should be, how much influence the United States still has, and whether idealism and realism are at odds in policymaking toward Egypt.

Each meeting in the What to Do About... Series highlights a specific issue and features experts who put forward competing analyses and policy prescriptions in a mock high-level U.S. government meeting.

HAASS: Well, good evening. And congratulations for not just braving, but conquering the traffic in New York today. You are an entrepreneurial crew if you managed to arrive here.

Tonight is the first of what we hope will become a series, bit of an experiment. And it's the "What to Do About" series. And what the idea is behind this series is we're going to take an issue that policymakers in the "real world," quote, unquote, are dealing with, are grappling with, and we're going to grapple with it ourselves. And on each occasion, we're going to get several experienced hands who often come at the subject somewhat differently, whether it's different backgrounds, different experiences, different expertises, what have you, and we're going to make believe it's a high-level U.S. government meeting.

And—but they're not going to role-play. We're not going to ask this or that individual to represent the State Department or the intelligence community or the Pentagon or anything like that. Instead, they're all essentially going to be counselors—indeed, there is a counselor at the State Department—or a minister without portfolio. So essentially, they have the right to go outside or in any and all lanes, so it won't be role-playing, if you will. It will simply be a chance for smart people to say smart things on whatever subject—or from whatever angle they would like.

And like one of these meetings, we are going to begin with a bit of setting the stage. Any such meeting—I've sat through approximately 4,383 of them—begins with a setting. Usually, the intelligence community gives it—you talked about stakes and situations, trajectories, and so forth. And then only after that was set, and it was clear, you know, where things stood, if you will, and where they might be going, all things being equal, and then you talked about what the prescriptive issues are. OK, what are the choices? And what might we do either differently or what might we do in the sense of more of the same?

And so we're going to spend about half-an-hour, give or take, kicking that around, and then we will open it up to you to ask all the questions that I wasn't smart enough to ask.

We've got three people tonight who will set a standard that my hunch is will be hard to beat down the road. Dan Kurtzer at the far end is someone I worked with for more years than either of us would like to count. Dan was the ambassador to both Egypt and Israel. Are you the only person who's done that?

KURTZER: No.

HAASS: Oh, OK. Who else did that?

KURTZER: Ned Walker.

HAASS: That's right. Dan is now a professor at the Woodrow Wilson School at Princeton University, and he's one of the authors of "The Peace Puzzle: America's Quest for Arab-Israeli Peace, 1989-2011."

Tom Carothers in the middle is the vice president for studies at the Carnegie—or "Carnegie," if you prefer—Endowment for International Peace in Washington. And he's the coauthor of an important book, "Development Aid Confronts Politics: The Almost Revolution."

And last but hardly least is Shibley Telhami. Shibley is the Sadat Professor for Peace and Development at the University of Maryland in College Park. He's also a non-resident senior fellow at Brookings, and he's the author of a new book, "The World Through Arab Eyes: Arab Public Opinion and the Reshaping of the Middle East."

And what's particularly good for tonight's session, Shibley literally returned from Egypt on an important Egyptian holiday, Thanksgiving, so his insights are fresh. Tom has been there at least four times over the past year. And Dan, as I said, was ambassador and continues to get there with some regularity. So we have three extraordinary resources here to guide us through this.

I'll just say one other thing in the way of introduction. The reason we chose this issue is not only its centrality, if you will, to the agenda, but I believe that Egypt, as much as any other issue right now, raises up some of the fundamental questions of U.S. foreign policy, and it's really the age-old question, in some ways, which is, how does one balance and contend with traditional interests, strategic interests of state, and how does one balance that at the same time the United States promotes democracy and human rights and that agenda? And how do you do both at the same time? To the extent you can, how do you make tradeoffs? How do you decide, and so forth?

So this has been a central fault line of American foreign policy, really, I would say, in some ways, since Woodrow Wilson, arguably before, but it certainly has over the last century. Time and time again, if you look at—if you unpack debates about American foreign policy, this thread or this theme of a realism versus idealism, traditional interests versus democracy and human rights comes to the fore, so Egypt is now simply one of the most recent or most important places where this issue plays out. And that's why, again, we chose it for the first of what we hope will be a valuable and enduring series.

Let's just start, then, with the setting. Shibley, you're the most recent arrival, so we'll start—just give us a sense of what is going on in Egypt. Let's begin with the politics, questions of stability, politics. What's the—the timelines out there? Just give us a sense of some of the basics, and then I'll ask Tom and Dan to fill in on what you don't get to.

TELHAMI: Well, thanks for inviting me to do this. I think what I'd like to do is, first, just put a broader background to it than just what's happening now, in the sense that, you know, when Mubarak was overthrown and the U.S. certainly was taken by surprise, like most analysts, I think a lot of people were not only taken by surprise, but were admiring of what had transpired. You had a—the public asserted itself in the Middle East on a scale we'd never seen before, principally calling for human rights, freedom, and democracy, mostly peaceful, particularly in Egypt and Tunisia, and it was hard not to jump on the bandwagon. And as you started off, Richard, you know, it looked like it was the perfect opportunity to narrow the gap between values and interests. So the U.S. jumped on the bandwagon.

I think what happened was is that we—in our moment of admiration—and I think I'm one of those people who still admire this empowerment that has taken place and think it's profoundly important and unchanging, not only in Egypt, but elsewhere—but we didn't sit back to analyze the consequences. We sort of pretended like publics know what they want, we pretended that publics are alike or unified or of one mind, and we pretended like, even when they're unified, publics really determine politics, when we know they always vie against institutions and interest groups and bureaucracies and power structures, even in a fully mature democracy like ours. I don't think you have as much power even as president of the Council on Foreign Relations as, you know, Adelson or someone, and certainly an ordinary citizen doesn't have as much as a corporation.

So I think we're not all equal in that regard. And I think what we've discovered over the past couple of years is that, yes, there is something profoundly new in the Arab world, and particularly in Egypt, and that is a public empowerment, probably enabled by the information revolution, and that's not going to go away.

But the reality is that everybody got empowered. You have the religious and the secular, the liberals and the conservatives, the ultra-religious and, you know, the old guard. And so everyone is really trying to figure out how to have their voice heard in the system, and at the same time, all the old institutions that ran the country still were there, the military being one of them. They're trying to figure out how to play their cards to still have weight in Egypt. Businesses, well-organized groups, remnants of Mubarak's regime, all of them are trying to figure out how to have a voice in this emerging system.

And so the thing that we really didn't calculate was that the fact that you have a public empowered and wanting voices heard doesn't mean you just jump on the bandwagon of the first movement of that...

HAASS: But I want to interrupt you now, because I want to be an impatient government official who's got a busy schedule. We are where we are where we are. And even though background and history are essential—I understand that—we are where we are. So let's—I want to turn then to Tom for a second, just to focus on, OK, we've got this background, and, you know, if we had to do it all over again, the United States maybe would have done some things differently. Arguably we should have done some things differently. In any case, you can't change where we are. So where are we?

CAROTHERS: We're in an unsettled revolution. As we see in Ukraine, nine years after the Orange Revolution, some revolutions take a long time to settle. And so what we're seeing right now, in a society which is riven by very different and diverse power sectors, an attempted reconstruction of the political order by significant elements of the old guard, minus Mubarak and his immediate cronies.

This means the military, the Ministry of Interior, the secret police, and the judiciary attempting to reconstruct a political order which they will civilianize through a process of constitutional referendum and elections, and will use the media to try to activate the population to take part in that civilianization process, and then they'll try to hold the country together with this reconstructed order, which will be civilian, elected probably, either Al-Sisi or someone else, quasi-democratic, but with significant constraints on political space in two ways.

They will have pushed the Islamists off the stage as much as possible, and they will constrain the main political space to keep others in check, so that they maintain power. So that's where we are. We're in the early stages of an attempted reconstruction of a partial authoritarian...

HAASS: In a second I want to ask you about whether that's achievable or sustainable, but before I do that, Dan, say also something about the economics. What's going on with Egypt? And then we'll turn to the question of whether what you describe as the effort here, whether this is, if you will, a viable strategy, all things being equal.

KURTZER: Sure. If Tom put on the stage that (inaudible) you want set some of the actors, let me deal with three processes, one that's under way, one that's not under way, and one that's heading south. The one that's under way is the so-called road map process. This was initiated...

HAASS: What process?

KURTZER: Road map.

(UNKNOWN): Road map.

HAASS: Oh, road map.

KURTZER: By the military when it pushed aside Mohamed Morsi, brought together some elements in the political system, and laid out a timeline for constitutional reform and then elections, moving to a new form of government based on a different constitution. That process is actually under way. The constitutional drafting committee finished its work this past weekend. There will be a period of some public discussion, and then there will be a public referendum, following which there will be elections. That's a process that's under way with all of its weaknesses and strengths.

One process that's not under way is reconciliation between the interim government and the Muslim Brotherhood. The Muslim Brotherhood is remaining steadfast in the belief that Morsi has been pushed aside illegally and that nothing can start on reconciliation until he is reinstated in office. And the system that's now in place, the military-backed interim government, sees that as a non-starter. And that's why you still have ongoing protests in the street.

And then the third process, which was the one you mentioned in the question, Richard, is an economy that has been on a relatively steady downhill slide since the beginning of the revolution. And it has been totally dependent upon external assistance largely from Saudi Arabia and the Gulf, just to maintain basic requirements, foodstuffs and imports and so forth, with no real amelioration in sight. The IMF has been negotiating now for a couple of years with Egypt, but just in the last few days, the Egyptian government has put out signals that it's not ready to reach an IMF agreement, which would open up a different kind of assistance and a different kind of investment.

So you have these three very different processes under way as you have this titanic struggle between the military and the Muslim Brotherhood for ultimate control over that system.

HAASS: Clearly implicit in what—and, Shibley, I'll come to you with this—is the military and a lot of the civilians—indeed, I'm not sure there are an awful lot of liberals or moderates left in Egypt, but a lot of people who used to describe themselves thus and maybe came out in Tahrir Square several years ago view the opposition and view the Ikhwan, the Muslim Brothers, as essentially illiberal and undemocratic. They may have won an election, but they basically said they had a taste of political power, we were right to come out and remove them. It was close to what Dan in a different life once described as one man, one vote, one time. And they felt that, unless they acted, that was going to be the end of the democratic experiment in any meaningful sense in Egypt.

So the question I have is really twofold. One, what is your take now of the Muslim Brotherhood? And, two, can the military prevail? Or is Egypt—unless they essentially find a way to give—they compromise, and maybe it begs the larger question, is there a compromise? Is Egypt headed towards civil war? Or are things so one-sided that we don't get there? A lot of questions. I apologize.

TELHAMI: First of all, you know, I don't—the military is obviously a central player, no question about that, and it was even when Mubarak was overthrown. It was they who made the decision to let him go, just as—by the way, as it was the military's decision to ask Ben Ali to go. In every country I the Middle East, the military has played a central role.

But I don't think that they think that they alone can rule. And that's very clear. When you look back even after they got rid of Mubarak, there was a sense that they had an opportunity to take over, but they understood that there's an empowered public, they wanted to play it out. And when they played it out initially, many in the military saw the ultra-liberals, particularly April 6th and others, to be actually anarchists. They didn't—they preferred—that's right after Mubarak—they preferred not to make a deal with them. And they actually preferred to work with the Brotherhood, because the Brotherhood seemed like status quo and initially didn't—wasn't ambitious enough to seek the presidency. They were going to go for the parliament. So...

HAASS: What about now?

TELHAMI: Now what—what you have is that they, I think, realize that they need some alliance. They took—they took the centrists, the secularists, and the liberals. They're going to have to make a choice. They can't rule—they have to govern either with the Brotherhood, the Islamists, or with the liberals. If they govern with the liberals, they're going to have to open up the system. There's an empowered public. They're going to get very uncomfortable with them. The coalition that overthrew Morsi was only unified in being an anti-Brotherhood coalition, but not in terms of the same.

So I think many in the military initially thought maybe they can crush the Brotherhood. What I sense in my most recent visit is that many voices who thinks they can't do that and they're—that their—the constitution that is being proposed, that's now with the president, that is going to be voted on within a month, under that constitution—I met with Amr Moussa, who's heading the constitutional committee, to ask him about what the constitution allows. And he said it does allow for the Muslim Brotherhood, the Freedom and Justice Party, to run, the Salafi Nour Party to run, if they choose to run.

Obviously, they're going to have independent candidates in the election. A lot of people—in fact, everyone I talked to believes that if there's parliamentary elections, the Muslim Brotherhood will run, either by supporting independent candidates or as a party. If they run, the system obviously will change. If they don't, I think they're going to have a choice and, personally, I think if—if the military makes the mistake of thinking they can simply crush them, it will come back to haunt them.

CAROTHERS: I think they believe they have to let them back into the system, but their goal is to weaken them as much as possible before they let them back in. In a way, they're sitting down at the table to negotiate, and their first move in the negotiation is to punch the Islamist sector in the face as hard as they can and say, "Now let's talk terms." They're in the middle of punching them in the face.

HAASS: Is the goal not just to weaken them, but also to structure the system in a way that means the Muslim Brothers can't ultimately dominate it again?

CAROTHERS: Yes. I mean, there's the possibility of dissolution of the Freedom and Justice Party, which is the Brotherhood party. There are other Islamist parties that have less popular support which they will let participate. They hope they can fragment the Islamist sector a bit so when they come back into the system, they'll be weakened both structurally, as well as, in a sense, morally by the media campaign against them and the whole war on terrorism narrative that the military establishment has been putting forward.

KURTZER: I would say, looking at it from the perspective of the Brotherhood, that they're at a Yogi Berra moment. You know, when you come to the fork in the road, take it. And they think they have an option of remaining adamant in their demand that Morsi be reinstated and that ultimately the system will have to come back to that them.

And they don't really have that option, which leaves them two options that they have not yet fully explored. One is the path of reconciliation, and it may involve disbanding their current party and forming a new movement of some sort that is less identified with the Muslim Brotherhood, but certainly represents the Muslim Brotherhood.

Or the other is to go back underground. And I would be a little bit less benign than Tom, I think, in his comments. I don't think the military is particularly interested in reaching accommodation with the Brotherhood. I think the military would be just as happy to stand fast, see the Brotherhood stand fast, and ultimately to force the Brotherhood back underground, where the system has learned to deal with the Brotherhood over the past 80 years.

CAROTHERS: I was distinguishing the Brotherhood from the Islamist sector, Dan. I think they—they think they can hit the Brotherhood hard and maybe crush it as an organization, disband the party, but they know in a sense there's a core Islamist sort of sector, if you will, that can translate into political support for some parties that have an Islamist orientation.

HAASS: Let me then go move ahead a little bit, which is, OK, Egypt's roughly a quarter to a third of the people in the Arab world. That said, it's—all this is going on, and I don't get the sense that the Arab world is getting up every morning watching to see what happens in Egypt. As goes Egypt, so goes Egypt. But as goes Egypt, what else goes? I mean, what are the stakes now for the United States? And to put it another way, are the stakes that we had in Egypt a decade or two decades ago, have they changed? And have they in some ways become more modest?

CAROTHERS: Actually, the Arab world has been watching what's happened in Egypt really closely. In Jordan, it's had big ramifications. In Libya, the Islamists in Egypt have been watching and saying, is this what happens to Islamists when they participate? Saudi Arabia has put its feet in. You know, actually, it's having a lot of ramifications in the Arab world, before we get to the U.S. role.

KURTZER: Yeah, it is happening.

CAROTHERS: So it is—it is a series of ripple effects around the Arab world...

(CROSSTALK)

HAASS: But that's—so Egypt as an example will have consequences more than Egypt in and of itself? Or...

CAROTHERS: Before we get to the question of U.S. interests, but first, it is—Egypt remains weak as it is economically, it still remains very consequential in terms of Arab political life.

TELHAMI: Why are all the Gulf states putting billions of dollars in and Saudis sort of saying they could commit up to $40 billion, if Egypt isn't important? It's very central to them. It's for the legitimacy movement. I think what happened in Egypt has put the Muslim Brotherhood on the defensive elsewhere, not only in Tunisia, but even in Jordan has applied the breaks.

But this is separate from Egypt's role in the region, which obviously has changed since Camp David, but it's still important. Think, for example, just immediately on the Israel-Palestinian question, the Gaza issue, immediately. You know, you can't do anything about Gaza without coordination with Egypt. Think about the vacuum in the Arab world. Yes, Egypt is weakened, but when you look at who are the states that are still, you know, not only symbols, but have some political influence, Syria is out, Iraq is out, Libya is in a mess, so you really are looking at the Gulf states, principally Saudi Arabia and Egypt.

And Saudi Arabia needs Egypt, actually. And for that reason, I think Egypt's role is central. And I think that, in the short term, for all of the issues that actually the U.S. has to deal with, Iran, the Arab-Israeli issue, the presence of American forces, the war on Al Qaida, that's huge. And even bigger than that, America's interests in the stability of Egypt. Look at how worried we are about instability in Syria, and that instability in Syria, with Al Qaida taking hold, imagine if it were to happen in a place as huge in Egypt, what the consequences would be. So, yes, it's very important.

KURTZER: I think there are two fascinating aspects of this—of your question and the situation. Number one, until February 2011, this region had become accustomed to not having Egypt as a leader. You know, you go back three or four decades, Egypt was the established leader. And then since Camp David, Egypt kind of receded into the background.

Comes the revolution, and all of a sudden, the emergence of great powers, like Qatar, and a lot of people in the region say, well, maybe we actually do need an Egypt. Maybe we need some heft in Arab policy, number one.

Number two, the other reason that's very interesting now in the way the rest of the region is looking at this is not so much the success of Arab democracy or non-Arab democracy. It's whether there's going to be Islamist Arab democracy. And if it succeeds or fails in Egypt, it will have tremendous ramifications for the rest of the region.

Right now, it looks like it's failing. Nobody pays much attention to Tunisia, where it may actually be—I don't want to say succeeding, but it may be doing better. But Egypt's going to be the real test case, whether or not an Islamist movement can play in the political arena as the society grapples with these questions of political freedom and democracy.

HAASS: You set up, all of you, a very interesting way of looking at it, that basically—that two of the principal actors in Egypt are faced important fundamental choices. The military has to basically decide whether it reaches out with some kind of a cooptation or compromise strategy or plays hardball. And the Muslim Brotherhood has to decide whether it's willing to put aside its principal that it won the election and nothing can happen until Morsi's reinstated, which is not going to happen, and they've got to decide whether they're more pragmatic.

So the question is, in this, what does the United States want? And just as important, what do we have—what tools do we have? What—you know, with the Saudis and the Gulfis pumping in enormous amounts of money that dwarf our aid levels, what can we actually call upon now? What are our tools? Before we get to how we ought to use them, what's essentially in our toolbox right now?

CAROTHERS: Before we turn to the tools, let's focus on what we want, because it is confusing. And you started, Richard, by highlighting the fact that in U.S. foreign policy there's so often a division between ideals and interests. And it's certainly true in Saudi Arabia or China; the interest in democracy often has to be sacrificed for other interests.

This is different. And I would argue—and I'll see what my colleagues up here, how they react to this—that we have to think differently here. Once a society has risen up and the people in the society say, we want some real power, we want a different relationship to the state, stability in that society is only going to be achieved, and stability is what the United States wants in Egypt. The United States wants an Egypt that's stable and coherent.

Stability will only be achieved through some kind of democratic order, some sort of inclusive order, some kind of pluralistic order. It was the lack of that that led to Mubarak's fall. It was the lack of a democratic approach by Morsi that led to his ouster.

If the military continues down a road of saying an exclusive order can work in a society that has risen up, they will face the same fate in some fashion. So this is an unusual case where the U.S. interest in democracy is our interest in stability. Democracy in Egypt is the only path—given that the society has risen up, wants power to achieve a stable Egypt over time.

TELHAMI: Well, I think that while in principle I agree, I don't think we are the instrument of democracy in the Middle East.

CAROTHERS: I didn't say we were.

TELHAMI: Yes, but what I'm saying is...

CAROTHERS: I'm saying the Egyptian people are an instrument...

(CROSSTALK)

TELHAMI: Therefore, I don't think we have—you know, in terms of what we want and in terms of instruments, for me, yes, we should take positions of standing and pushing regardless. Our ability to influence events in Egypt is minimal. And what is going to happen in Egypt is going to be really not up to us one way or the other.

CAROTHERS: I agree with that, but let's first agree on what we want.

TELHAMI: We can, but—and that's why I say, I think when you look at it, therefore, you have to ask that relationship that we have with Egypt. You know, you can ask the question that Richard asked, which is, should we just pull out? And is Egypt important for us at all?

But if you argue that there is something that we're getting in that strategic relationship with Egypt, which is in the short—forget about the long term. We don't even know what's going to happen in a year. Look at how many times we've been surprised in Egypt itself. Something could happen in six months.

But when you're looking at the American agenda, look at the short-term agenda. The president says he wants to deal with Iran in six months. He wants an Israeli-Palestinian deal in six months. We have an ongoing American presence, you know, in the Gulf. We have a war on, you know, Al Qaida in the Middle East. All of these issues, that's where Egypt comes in.

So the question is, you have to ask yourself, do I find a way to work with them and still push them on the margins, knowing that that's not going to be the case? Our investment in Egypt was never about democracy. And it was always about strategic benefits. So...

CAROTHERS: And it led to—and it led to an unstable Egypt.

TELHAMI: I don't think it had to do with us. It had to do with Egypt. And I think right now, that's not likely to happen, not because of us, but because you have an empowered public. It wouldn't let the military get away with it. And if they think they're going to get away with (inaudible) you're going to have not just the—not just the Islamists, you're going to have the liberals and centrists...

(CROSSTALK)

CAROTHERS: That's precisely what I'm saying. That's precisely what I'm saying.

HAASS: Actually, you sound like you're agreeing. I may disagree with both. But, anyhow, go ahead, Dan.

KURTZER: Look, I think setting this up as a binary choice between two polar opposites, you know, the fact that people rose up, we have to support that strain of activity, as opposed to not, I think, is absolutely false and is probably dangerous for the United States. We have a set of interests that have guided us for 35 years in Egypt, and they've paid dividends. Middle East peace process, Egypt is the cornerstone of what we do or fail to do in the peace process. Strategic relationships, which have paid dividends, including when we're fighting wars. Intelligence and counterterrorism, access through the Suez Canal and otherwise, and economic reform.

Now, as Shibley said—he's 100 percent right—we had never established democracy in Egypt—maybe it's a mistake, but we never established it as a primary objective of the United States. So to say now that somehow we failed and that the policy now has to shift from one side of the spectrum to the other I think loses sight of the fact that...

CAROTHERS: It isn't that we failed...

(CROSSTALK)

KURTZER: Let me finish, please—loses sight of the fact that we need to try to maintain what our strategic interests are while we are also trying to use whatever tools are still at our disposal, and we'll discuss them in a moment, to try to help Egypt through this process.

Shibley is also 100 percent right that the value of the American relationship to Egypt in terms of our ability to influence Egyptian decision-making is at an all-time low. There's no question about it, and not just because of the diminution of our aid, but also because the Egyptians now perceive either that we are totally in bed with the Brotherhood or totally in bed with the military. And everybody in Egypt distrusts us. Everybody.

HAASS: It has to be a big bed to accomplish that.

KURTZER: Yeah.

(LAUGHTER)

HAASS: We're the one thing Egyptians now—so let's talk about—I mean, there seems to be—actually, I think—I'd say two things. One is, there seems to be something of a consensus that the—our influence is modest, at best, but whatever it is, we still need to exercise it. Not exercising what it is we could do is just as much of a policy option as everything.

I do think there are tradeoffs between democracy promotion and other interests. A perfect example is whenever the military does things we don't like—and here we begin to creep into the prescriptive—do we penalize them for it? Do we incentivize them to do certain things? Do we penalize them if—either to discourage them from doing things or as a reaction to them having done it?

And what we've had so far is what you might call is a policy of limited criticism and limited penalization. Or another way of saying it, we've had continued—you know, we've continued with the bulk of our support economically and militarily, and we've rolled back elements of it.

So depending—you said the glass is two-thirds full or one-third empty, however—I'm going to confuse everybody if I keep going here. But the bulk of our aid relationship is still in place, militarily and economic, but we've curtailed elements of it. And so the question is, what is the range of things, public, private, what we say, what we could do, increase, decrease aid under certain circumstances, refocus aid under certain circumstances? What is it essentially we can do here?

(CROSSTALK)

KURTZER: But, you know, the part of our aid that's important to the military is now suspended. That's the part that's been suspended. So if you wanted to take that argument you made, which is if the military does something we don't like, we penalize them, we've done it.

The part of our aid that still obtains has to do with social, economic, humanitarian assistance and some counterterrorism assistance, which, frankly, is quite important, given what's happening in Sinai, a very unstable area. So we may have reached a very critical decision point. If you start cutting aid further to penalize a system that you don't like, you're going to be—you're going to end up penalizing yourself. Our own interests are going to be...

TELHAMI: And I would add to this, I mean, there are real intellectual choices. One intellectual choice is saying, we don't have enough interests, we're going to make a principle of this is democracy and human rights. We're going to pull up our aid. That's a legitimate position, arguable but legitimate.

The other position is to say, no, we have some important interests in Egypt and we need to influence events as much as we can, certainly on foreign policy, but domestically. If you do that, you don't cut off aid.

CAROTHERS: You guys keep slipping...

TELHAMI: Can I just finish on one thing? The argument is that we're only influencing on the margin. Think about the military calls to the Egyptian military after Mubarak was overthrown. Do you shoot on the street? Do you shoot on the demonstrators or not? I would argue that we had tremendous influence with them on that decision.

When they had to announce whether Morsi won or didn't win, it was a close call. They were all trying to figure out what to do on that. The American decision and the influence of our Pentagon directly with them certainly had weight.

Right now, even in this environment, on Saturday, Secretary Hagel made his 26th phone call to Morsi—to Sisi. So I think those private conversations actually, when you have that consolidated relationship that's relatively safe, that's independent from what's happening, have far more influence than punishment.

CAROTHERS: Two things. We've seen consistently over the last two-and-three-quarter years that all those phone calls from the Joint Chiefs and the secretary of defense and others with the Egyptian military have had almost no influence on their political trajectory. They may sound good. They may make us feel good. At every step of the way, they have done what they wanted.

When Deputy Secretary Burns was there in early August trying hard to get them not to suppress with violence the demonstrators, they went ahead the next week and did it. All of those high-level consultations have added up to very little.

But you guys keep slipping back and thinking democracy is just about principles. If we want to see an Egypt which is stable and coherent over time, Egypt has changed. We cannot go back to the old ways of thinking of relationship management with the military institution and simply say that democracy is a nice extra. If Egypt does not manage to become a more inclusive society, it will be racked by instability, radicalization, and other things that are bad for our hard security interests.

This is not a tradeoff between our democratic principles and our hard interests. This is a time and a place where we have to see that they're interlinked.

KURTZER: But no one disagrees with that.

(CROSSTALK)

HAASS: If I agreed with you...

CAROTHERS: He doesn't.

HAASS: What is it—what is it we would do differently starting tomorrow? What's the policy consequence of that argument?

CAROTHERS: It's not dramatic, because our influence isn't dramatic, but it is a change in certain ways, and it isn't about cutting off aid further. I agree with you there, Dan, or suspending more aid. But when we talk about the unfolding transition there, we don't say—we don't celebrate it, the road map, as a democratic transition. We say that we're concerned about the crackdown, we're concerned about the exclusion of Islamists, we would like to see this road map lead to an inclusive order.

We have certain principles which we believe are good for you, and so we're not going to get sort of joyously happy when a constitutional referendum is held and elections are held and say Egypt is now a democracy. When high-level officials go, they're going to stick to certain principles because it is good for our hard security interests to remind the Egyptian military establishment that cracking down will lead to both exclusivity and radicalization of...

HAASS: But other than the power of argument, which is essentially what you're saying, which in my experience only takes you so far in foreign policy, what is it we have besides the power of argument? What is it we could either promise to do or say or condition one way or the other in order to make it more likely that, in your case, the military would begin to go down a more inclusive path?

CAROTHERS: The Egyptian military is very concerned about its public image. Sometimes it's small things. After the crackdown in August in which the security establishment in Egypt killed over 500 people in one day, which is a significant event, there was very little public criticism of it. And, for example, the U.N. Human Rights Council didn't take that up. The Egyptian military was very concerned that it would. It did not want to get on the agenda in Geneva and be held up in front of the world and so forth.

The United States could have at least broached with them the idea that you did something really terrible, and actually there are fora at which those get discussed, and we might be part of that. So there are other mechanisms we have other than simply cutting off aid or making relatively empty pronouncements to draw attention to the fact that we do have both values and we have an understanding that those values will be good for Egypt and good for our security...

(CROSSTALK)

HAASS: One last question, and then I'll turn to the other two guys, and then I'll open it up. Are you at all worried that a more—a political opening by the military will give the people who were running Egypt a chance to get back in and they—they continue to have an illiberal agenda that would be bad in the long run for democracy and bad in the long run for U.S. interests?

CAROTHERS: I'm more worried that if the Islamist sector is completely excluded, certain elements of that will move off the political stage into radicalization. That concerns me more than them winning a big election.

HAASS: OK. Dan?

KURTZER: You know, the way Tom has framed kind of next steps I don't disagree. I think we should do a lot of jawboning, and I think there are things that we can do to manifest our discontent with Egyptian policy. The problem is, what happens the day after we do that? Because what you've seen in Egypt is you have a large mass of people who will not be quieted again, as they were in the past, but they don't have a clue about what they want, and there's no organization within that mass of people that's stepped forward, no individuals, you don't have heroic leaders that have stepped forward. You know, the one heroic leader people thought, ElBaradei, ran away. And there's nobody else around whom this system has coalesced to represent a kind of beacon out there that you can play with.

So, yes, we should continue to jawbone, to make clear to Egypt the things we like and don't like, and to use mechanisms like the Human Rights Council or others, but we're talking about a long-term process here of an Egyptian—what we've been calling the liberal opposition trying to figure out how to organize itself and how to get itself ready to compete and to contest elections in an emerging democracy. And that's not going to happen the day after we jawbone the military for doing something wrong.

TELHAMI: I would add one more thing, which is that, you know, we have this sense—you said that, I think, Richard, about how the Muslim—I think it was Dan—the Muslim Brotherhood think we're in bed with the military, the military accuses the U.S. of being in bed with the Muslim Brotherhood.

I don't think there's anything we can do, even if we genuinely intervene on behalf of democracy and human rights, that will lead a majority of Egyptians to say we're doing it for the right reasons. The mistrust is profound. It has to do with decades of American foreign policy, big-ticket items, Arab-Israeli issue, Gulf, everything else.

And so I think that's why I'm very skeptical about any—and, frankly, I don't even know that Washington knows how to do it and look at how well we've managed this sort of thing. So I think taking a position, but not...

(CROSSTALK)

HAASS: Let me ask one last question, and then I promise to stop. Given all that, what about a policy where we would restore full levels of aid, we'd try to strengthen the state, deal with our interests, and continue to argue what we think they should do in their own self-interest? That would strengthen our relationship, presumably, to the military. It would make a lot of our friends in the region happy who are worried about this. And it would help us—it would help us cooperate in the areas we can cooperate in, and we'd have to agree to disagree about the democracy, but at least then we'd have a stronger relationship with these guys. We'd protect those interests we could.

And we're very used to the idea of conducting, if you will, multi-personality relationships, so we would have a relationship with these guys, that our strategic cooperation would continue much more, at the same time, we'd have to agree to disagree, and we'd continue to privately and publicly argue what we think they should do about democracy and we'd try to strengthen civil society independently where we could. So why not basically take the sanctions off the table and say, there's really only two choices in the short run, we don't want to bring the Muslim Brotherhood back, we want to work with these guys, gradually we want them to evolve, but in the meantime we're going to strengthen our strategic ties?

(CROSSTALK)

CAROTHERS: That would be a mistake.

KURTZER: I vote for that. No, and I—I testified before the Senate right after the military pushed Morsi out and basically said the same thing, that we're not going to accomplish that—Richard and I get along this way...

(LAUGHTER)

CAROTHERS: If we restore the aid right now, Richard, we would be...

KURTZER: Let me just finish one thing, Tom, one thing. It's a question of not just going back to the old way of doing business. I mean, we—I think we should make a statement and make it clear that we're prepared—we're in. We've jumped in. But we also have some things that we want to see happen.

And I'll give you one example. When we had the NGO crisis—what was it now, almost two years ago, two-and-a-half years ago—that's a place where we could have made a stand, because we had been working with the Egyptians for years in a situation where our NGOs were not licensed, and then all of a sudden, for their own internal reasons, had nothing to do with the NGOs, they clamped down on the NGOs.

NGOs are important. They're an important vehicle for us to play out this longer-term strategy of building capacity, institutional and individual capacity. So if we are going to take this leap into one or the other camp—and I'm with you in which camp to leap into—I would accompany it with a very strong demarche to the Egyptians that said, look, there are things that we want to see happen, and we want to see a vibrant civil society growing, and we can help in that respect, and we expect you not to clamp down on them.

CAROTHERS: How can we say that we want a vibrant civil society if we restore aid to a military that's in the process of cracking down on that civil society? If we were to restore the aid which we've suspended now, we're sending two signals, one to the military saying we're on board with your project of cracking down, which is quite harsh right now, and, secondly, we're sending a signal to the, yes, somewhat incoherent, but still sizable group of Egyptians who want a more inclusive and democratic Egypt, we're not with you. We're with that old policy that led you to hate us so much in the first place. Is that what you want?

TELHAMI: Well, I would, you know, reframe some of what you said, Richard, a little bit differently, in terms of the Brotherhood particularly. I would say we work with the Egyptian government and the will of (inaudible) the Egyptian people. We're realistic about our interests.

But I wouldn't take a position on the Muslim Brotherhood. I think that they're—you know, separate from the organization, they have grassroots support. If they were to enter the parliamentary election tomorrow, I think they'd get probably 20 percent of the seats. That's my estimate. So we can't write them off. They're going to come back...

HAASS: No one suggested...

TELHAMI: ... and be part of it.

HAASS: OK, I promised to open it up. Michelle?

QUESTION: Michelle Caruso-Cabrera, CNBC. So much of the discussions about Egypt are about democracy and democratic freedom, and rightly so, but it's my understanding that economic freedom is also problematic, because the military controls such a large part of the economy. One, is that perception correct? And, two, do you have a good number on how much the military controls? I've seen estimates of 40 percent to 70 percent. You could drive a truck through those.

KURTZER: The estimates I've seen actually don't go up to 70 percent. They go from about 10 percent to 40 percent. I would believe the 40 percent more than I would believe the 10 percent.

But the system's totally opaque. It's very hard to know exactly what the military controls. And what they have done over the decades is to use their intrusion into non-military production sectors—you know, if they're producing bullets and guns, that's what they're supposed to do, but they've used their intrusion into other sectors of the economy to be a kind of safety valve.

So before Ramadan, when food imports go up considerably, if Egypt doesn't have the capacity to finance those imports, the military will dump some of its food into the economy, or appliances, or other goodies for the population. So it's a very, very challenging problem.

And one of the—I think one of the great casualties of this revolution was the beginning of liberalization that was taking place after the Ahmed Nazif cabinet came into office in 2003. It was not a rush to liberalization, but you saw an Egypt that was beginning to expand the room for private-sector growth and you saw at least the economic ministers committed to doing that and pushing up against the military. Ultimately, they were going to be involved in a titanic struggle anyway. What happened after the revolution is all those guys ended up either in jail or in exile, because the military didn't want to be pushed on economically the economic question.

CAROTHERS: The new constitution—my colleague, Nathan Brown, has an analysis which will be out tomorrow, which says that the military—and I agree with everything Dan said, but take it a step forward. The new constitution, which is about to promulgated, as he puts it, doesn't any longer have the military be a dominant part of the executive branch. It has the military as a separate branch of government. They have control over the Ministry of Defense, so that the minister of defense is appointed by the military. They have the ability to try civilians in their courts and so forth.

The military is the big winner in the new constitutional process, and this is how they're trying to lock in their institutional and economic situation, and this is why, if you have a system that they're trying to reconstruct this order, that's what leads to the dissatisfaction down the road that will come back to haunt them.

TELHAMI: The military is still influential, but, no, the appointment of the defense minister is given to the military for two more—for two more rounds of the president, for eight years, so it's not...

CAROTHERS: Three years.

TELHAMI: ... after which, it's supposed to be taken out of that.

HAASS: That's an optimum.

TELHAMI: But it's not—you know, it's...

(CROSSTALK)

HAASS: Got lots of hands, so I'm going—we're going to try to keep the answers short, maybe not all three on every answer. Allan?

QUESTION: Allan Gerson. I was wondering if there is a co-relation between U.S. policy towards Iran and U.S. policy towards Egypt. For example, is the Egyptian leadership looking at—as it undergoes its own re-evaluation of how important it is to have good ties with the United States? Is it looking to the recent U.S.-Iran accord to—and factoring that in to that question?

TELHAMI: You know, I discussed the issue of Iran, obviously, with Egyptians while I was there last week. And the Egyptians actually are very open-minded and positive about the accord with Iran. They certainly don't want to see a nuclear Iran. They want to use it as a way to push their agenda, which is a nuclear-free zone in the Middle East.

They understand the Gulf concern about Iran. And I think, actually, for the United States, as the U.S. tries to manage the Iran issue in the Gulf, meaning to have cooperation in the Arab world for a potential accord within six months, or if there's no accord, to deal with the aftermath, which is going to put you on a path of confrontation, you're going to need some key allies. I think Egypt actually is in a very good position to work with the Gulf, because it's in some ways closer to the American agenda on the Iran issue than it is to the Saudi agenda and yet they have this close relationship, where the Saudis need them for legitimacy, they need the Saudis for funds. So there's a role for them to play.

KURTZERCAROTHERS: Richard, if I might just on this, because I don't agree with Shibley, and I'll tell you why. The Israelis have had a non-declared nuclear program for decades, and yet in the early 1980s, Egypt formally gave up its own nuclear program.

When the Iranian program started to make headway, the Egyptians started talking about re-nuclearizing their energy sector and, therefore, acquiring the technology and the know-how to do whatever else they needed to do. I think the Egyptians are seriously concerned about the Iranian program. And part of what you see today with the military...

TELHAMI: I didn't say they weren't. I said they're for the diplomatic solution.

KURTZERCAROTHERS: But I think their concern is as great, if not greater than the Saudi concern, because that's where I differ with you.

HAASS: Maurice, do you have your hand up? I'm sorry. Maurice (inaudible)

QUESTION: In broadening U.S. interests beyond the Egyptian borders, and also coming back to the effectiveness of the tools we have, what do we do when we say—or try to do things in Egypt? And on the other side, you have the Saudis who come in and say, do the opposite and we'll write you a big check. And you have the Russian foreign minister and the minister of defense parachuting in and saying, any time you need something, come and there's our telephone number.

HAASS: Well, Dan, why don't you take that? You're a former official. You're in a—you know, the American era in the Middle East, shall we say, is not quite what it was.

KURTZER: Yeah. Yeah. Look, first of all, if you follow Richard's policy prescription, then the Saudis are not going to come in and say to the Egyptians, "Do the opposite," because they're looking for that kind of American policy, which is basically, no, we don't want a return to Mubarak or Mubarakism, but we do want the stability that a military-backed regime provided and we want the United States to support it.

So if you follow that policy, the Saudis will be more than happy to go along. If you don't, which is essentially where we are today, we're kind of vacillating between these polls as though there is a binary choice, then the Saudis are going to play and they're going to play with their money, and the Russians will play with their influence.

Now, you know, I'm not—I'm not nervous about the Russians coming back in, in a large way, because they don't have the capacity to do so now. And the Chinese don't have the interest to do so now. But that shouldn't, you know, give us a false sense of complacency about the importance of Egypt to our strategic interests.

So, you know, it depends what policy you follow. If it's a policy of essential stability, where you're also promoting some democratization, Saudis are not going to be a problem for us.

HAASS: Yes, ma'am?

QUESTION: Hi. Sarah Leah Whitson. I think the one thing that you three, four maybe have consensus on is that the U.S. does not really have leverage in Egypt right now. And if we accept that premise, I wonder whether there shouldn't be an orientation of also acknowledging that U.S. policy is not neutral, that giving $1 billion in aid is not a matter of more leverage or less leverage, but is actually doing harm.

And I wonder whether there might be a perspective where the U.S. policy acknowledges that there's no leverage and says, at minimum, we don't want to do harm by aiding and abetting military—and it's not just the Egyptian government, it's one particular arm of the Egyptian government that the U.S. is giving aid to—aiding and abetting them, so effectively empowering the military to carry out their crackdown, and symbolically enabling the military and thus not in the U.S. interest to be seen as aligned with an abusive government.

Just as a matter of basic principle, basic interest, wouldn't there be a perspective that says we could reorient our aid as rent for the Suez, where it needs to be, but not otherwise give aid to an abusive government, so that it's not particularly prescriptive?

TELHAMI: Well, you know—Sarah Leah, first of all, good to see you—and, you know, I think from—if the issue was strictly about democracy and human rights, you might be able to construct an argument like that. I'd love to see it, but you might be able to, and therefore say, you know, is our money going to help or hurt more on the issue of democracy? Good argument. And you can fall both ways on that one. Maybe your argument will be stronger.

I don't think that's the aim of the money. I think the question that you have to ask yourself, if you're not going to be able one way or the other to really sway or make the difference in Egypt on your own, even if you're, you know, maybe hurting a little bit or helping a little bit, but you have a more important strategic interest that you need to consolidate because Egypt is central for certain strategic goals that you have, and then meanwhile we know what America's priorities are, Iran, Israel, Palestinian Palestine, et cetera, and if—if that's your aim, that you have to ask the question, you know, is this—is this aid useful for that? And you have to weigh it against that. And that's why I think the issue cannot be talked about without consideration of strategic aims.

I think the money was never about—you know, is it—the question of helping democracy or hurting democracy. It isn't now.

CAROTHERS: In a way, because we've been so close to the Egyptian military and such a deep aid relationship, even a partial suspension gets you some of what you want to do in terms of sending signals both to them that we're not fully onboard with their crackdown approach, it sends a signal to the public that we're not fully on board with it, either, yet it still maintains some of the useful relationship with the military that we have.

And so I think it's not ideal. But in a way, because we're so, you know, deeply linked with this military, even the partial suspension was a fairly loud signal.

HAASS: KT?

QUESTION: KT McFarland, Fox News. I was in Cairo two months ago and spent two hours with General Al-Sisi. And the impression that he very clearly conveyed was one of great not only disappointment, but a sense of real bitterness to the administration in Washington, feeling—and he said, you know, it's not the aid, it's not the money, it's the fact that you didn't endorse us. It wouldn't have cost you a penny if you had endorsed us, and it would have made all the difference.

The sense I got was such a sense of betrayal from the United States, from the administration. My question to you is, do you think that can be repaired?

HAASS: I'd piggyback on the question. Could it be repaired? And what would the United States get for repairing it or...

KURTZER: Well, I'd add Al-Sisi to those beds that I indicated before. You know, he represents another sentiment about U.S. policy, which is very, very strong. The answer is, sure, it can be repaired, and the reason I think it can be repaired is that if you take a hard look at American interests and Egyptian interests, before 2011 and after 2011, putting democracy over the side here, nothing has changed. And, in fact, some of those interests have intensified.

I think the instability in Sinai has brought home to Egypt a period of—long period of laxity in its approach to the emerging problems in Gaza, of Hamas and other terrorism. I think Egypt's concerns about the Nile waters have brought home to Egypt its own insufficiencies with respect to its military capabilities. I think the problem or the question of spillover of what's happening in Libya is very disturbing to Egyptian strategic thinkers.

So if you take—again, putting democracy over here—if you take a listing of the vital interests that brought our two countries together, nothing has changed, and I think it's intensified. And that's why I think that over time you get over, you know, the feeling that we should have been supported better. You know, there will be more Chuck Hagel conversations, and Sisi at some point will, you know, begin to get over the hurt. And we'll manage to find a way to work with them.

TELHAMI: It's not really about Sisi. It's really—you know, I think it's a zero-sum game in Egypt right now. It's a zero-sum game. And there's no nuance. And they don't like somebody to sit back and reflect and their—that's the way that whole thing is posited. And some of it is tactical; some of it is genuine. So, I mean, you have to make an assessment about what that—you know, what that's about. I think—I sense—and I met with the military, as well, while I was there—and I sensed they deeply want to have a relationship with the U.S.

Now, you can argue about why they want that. You know, does that translate into influence? I think it does. And that's why I think that, if you have the strong relationship that you have with them, you can use it for leverage. You can push on the margins. But ultimately, it's going to be the Egyptian street that's going to push him, not America.

HAASS: Sure.

CAROTHERS: On August 14th, Egyptian security forces lobbed tear gas into a crowded square. As people ran out of the square, snipers on the roofs shot them, unarmed protesters. Over 500 people were killed in the space of hours. If he feels betrayed that we didn't completely embrace that, I'm happy about that.

HAASS: Got time for one last—yes, ma'am?

QUESTION: Raven Bukowski. Clearly for us, a civilian control of the military is an essential component of our democracy, but I don't think the Huntingtonian model quite fits Egyptian culture. So my question for you is, how important is it to Egyptians that their military subordinate themselves to civilian leadership?

TELHAMI: Well, you know, we have lots of public opinion polls, and one of the interesting things is that, initially after Mubarak was overthrown, the military was very popular, and there was always this kind of conventional wisdom, the military institution is revered in Egypt. There's some truth to it, dating back to, you know, wars.

But in fact, by the time of the Egyptian presidential elections—that is, by May 2012—when I did a poll in Egypt, we had—the majority of people said that, actually, the military did not—was not behind the goals of the revolution. So they've lost faith in the military just before the elections. They were losing faith during that period. Now it's swung all the way around, and people are rallying behind it.

So I don't think this relationship with the military is independent from what's happening around. And so I don't see it as sacred. They do want—a lot of it depends on who the Egyptians are, because obviously the coalition behind the overthrow of Morsi is very broad it seems.

HAASS: I'm going to—we started a few minutes late, we're going to end a few minutes late. I just want to come back to Tom's comment for the last question, because I think that, in some ways, captures a lot of this debate. Your reaction, if Sisi's upset that we've somehow reacted critically, cut off aid after he committed, you know, one way or another was involved in killings, too bad for him, you can live with that.

When you say that, though, is that because you feel that by being negative towards him, we make a statement that somehow reverberates to our credit around the world about our principles? Do you think in the long run this will affect Al-Sisi's policies? Do you think this will somehow make us friends and build us influence in Egypt? What is it you think we gain by saying we're going to be, quote, unquote, "principled" and we're going to distance ourselves from this person we disagree with in this sphere? Does it somehow help promote democracy in Egypt? Does it promote U.S. influence in Egypt? Does it promote the rest of the U.S. interests in Egypt? What is it you believe you achieve with that kind of a stance?

CAROTHERS: You gain three things, Richard. First, you send a signal to the military that a political program of intense crackdown on civilians is bad for them and bad for Egypt and likely to lead to a less stable and more radicalized Egypt over time.

Secondly, you send a signal to Egyptian citizens that you do have some principles and standards and you're not in the old policy of forgiving the military for whatever it does to the country.

Third, you send a signal to the rest of the region, which is also trying to become more politically empowered in other parts of the world, that the United States does have a few principles and is smart about realizing the relationship between inclusive politics and long-term stability.

HAASS: Dan, any reaction to that? Or Shibley? And then we'll end it there.

KURTZER: Look, that was not a moment—if we go back to the question, that was not a moment when the United States was going to indicate support for the Egyptian military, and it was a moment—I can't quote you the State Department or White House spokesman comments—but it was a moment when we were critical of the crackdown. And the words were quite tough.

But it also was a moment that reflects this dilemma that's pervaded American policy since February 2011, and that is you are—we are concerned about stability. The—we are concerned about maintaining the relationship. We are concerned about human rights. And we're trying every day to balance these in a way that hasn't come out quite right.

So I agree with Tom that it's nothing to be proud of. We would not have been proud of a support for Morsi. But I think we were critical to the extent that the administration thought it could be and maintain the position we have in Egypt.

HAASS: When I used to teach at the Kennedy School, we used to basically tell the first-year students that foreign policy is hard. This is a good case study, where foreign policy is hard. So I want to thank these three wise men here.

(APPLAUSE)

And thank you all for, again, braving the traffic. Thank you.