The Cable

Egyptian Embassy: We fired our Washington lobbyists for budgetary reasons

It was the Egyptian government that terminated its lobbyists in Washington, a senior official at the Egyptian embassy in Washington told The Cable Monday, not the other way around, as those lobbyists are claiming.

On Saturday, The Cable reported that the Livingston Group, run by former Rep. Bob Livingston (R-LA), the Moffett Group, run by former Rep. Toby Moffett (D-CT), and the Podesta Group, run by Tony Podesta, had unanimously severed their combined $90,000 per month contract with the Egyptian government. The three firms had formed an entity known as the PLM Group, which had received more than $4 million from the Egyptian government since 2007. The trio came under fire last week for circulating talking points defending Egypt's Dec. 29 raid of several NGOs working to train political parties in Egypt, including three organizations partially funded by the U.S. government -- a dispute that has escalated to include barring NGO workers from leaving Egypt, including Transportation Secretary Ray LaHood's son Sam LaHood, the head of the International Republican Institute's Cairo office.

"We handed the principals of the group the letter of termination. We were surprised by some of the statements made on their behalf," the Egyptian embassy official told The Cable. "We are under instructions from Cairo to try to cut costs, taking into account the economic crisis we are facing in Egypt."

"One of the things that they have instructed us to do is to cut our embassy budget and they specifically instructed us to cut the budget by cancelling the contract with PLM, and we did that in accordance with the contract itself."

Sources at the PLM Group said that they had warned the Egyptians earlier in the month that if the NGO situation wasn't resolved, they would have no choice but to drop Egypt as a client. Late last week, the three principals met with the Egyptian ambassador, who swiftly handed them a letter of termination, the sources said.

"That's not true," the Egyptian embassy official countered. "There was no ultimatum that was given to us by PLM that would terminate their contract with us."

So will the Egyptian government now hire new lobbyists? Not right away.

"This is something for the headquarters to instruct us with, so we're waiting and hopefully we'll get instructions soon whether to go ahead with hiring someone else or not. That also depends on the transition itself... so there will be a new approach, we think, to things like that," the official said, referring to the ongoing political process in Egypt.

The official also confirmed that a high-ranking Egyptian military delegation is coming to Washington later this week to meet with senior U.S. officials and lawmakers. That delegation is in Tampa, Florida, now, meeting with officials at U.S. Central Command, and will arrive in D.C. on Wednesday -- without their lobbyists at their side.

That delegation was pre-scheduled and focused on military-to-military cooperation, the embassy official said. The Egyptian military receives $1.3 billion annually from the U.S. government, aid that is now under new scrutiny due to the military's role in the NGO raids.

"They are coming to discuss military issues; this is a periodic delegation that meets with their counterparts to discuss issues of mutual interest," the official said. "It's not related to the NGO issue."

The Cable

Egypt gets dumped by its Washington lobbyists

All three of the lobbying firms representing the Egyptian government in Washington, D.C., dropped Egypt as a client late Friday amid widespread criticism of the ruling military council's raid of U.S. NGOs in Cairo and its refusal to let American NGO workers leave the country.

The Livingston Group, run by former Rep. Bob Livingston (R-LA), the Moffett Group, run by former Rep. Toby Moffett (D-CT), and the Podesta Group, run by Tony Podesta, unanimously severed their combined $90,000 per month contract with the Egyptian government, Politico reported late Friday, quoting Livingston directly. The three firms had formed what is known as the PLM Group, a lobbying entity created to advocate on behalf of the regime of former President Hosni Mubarak, who was deposed in February 2011 after 18 days of massive street protests. According to the disclosure filings, Egypt has paid PLM more than $4 million since 2007.

The trio came under fire last week for circulating talking points defending Egypt's Dec. 29 raid of several NGOs working to train political parties in Egypt, including three organizations partially funded by the U.S. government. The groups had been working in Egypt for years without being technically registered with the government, but now stand accused of fomenting unrest against the Supreme Council of the Armed Forces (SCAF), which has been ruling the country since Mubarak's ouster.

"It is bad enough when the actions of American lobbyists conflict with U.S. national interests. It is far worse when their influence-peddling undermines American values, as the Egyptian government's lobbyists in Washington are doing in this instance," said Sens. John McCain (R-AZ) and Joe Lieberman (I-CT) in a Jan. 24 statement. McCain is the chairman of the board of the International Republican Institute (IRI), one of the groups that had their Cairo offices raided. The other two groups were the National Democratic Institute, whose board is chaired by former Secretary of State Madeleine Albright, and Freedom House.

The anger in Washington against the Egyptian government reached a boiling point when it was revealed Jan. 26 that U.S. Transportation Secretary Ray LaHood's son Sam LaHood, the head of IRI's Cairo office, had been barred from leaving Egypt by the government along with five other U.S. citizens.

"To have an American lobbyist lobbying for a government where these activities are taking place -- is there no shame in this town?" said Rep. Frank Wolf on Thursday.

On Friday, Sam LaHood told NPR that he and the other Americans trapped in Egypt could face criminal charges, lengthy trials, and years of prison time.

"If we are referred to trial," LaHood said. "The trial could last up to a year ... and the potential penalty is six months to five years in jail."

The lobbying groups buckled under the public pressure, recognizing that they couldn't influence the SCAF's actions in this case and that their association with the military council was harming their broader image. For years, these firms have been defending the Egyptian military's $1.3 billion annual aid package on Capitol Hill and lobbying for non-military aid to go through the government, and not directly to independent organizations as many democracy advocates urged.

The Cable reported that in late 2010, Bob Livingston personally called Sen. Roger Wicker (R-MS) to get him to kill a Senate resolution calling for greater respect for human rights and democracy in Egypt. Wicker placed a hold on the resolution and it died in the Senate.

Egypt's lobbyists were also responsible for negotiating an endowment the Egyptian government wanted from the Obama administration. But the Mubarak regime demanded the money be given with no annual Congressional oversight, and the negotiations broke down.

Congress did place new restrictions on military aid to Egypt in the most recent appropriations bill passed in December, as a way of pressing the SCAF to move faster toward handing over its executive powers to an elected government.

According to the legislation, Secretary of State Hillary Clinton must certify that the Egyptian government is living up to the 1979 Egypt-Israel peace treaty and that the SCAF is supporting the transition to civilian rule. Multiple congressional aides told The Cable Friday that the aid is now in serious jeopardy.

"Needless to say, this whole crisis is going to make it a lot more difficult for the secretary of state to meet the certification requirements to continue providing assistance to Egypt," one senior Senate aide told The Cable. "People up here are completely seized with this issue. They're putting their friends in a really awful spot."

Another senior Senate aide noted that the Obama administration is doing a lot of work behind the scenes to deescalate the crisis, which is threatening to do long-term harm to the official U.S.-Egypt relationship.

President Barack Obama brought up the raids in a call last week with SCAF leader Field Marshal Mohamed Hussein Tantawi, according to the White House. Clinton, U.S. Ambassador Anne Patterson, Deputy Secretary of State Bill Burns, National Security Advisor Tom Donilon, and Lahood have been working the phones hard, calling contacts in Egypt to send strong messages and implore them to change course. Assistant Secretary of State for Democracy, Labor, and Human Rights Michael Posner was in Egypt on Jan. 26 and met with high-level Egyptian officials.

"Since the NGO raids in late December, the Obama administration has repeatedly provided paths for the SCAF to deescalate this crisis. Instead they keep escalating -- doubling down on a bad bet that, in the end, will prove ruinous to them," the Senate aide said. "Three weeks ago no one in Congress thought there was a chance in hell that aid to the Egyptian military could ever come under serious threat. It is now an increasingly and shockingly real prospect."

Ironically, McCain and Lieberman had been among the U.S. leaders most supportive of the SCAF and its role in maintaining stability during Egypt's fragile transition.

Many in Washington believe that the SCAF is being heavily influenced on this issue by one civilian Egyptian official, Fayza Abul-Naga, the minister of international cooperation and a holdover from the Mubarak era. In a speech this week, she disavowed the SCAF's previous promises to return the NGOs' raided possessions and cease harassing them as she lashed out at the American NGO groups.

Lorne Craner, the president of IRI, said in an interview Friday with The Cable that there is bad blood between Abul-Naga's ministry and the NGO groups. "Some people say that the people who used to get the money, for example the minister of international cooperation, resent the fact that they are not getting all of the funding," Craner said.

Meanwhile, the Americans and several of their locally hired staffers are enduring hours-long interviews as they await a possible arrest, which would only escalate the crisis.

"Things have gone from bad to worse," Craner said. "You start to think about Americans getting arrested on the streets of Cairo and sitting in a cage in some Cairo court ... And these are our allies."

UPDATE: On Sunday the Egyptian Embassy in Washington issued a statement claiming they dumped the PLM Group, not the other way around:

The Government of Egypt had decided to terminate its contractual relationship with the PLM Group. This decision was transmitted to the Group's principals on January 27th 2012 through an official letter, as the contract stipulates, that either party has the right to terminate the relation within a 60 days prior notice.

It is surprising that a distorted version of this fact is being circulated in some media outlets. It is equally disturbing that articles and media coverage of the issue were made without an attempt to contact the Egyptian Embassy to check the factual basis of the stories reported.

This Press Release attempts to clarify the situation in line with the official documents related to the matter including the letter of termination which was recently transmitted by the Embassy to the PLM Group.