SECRET
BUREAU OF INTELLIGENCE AND RESEARCH
(U) EGYPT: SADAT'S MILITARY REQUIREMENTS AND FUNDING PROBLEMS
Summary
(C/NF) Arab sanctions imposed against Sadat since the signing of the Egyptian-Israeli peace treaty have resulted in the withdrawal of considerable Arab funds heretofore available to Cairo for financing arms purchases from Western Europe and the US. Tentative and Confirmed purchases since 1976 are estimated at about $5.3 billion. The unavailability of Arab funds might affect 50 percent or more of this amount—including the F-5 deal with the US and a series of large contracts with France and the UK for major weapons systems.
(C/NF) Arab sanctions should not substantially degrade immediate Egyptian military capabilities. In the long term, however, Egypt's efforts to modernize its armed forces could be seriously affected.
(C/NF) Egypt could undertake a combination of measures to raise the funds necessary to fulfill existing contractual arrangements with the West:
- —commercial borrowing, assuming that credit will be available without Arab backing;
- —diversion of the resources from civilian imports, a politically as well as economically dangerous task;
- —cutbacks int he military modernization program which, if significant, could threaten Sadat's support within the armed forces; and
- — requests to the US for additional aid.
SECRET
RDS-27/2/99 (multiple sources)
July 2, 1979
