WASHINGTON — Nearly 16 months after first pledging to help Egypt’s failing economy, the Obama administration is nearing an agreement with the country’s new government to relieve $1 billion of its debt as part of an American and international assistance package intended to bolster its transition to democracy, administration officials said.
The administration’s efforts, delayed by Egypt’s political turmoil and by wariness in Washington about new leaders emerging from its first free elections, gained new urgency in recent weeks, even as the United States risks losing influence and investment opportunities to countries like China. President Mohamed Morsi chose China for his first official visit outside of the Middle East, although a spokesman said the crisis in Syria was the main issue driving the visit.
In addition to the debt assistance, the administration has thrown its support behind a $4.8 billion loan being negotiated between Egypt and the International Monetary Fund. Last week, it dispatched the first of two delegations to work out details of the proposed debt assistance, as well as $375 million in financing and loan guarantees for American financiers who invest in Egypt and a $60 million investment fund for Egyptian businesses.
The assistance underscores the importance of shoring up Egypt at a time of turmoil and change across the Middle East, including the relatively peaceful uprisings in Egypt and Tunisia, Libya’s unfinished transition, the showdown over Iran’s nuclear program and the war in Syria.
Mr. Morsi has called for President Bashar al-Assad of Syria to leave power and end the bloodshed there, while China, along with Russia and Iran, has been a supporter of Mr. Assad as his military assaults opposition strongholds and civilians.
Given Egypt’s influence in the Arab world, the officials said, its economic recovery and political stability could have a profound influence on other nations in transition and ease wariness in Israel about the tumultuous political changes under way.
The administration’s revived push came after Mr. Morsi won the presidency in June and overcame a constitutional showdown with the Egypt’s military rulers.
Mr. Morsi and his Islamic movement, the Muslim Brotherhood, have since made it clear that the struggling economy is their most urgent priority, brushing aside reservations about American and international assistance and outright opposition to it from other Islamic factions.
American officials say they have been surprised by how open Mr. Morsi and his advisers have been to economic changes, with a sharp focus on creating jobs.
“They sound like Republicans half the time,” one administration official said, referring to leaders of the Muslim Brotherhood, which was long banned from office under the former president, Hosni Mubarak, a close American ally.
Hoping to capitalize on what they see as a ripening investment climate, the State Department and the U.S. Chamber of Commerce will take executives from nearly 50 American companies, like Caterpillar and Xerox, to Cairo beginning Saturday as part of one of the largest trade delegations ever. The officials and executives will urge the government to make changes in taxation, bankruptcy and labor laws to improve the investment climate.
“It’s important for the U.S. to give Egypt a reason to look to the West, as well as the East,” said Lionel Johnson, the chamber’s vice president for the Middle East and North Africa.
From the start of the popular uprisings in Tunisia and Egypt in 2011, President Obama and others argued that the United States and the rest of the world needed to address the poverty and joblessness that fueled popular anger and opposition to authoritarian governments in the region.
The assistance that Mr. Obama first pledged in a speech at the State Department in May 2011 has been slow in coming, because of the political turmoil and street unrest in Egypt, the sluggish bureaucracy in Washington and anger in Congress over the prosecution by Egypt of American nongovernmental organizations that promote democracy.
The delay has frustrated officials who fear that the United States has risked missing an opportunity to reshape a relationship that for decades was focused more on arms sales and security than on economic prosperity for a broad group of Egyptians.
“Our goal is to send a very strong message to Egypt that the government understands it’s not just about assistance,” Deputy Secretary of State Thomas R. Nides, who will travel with the Chamber of Commerce delegation, said in an interview. “It’s about growth and business.”
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