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Egypt not expected to be hit hard by US aid cuts

By Lolita C. Baldor

Associated Press

Published: Saturday, Oct. 12 2013 5:37 p.m. MDT

For years, the U.S. has tried to wean the Egyptian military off the large tanks and planes used to fight a conventional war and get Cairo to buy counterterrorism items such as surveillance systems and electronics equipment. So far the military has resisted, partly because of the U.S.-Egyptian co-production tank program, which creates jobs in Egypt.

The U.S. decision is not expected to hurt giant U.S. defense manufacturers, but there could be ripple effects down the road at places such as a tank plant in Lima, Ohio, if the factory can't find other countries to buy the hulking tanks, each weighing close to 70 tons.

The Joint Systems Manufacturing Center, which is operated by General Dynamics' Land Systems division, is the only remaining plant that builds the tanks.

"For a program like Boeing's Apache helicopter, it's a blip on the radar screen because they are rebuilding hundreds of helicopters for the Army," defense analyst Loren Thompson of the Lexington Institute said. "But for a place like the tank plant, which is already on the edge, it can have outsized consequences."

The U.S. military is not buying the tanks, so the plant — Lima's fifth-largest employer with close to 700 employees — depends heavily on overseas sales. Egypt is one of the more reliable buyers.

The Harpoon anti-ship missiles, made by Boeing, are also purchased by other countries.

The Pentagon no longer is buying F-16 fighter jets, which General Dynamics makes. The planes are being used by other nations, including some in the Middle East. The U.S. now buys the more advanced F-35 Joint Strike Fighter.

"One of the appeals of the F-16 for the U.S. government in terms of overseas sales is that it is a capable fighter, but it is not deemed a threat to Israel," Thompson said. "So there is a greater willingness to sell the F-16 in the Middle East."

Defense officials are working to figure out how much the U.S. will have to pay contractors for the costs, such as storage, associated with holding up the delivery of the military ware and whether the delay triggers any financial penalties. The F-16s and Apaches, for example, were about ready to be shipped.

Congressional aides have estimated that these "wind up" costs could amount to a half a billion dollars or more.

It's unclear how long the suspension in aid will last.

Springborg speculated that it would end in a few months after an Egyptian constitution is ratified and elections are held.

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