With Americans holed up in Cairo embassy, Egypt's lobbyists in DC quit

It takes a lot to get K Street to distance itself from a regime. Egypt's ruling military junta has manged the feat by investigating a group of American NGO workers for criminal prosecution.

On Sunday, a group of Egyptian officers landed in the US to lobby for their annual $1.3 billion stipend form Congress to keep flowing. Not coincidentally, Defense Secretary Leon Panetta called Egypt's military ruler, Field Marshal Mohammed Tantawi, to ask a little favor at about the same time. Would he please lift the travel ban on a group of Americans working on democracy promotion in Egypt? 

The answer, apparently, was no. Tonight the Americans, a group of employees for the International Republican Institute (IRI) and the National Democratic Institute (NDI), are holed up in the US Embassy in Cairo, avoiding possible arrest.

One of them is Sam LaHood, IRI's Egypt director and the son of US President Barack Obama's Transportation Secretary Ray LaHood. The US-funded groups' offices were raided in December, cash and equipment confiscated by armed Egyptian security officers.  A number of their local executives have been banned from leaving Egypt pending a criminal investigation, and the US Embassy has taken the group in on concerns that further measures will be taken against them.

How badly are Egypt's military rulers handling the relationship with the US? This badly: The lobbyists representing Egypt's interests in DC, led by former Representatives Robert Livingston (R) of Louisiana and Toby Moffet (D) of Connecticut, dropped their $90,000 a month contract a few days ago. The two former Congressmen had stuck with Egypt as Mubarak refused to step down last January, as the military killed and jailed protesters throughout the course of last year, and even defended the December NGO raids. But the direct targeting of the Americans, most with ties to the DC establishment, was a bridge too far.

Egypt's aggressive moves against IRI, NDI and others reflects the longstanding desire of Egypt's rulers, whether the junta running the show now or Hosni Mubarak before them, to control money flowing to domestic groups. Egypt has refused to grant operating licenses to either IRI or NDI despite multiple requests -- yet has allowed them to operate mostly unmolested (except for shutting them down for a time in 2006) for years.

Egypt describes its investigation into the groups for illegally funding Egyptian NGO's as a matter of national sovereignty. But spearheading the movement against the NGOs has been Minister of International Cooperation Fayza Abul Naga, who has for years pushed for America's economic aid to Egypt to be put into an endowment fully under Egypt's control, without preconditions.

Ms. Abul Naga demanded the criminal investigations that led to the raids. When she served Mubarak, her concern was the prevent the flow of foreign money to pro-democracy groups and regime opponents, something she was largely successful at. And if Egypt had simply been interested in restricting the activities of the NGOs, there would have been much less provocative means of going about it.

Egypt's funding is now on the line. While the $1.3 billion per year has generally been treated like an annuity, the Egyptian officers currently in the States are going to get an earful when they make their case for cash in Washington (and without their long time lobbyists to help out). Expect a climbdown by Abul Naga and her bosses in SCAF.