CAIRO - The Obama administration has decided to provide about $1 billion in debt relief for Egypt, a senior official said Saturday, in the boldest US effort yet to shore up a key Middle East ally as it attempts a democratic transition, the Washington Post newspaper said on Sunday. The aid would be part of a major economic aid package that also includes trade and investment incentives, officials said. It is intended to help stabilize Egypt after demonstrations forced out longtime President Hosni Mubarak on February 11. While the Obama administration has been preoccupied of late with the war in Libya and protests in Syria, it sees Egypt as even more critical for US interests. Washington has long regarded Egypt as a moderating influence in the Middle East. With one-quarter of the world's Arabs, Egypt could emerge as a democratic model in the region. Economic assistance for Egypt and Tunisia is “fundamental to our capacity to support their democratic transitions,” a senior State Department official said on the condition of anonymity. He said that officials were in the midst of “intense policy formulation” but that the economic package wasn't finished. Parts of it will need congressional approval.
