Egypt Cracks Down On NGOs Just after noon on Dec. 29, Julie Hughes, the Egypt country director of the U.S.-based National Democratic Institute (NDI), got a phone call saying police were raiding the group's office in the south. Thirty seconds later, over a dozen men, roughly half of them armed with AK-47s, burst into her Cairo headquarters, while other teams assaulted the NDI's offices in Assiut and Alexandria. "It was impressive logistically," Hughes recalls. As the officers piled in, she immediately called the NDI's local lawyer, then the American Embassy. A man in dark glasses commanded her to hang up. Hughes told him she was an American citizen. "Hang up the phone or we'll take that too," he snapped. They wouldn't tell her who ordered the raid, only that they called him "Mr. Prosecutor." NDI staffers were herded into the office's conference room as men rifled through everything in the office, loading up files, computers, and phones. They took cash from the office safe and Skype video-conferencing equipment. The raid lasted six hours. Afterward, the police asked Hughes if she had any big boxes to help them cart the stuff away. That day, 10 civil-society organizations operating in Egypt were raided, including U.S. pro-democracy groups International Republican Institute (IRI) and Freedom House, which, like NDI, receive U.S. government funding. The Ministry of Justice launched an investigation into the groups and interrogated employees; Hughes's own questioning lasted four and a half hours. At least seven Americans, including Hughes and IRI country director Sam LaHood, son of U.S. Transportation Secretary Ray LaHood, have been banned from leaving Egypt. With Egypt still wracked by pro-democracy protests a year after the uprising that overthrew Hosni Mubarak, the ruling Supreme Council for the Armed Forces (SCAF) has taken to blaming "foreign hands" for the continued unrest. In their search for scapegoats, they've launched a full-scale investigation into civil-society groups. But storming NGOs, interrogating U.S. citizens, and banning them from leaving the country has strained U.S.-Egypt relations, and threatened the sacrosanct $1.3 billion in military aid from the U.S. that SCAF thrives on. The vilification campaign against supposedly foreign-backed rabble-rousers has resonated with a suspicious Egyptian public. And over the summer, the generals unleashed the country's biggest enemy of foreign funding and civil society: Minister of International Cooperation Fayza Abul-Naga. One of the few ministers from Mubarak's government to hold on to her cabinet seat, Abul-Naga has been a dogged campaigner against human-rights organizations and their foreign sources of funding since her appointment in 2004. But never had she been given so much leeway to go after them. Egyptian soldiers stand guard during a raid on the US National Democratic Institute, an NGO operating in Cairo., Filippo Monteforte / AFP-Getty Images Foreign funding has always been a sensitive issue for Egypt. But the raiding and closing down of local and international NGOs puts SCAF on an unprecedented collision course with new U.S. legislation that ties ongoing military aid to the Egyptian Army's commitment to a democratic transition. "The fact that it's threatening to interrupt that assistance to military aid, inevitably that's a real threat to the U.S.-Egypt relationship more broadly," says Stephen McInerney, executive director of the Project on Middle East Democracy in Washington. Egypt's authoritarian government has had a stormy relationship with the NGOs that operate outside of its control. In the 1990s, the government laid down stringent conditions for NGO registration, forcing many to register as civic companies instead, which left them vulnerable to crackdowns whenever it was politically expedient. Based on the regime's interpretation of a 2002 law, any group working in civil society and receiving foreign money should register with the Ministry of Social Solidarity for approval or risk being branded a foreign agent - as may happen to the groups now under investigation. At first, U.S. administrations sought approval from the Egyptian government over which NGOs to fund. But in 2004, Congress agreed that U.S. assistance should not be subject to the prior approval of the Egyptian government. From 2005, the United States Agency for International Development (USAID) in Egypt began distributing "direct grants" to NGOs, registered or unregistered, sparking fierce backlash from Abul-Naga over national sovereignty. When U.S. President Barack Obama took office, his administration decided to try to improve relations with a number of Middle Eastern countries. "The government of Egypt said privately during the transition ... one thing you could do to remove tension from the relationship is to go back to the old way of handling NGO grants," says Michele Dunne, director of the Rafik Hariri Center for the Middle East at the Atlantic Council in Washington, and a former specialist on Middle East affairs at the U.S. Department of State and the White House. The new administration compromised and from March 2009 began funding only registered NGOs - though other smaller funding arms of the U.S. government, like the Bureau of Democracy, Human Rights, and Labor, continued to finance unregistered groups, but with far less money to disburse. At the center of the NGO controversy sits Abul-Naga, whom many see as the architect of the present crackdown. Described as fiercely intelligent and deeply committed to what some have called a personal vendetta, Abul-Naga - a former U.N. ambassador who is well aware of how human-rights groups operate overseas - is seen as strongly devoted to Mubarak and was herself the target of NGOs during her 2010 parliamentary campaign, when they reportedly accused her of buying votes. Abul-Naga appears to be gaining influence with SCAF. For years she had been pushing for American aid to flow to a government-held endowment, which would distribute funds as it saw fit. The Ministry of International Cooperation declined to comment for this article. However, following the uprising that toppled Mubarak, USAID once again began distributing funds to unregistered NGOs in an effort to be part of Egypt's democratic future - a move that antagonized Abul-Naga. Meanwhile, the revolution's honeymoon with SCAF ended a few months after Mubarak's fall and Egypt's generals found themselves under increasing criticism from rights groups over the country's emergency law and the use of military trial for civilians. As protests in Cairo flared, human-rights groups demanded the ruling council step down and stand trial for abuse of authority and the deaths of protesters. The fact that these groups and many like them were funded from abroad also infuriated Egypt's rulers. And so the regime struck back. In July, Abul-Naga announced the creation of a committee to investigate "direct foreign funding of unlicensed Egyptian and foreign NGOs operating in Egypt," according to a Human Rights Watch (HRW) report. Then, the Central Bank ordered all 39 banks operating in Egypt, domestic and foreign, to inform it and the Social Solidarity Ministry about any transactions on the accounts of unregistered NGOs and to check whether the groups received authorization from the ministry to receive funds. In mid-September, the cabinet announced that a Justice Ministry report had identified more than 30 unregistered NGOs receiving unauthorized foreign funding - an offense punishable with imprisonment under Egyptian law, according to HRW. SCAF's actions did not go unnoticed in Washington. Last December, Congress included conditions in the annual appropriations act on military assistance to Egypt. To release funds, Secretary of State Hillary Clinton must certify "that the Government of Egypt is supporting the transition to civilian government including holding free and fair elections; implementing policies to protect freedom of expression, association, and religion, and due process of law." Not long after that, the raids began. Supporters of Egypt's military council protest outside the American Embassy in Cairo in early January., Mohammed Abed / AFP-Getty Images The severity of the crackdown suggests Abul-Naga's concerns over NGOs resonate deeply with SCAF. "All the democracy and governance assistance flows in the direction of establishment of a truly democratic system in which the military will come under civilian control eventually and will need to be accountable," says Dunne, "So I think there's a certain amount of signaling here to the United States: "Don't think you can push us to that direction. We're not going to go quietly."?" U.S. military assistance to Egypt is set to run dry in March, and experts say it's unlikely that the administration will be able to certify compliance by that date, unless SCAF and Abul-Naga drastically change course. Meanwhile, Defense Secretary Leon Panetta and Obama both spoke with the head of SCAF, asking for the Americans to be allowed to travel and discussing aid. Last week the minister of justice rejected a letter from U.S. Ambassador Anne Patterson asking to lift the travel ban; as of press time, it had not been lifted. Our job is to help Egypt become successful. Our interest is to try to work with the Egyptians to create an inclusive, safe, secure, and democratic country, and instead of talking about that we're stuck in this rather unfortunate situation in which civil society, a crucial component of democracy, is being constrained," says a U.S. official familiar with the matter. Watchdogs say the real problem is not so much the attack on U.S. organizations but the targeting of those trying to hold Egypt's leadership accountable. The problem is with the whole approach of the investigation. It is one that puts the entire human-rights community at risk," says Heba Morayef, an HRW researcher in Egypt. Once you set the investigation in motion ... then all of these organizations are vulnerable. Even if Egypt releases the Americans, the ongoing crackdown on human-rights groups will make it difficult for Clinton to get Congress to sign off on aid. While the administration could delay funding for several months or exercise the waiver over select projects, it would be difficult to do if the situation continues to deteriorate.