Military Aid to Egypt:

Tank Coproduction Raised Costs and May Not Meet Many Program Goals

NSIAD-93-203: Published: Jul 27, 1993. Publicly Released: Aug 19, 1993.

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Pursuant to a congressional request, GAO provided information on the costs and benefits of the M1A1 tank coproduction program in Egypt, focusing on the: (1) rationale for the U.S.-Egyptian coproduction agreement; (2) cost of coproduction compared to the cost of supplying complete tanks; and (3) future plans for the Egyptian tank factory.

GAO found that: (1) the Defense Security Assistance Agency's (DSAA) decision to support U.S.-Egyptian coproduction of the M1A1 tank instead of supplying them directly was made for political reasons, raised Egyptian expectations for further U.S. support, and increased program costs by $1.9 billion; (2) although Egyptian officials believe that the additional costs of coproduction are justifiable and will foster economic development, modernization of the Egyptian tank fleet, self-sufficiency in tank production, manufacture of light armored vehicles, expansion of arms exports, and maintenance of M60 tanks, many of these expected benefits have not been realized and could further increase program costs; and (3) in anticipation of the end of the program in 1998, Egypt is seeking to convert the M1A1 factory for civilian production of heavy equipment that could directly compete with U.S.-made heavy equipment.

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