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Related Topics World » Egypt » Middle East Turmoil » By Marwa Awad CAIRO | Fri Oct 12, 2012 1:40am EDT CAIRO (Reuters) - Egypt has no foreign military bases on its soil and has no plans to downsize its armed forces, said the military spokesman, rejecting media reports claiming so. Military aid from the United States of $1.3 billion per year allows Egypt to reduce its defense procurement related costs, Colonel Ahmed Ali said in response to reports Egypt's army contracted with U.S.-based security companies. "There are no American or foreign military bases in Egypt," Ali told reporters on Thursday. "There never has been and there never will be any foreign military bases in Egypt. This is a fixed stance in Egyptian national security policy to preserve national sovereignty. "Any decision to install military bases in Egypt would be a political decision taken over many stages including presenting the matter to the national defense council and parliament for consideration. But this issue is farfetched." There are 1,600 Multinational Forces and Observer troops from the United States, Canada, Australia, France and other nations in the Sinai to monitor the 1979 Egypt-Israel peace treaty. The MFO facilities are sometimes mistaken for foreign bases. The U.S. Embassy in Cairo issued a statement also denying the presence of U.S. military bases in Egypt. "The security and stability of the armed forces cannot withstand being subject to suspicion or faulted analysis and guesswork resulting from lack of understanding of how the armed forces is managed," Ali said. Egypt's armed forces were thrust to the forefront of politics when the military council took power from President Hosni Mubarak in February last year, gradually coming under immense public scrutiny for what many said was its mismanagement of the interim period and the army's lack of transparency with the public. But after new President Mohamed Mursi reshuffled the council, installing younger commanders more in tune with a growingly skeptical public, the military has moved to recover its image as a professional nationalist institution. Ali also denied talk that the Egyptian army was being downsized, saying such talk was "illogical." Egypt's armed forces are the biggest in the region and U.S. WikiLeaks cables have cited there was pressure on Egypt to downsize its army. Ali sought to explain the army's reliance on U.S. military aid, the subject of much contention among activists and officers within the military who say the aid arrangement was not in Egypt's defense interests. "The U.S. offers Egypt military aid annually worth $1.3 billion," he said. "This aid is a contract in kind and not in cash. Egypt does not receive money but receives weapons, equipment and spare parts to develop its armament system. There are training missions to exchange expertise between the two countries." That aid is carried out through contracts set up between Egypt's armed forces, the U.S. Defense Department and U.S. private and government security companies, one of which is Dyncorp International Inc, said Ali. The U.S. State Department relies on private security contractors to protect its staff movement in countries across the Middle East such as Iraq and Egypt and has awarded several five-year contracts to private security contractors including Dyncorp worth $90 million to offer services to U.S. Army personnel in Egypt. "A contracting company like Dyncorp offers logistical and administrative services to U.S. technicians and experts training Egyptian army personnel," Ali said. "This saves Egypt a lot of money in comparison to what we would spend if we deal with such visitors on an individual basis. These companies are brokers who help manage the aid." The army has been under pressure from activists and politicians to bring its unannounced defense budget, which includes a sprawling business enterprise and industrial complex, to parliamentary oversight. (Editing by Bill Trott) World Egypt Middle East Turmoil Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. 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