Defense Secretary Gates was asked at a news conference if US aid to Egypt would be conditional on the assurance that the state make progress in the way of democracy and human rights. He said no; this is a problem for the US and for Egypt and for the Arab world.
(Besides conditionality, many hope that some of the aid money will be earmarked for capacity building projects and economic development, not just for Mubarak's military.)
Brief background: Over the past years the US has thrown billion of dollars (8 to be exact) at Egypt; much of it goes to the Egyptian army, which Mubarak uses to suppress political opposition groups, many of them democratic groups who run for parliamentary elections, among other undemocratic things that are aimed at keeping himself in power.
Conditionality is a great way to indirectly encourage moderate change in regimes like Mubarak's in the Middle East. It is semi-underhanded, meaning it is not looked upon as the US 'democracy building,' a policy that is badly tainted right now in the region.
The Post advocates for conditionality on its editorial page.
A few months ago I attended a panel with Saad Eddin Ebrahim (Egypt rights activist) at GW put together by Prof. Marc Lynch (Aby Ardvark) in which Mr. Ebrahim discussed the benefits of conditionality; he had also been to Congress to make this argument.
More on this tomorrow, I've got to run.