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This paper shows how international and local politics influence aid projects, using the example of the Helwan housing project in Cairo funded by the US Government’s Agency for International Development (US AID). Most discussions on aid focus on its economic role, neglecting how politics within donor and recipient countries shape it and often limit its effectiveness. Many aid agencies also assume that they can impose conditions to make “their” project more effective without recognizing the resentment and opposition this generates (which then reduces effectiveness). In describing the implementation of this project, which included upgrading for 200,000 people and 7,200 new serviced sites, the paper also shows the dependency of international donors on recipient government agencies. These agencies have considerable power, both in what they do and in what they choose not to do or to delay. Most of the Helwan’s project’s goals were not achieved. It did not change the government of Egypt’s approach to low-income housing and it did not even meet its goals within the project itself. At the-outset, no consensus was built between the different international, national and local agencies. The donor could not stop the funding in order to enforce project conditionality because it was under pressure to spend the money and because many vested interests would have suffered if the funding had been stopped