The Obama administration, undertaking a major review of U.S. relations with Egypt, edged closer to a decision Tuesday about curtailing some of America's $1.5 billion in annual aid after the Egyptian military's crackdown on supporters of ousted President Mohammed Morsi.
Top administration officials met at the White House to review the possibility of cutting military or economic aid to Egypt, a longtime U.S. ally and the most populous nation in the Arab world. Some cuts are forthcoming, according to U.S. officials, speaking on condition of anonymity because they weren't authorized to talk publicly about the sensitive discussions.
Tensions in Egypt have soared since the army ousted Morsi, who was the nation's first freely elected president. The July 3 coup followed days of protests by millions of Egyptians demanding that Morsi, who hails from the Islamist Muslim Brotherhood, step down. Some 1,000 people have been killed in ensuing violence.
The U.S. is in a bind. While it wants to continue aiding Egypt to maintain ties with the military-run government and assert its influence in the region, the Obama administration and lawmakers do not want to appear to be condoning the bloody crackdown. To express its displeasure, the U.S. suspended the delivery of four F-16 fighter jets to Egypt and canceled biennial U.S.-Egyptian military exercises planned for next month.
In canceling the military exercises, President Barack Obama said that America's traditional cooperation with Egypt "cannot continue as usual" while violence and instability deepen.
The administration now is deciding what it wants U.S. engagement in Egypt to look like and what, if any, aid, should be cut. Congress, meanwhile, appears split on whether to suspend the aid, with some saying that would deprive Washington of leverage over those in power in Cairo.
So far, Obama has opted against any swift reaction, insisting it would not serve U.S. national interests to suddenly eliminate funding for operations that cover everything from fighting al-Qaida in the heart of the Middle East and safeguarding the stability of the Suez Canal to halting weapons flow to the Hamas-ruled Gaza Strip and ensuring Israel's security.
For weeks the administration has said it won't characterize the military's takeover of the Egyptian government as a coup d'etat.'
Such a determination would not only make it appear that the U.S. was taking sides in the internal conflict, but it also would, under U.S. law, trigger an automatic suspension of most aid programs.
However, while the administration has not declared Egypt's military takeover a coup, officials are essentially treating it as such internally and are reviewing aid under the guidelines that govern such a determination, a U.S. official said. Stopping short of making a formal declaration gives the U.S. flexibility in what aid it might cut off, the official said. It also would make it easier to reinstate aid later.
The official spoke only on condition of anonymity because the official was not authorized to discuss the situation publicly.
The money is significant. Between 1948 and 2011, the U.S. provided Egypt with $71.6 billion in bilateral aid, according to a June report issued by the Congressional Research Service.
A number of U.S. interests are at stake. U.S. warships are given fast passage through the Suez Canal to deploy carrier groups to the Persian Gulf. Without that access, the ships would have to travel around the Cape of Good Hope, adding time to their deployment from Norfolk, Va., the report said. The U.S. also wants to keep the 1979 Israel-Egypt peace treaty intact, promote democracy and economic growth in the country and maintain Egyptian cooperation on intelligence and issues related to terrorist activity in the region.
The U.S. currently sends $1.48 billion a year in aid to Egypt.
The bulk of the money — $1.23 billion — is in the form of military aid. Since 2000, Egypt's military financing from the U.S. has been placed in an account at the Federal Reserve Bank of New York where the money stays until it is obligated. The money doesn't actually leave the U.S. Egypt uses the money to negotiate major arms purchases, such as tanks, with U.S. defense suppliers.
The State Department says some $585 million — almost half the military aid package for the year — has not yet been obligated. Spokeswoman Marie Harf said the administration hasn't missed any deadlines because it has until Sept. 30, the end of the fiscal year, to use the money.
Even as officials review aid to Egypt, the U.S. military has continued to ship thousands of spare parts for American weapons systems used by Egyptian forces, including armored personnel carriers, tanks and missiles.
The next military weapons shipments are scheduled to take place next month — including 10 Apache helicopters and a number of M1A1 Abrams tank kits, which include machine guns and other equipment used with the tanks. Defense Department officials said they did not know the exact number of tank kits scheduled to be sent in September.
Col. Steve Warren, a Pentagon spokesman, said those shipments are being reviewed, but the deliveries are continuing as planned. "There is no policy decision to suspend the shipment of any weapons systems other than the F-16s," Warren said. "Any suggestion of a de facto suspension is incorrect."
The rest of the U.S. aid to Egypt — $250 million — is in the form of economic support.
Harf said the U.S. is trying to abide by all requirements and has conducted a legal review of programs. So far, the review has found that most forms of U.S. economic aid to Egypt can legally continue even if a coup is declared because funds are spent on promoting democracy, health and rule of law programs and the like. She said, however, that there is a "tiny bucket" of economic aid that might be subject to cancellation because of the events that have taken place in Egypt.
European Union foreign ministers will hold an emergency meeting Wednesday in Brussels to forge a joint response to the recent violence in Egypt with discussions expected on proposals to halt aid programs and suspend arms shipments.
However, the threat to withhold aid — by either the U.S. or the EU — is weakened by the readiness of wealthy Arab states to prop up Egypt's new military-backed leadership. So far, they have promised $12 billion in new aid, chiefly from Saudi Arabia, Kuwait and the United Arab Emirates, who are longtime critics of Morsi's Islamist movement, the Muslim Brotherhood. The grants allow the government to pay for vital food and fuel imports.
AP White House Correspondent Julie Pace and AP Writer Lolita C. Baldor at the Pentagon contributed to this report.