WASHINGTON — While dissatisfied with Egypt's progress toward reinstating a democratic government, the U.S. is holding out the possibility of restoring hundreds of millions of dollars in aid if its Middle Eastern ally moves toward free and fair elections.
At stake: a sizable portion of the $1.5 billion the U.S. provides Egypt each year. Much of the aid is in military equipment, and at least a quarter-billion in cash assistance to the Egyptian government and $300 million in a loan guarantee are also now in limbo.
The State Department made clear Wednesday that the decision to freeze the aid wasn't permanent and it could be restored if "credible progress" is made toward setting up an inclusive government in the wake of the military coup that overthrew the elected if unpopular government of President Mohammed Morsi.
Secretary of State John Kerry said Thursday the Obama administration remains committed to restoring democracy in Egypt and will stay engaged with its interim leaders.
"By no means is this a withdrawal from our relations or a severing of our serious commitment to helping the government meet those goals," Kerry said at a news conference in Kuala Lumpur, Malaysia. "We want this government to succeed, but we want it also to be the kind of government that Americans would be comfortable supporting and being engaged with."
In Cairo, military spokesman Col. Ahmed Mohammed Ali declined to comment on the announcement. Before the announcement, Gen. Abdel-Fattah el-Sissi, the Egyptian military leader, described his country's relations with the United States as "strategic" and founded on mutual interests. But he told the Cairo daily Al-Masry al-Youm that Egypt would not tolerate pressure, "whether through actions or hints."
The Egyptian military set up an interim government after Morsi's ouster, which came after massive anti-Morsi demonstrations in July. Military crackdowns against the Muslim Brotherhood and other Morsi supporters have left hundreds dead amid ongoing turmoil and soured U.S.-Egyptian relations.
The consequences of suspending aid extend beyond Egypt. The move will anger Gulf states, push Egypt to seek assistance from U.S. rivals and loosen decades of U.S.-Egyptian ties that that have been a bulwark of stability in the Middle East.
Neighboring Israel also has indicated concern. The Israelis consider the U.S. aid to Egypt to be important support for the peace agreement between Egypt and Israel.
Cabinet Minister Gilad Erdan said Thursday that while Israel was "disturbed" by the threat of a U.S. aid cutoff, "I hope this decision by the United States will not have an effect and won't be interpreted as something that should have an effect" on the treaty.