The United States is cutting hundreds of millions of dollars in aid to Egypt in response to the ouster of President Mohamed Morsi and the crackdown by the military-backed government on his supporters.
The US provides US$1.5 billion in aid each year to Egypt. While the State Department did not provide a dollar amount of what was being withheld, most of it was expected to be military aid. A US official said the aid being withheld included 10 Apache helicopters at a cost of about $500 million.
The official provided the information only on condition of anonymity because the official was not authorised to comment by name.
The US decision to slash aid to Egypt will create new friction in Washington's already uneasy relations with the government that ousted the first democratically elected Egyptian president. And the consequences won't end there. The move will anger Persian Gulf states, push Egypt to seek assistance from US rivals and upend decades of close ties with the Egyptians that that have been a bulwark of stability in the Middle East.
State Department spokeswoman Jen Psaki said in a statement Wednesday that the US will withhold delivery of certain large-scale military systems as well as cash assistance to the Egyptian government until "credible progress" is made toward an inclusive government set up through free and fair elections.
The US will still provide health and education assistance and money to help Egypt secure its borders, counter terrorism and ensure security in the Sinai.
The US also will continue to provide parts for military equipment coming from the United States as well as military training and education. The US military has continued shipments of thousands of spare parts for American weapons systems used by the Egyptian forces, including armoured bulldozers for border security, radars and missiles.
In Cairo, military spokesman Col. Ahmed Mohammed Ali declined immediate comment.
Other details about what military assistance is being cut were not immediately known.
The US had already suspended the delivery of four F-16 fighter jets to Egypt and cancelled biennial US-Egyptian military exercises.
The next military weapons shipment for Egypt was slated to include the Apache helicopters as well as a number of M1A1 tank kits, including machine guns and other equipment used with the tanks. That shipment also was to involve some used missiles - which have been moved and handled, but not yet fired. They could be used for spare parts by the Egyptian military or they could be refurbished and fired.
The US and Egypt have gotten used to relying on one another. Egypt gives the United States permission to fly over its territory to supply American troops in the Gulf, allows the US to move men and materiel through the Suez Canal without delay and cooperates with American intelligence agencies. It is unclear if cooperation on these fronts will be affected by the aid decision.
The decision also is not just about money. There are fears that the suspension of some aid will embolden pro-Morsi supporters who oppose the current government to stage more protests because they think the military-backed government will be weakened by the cut in aid.
The US has been considering such a move since July, when the Egyptian military ousted Morsi. Ensuing violence between authorities and Morsi supporters has killed hundreds. The scheduled November 4 trial of Morsi on charges that he incited the killings of opponents while in office and the US decision to cut its aid to Egypt threaten to add to the turmoil.
The cutoff of some, but not all, US aid also underscores the strategic shifts underway in the region as US allies in the Gulf forge ahead with policies at odds with Washington. Saudi Arabia and other Gulf states, including the United Arab Emirates and Qatar, are strong backers of Syrian rebel factions and were openly dismayed when the US set aside possible military strikes against Bashar Assad's government. The Gulf states also feel increasingly sidelined as Washington reaches out to their rival, Iran.
Iran had moved quickly to heal long-strained ties with Egypt following Morsi's election but now is redirecting its policies with Egyptian leaders who don't share Tehran's agenda.
In Cairo, Gen. Abdel-Fattah el-Sissi, who led the military effort that ousted Morsi, described Egypt's relations with the United States as "strategic" and founded on mutual interests. But he said his country would not tolerate pressure, "whether through actions or hints." His comments were in an interview published Wednesday - before the US decision was announced - by the Cairo daily Al-Masry al-Youm.
US aid to the Egyptians has a long history. Since the late 1970s, the country has been the second-largest recipient - after Israel - of US bilateral foreign assistance, largely as a way to sustain the 1979 Egypt-Israeli peace treaty.
The United States gave Egypt $71.6 billion in assistance between 1948 and 2011, according to a Congressional Research Service report issued in June. That included $1.3 billion a year in military aid since 1987. The rest was economic assistance, some going to the government, some to other groups.
How much will the loss in US aid matter?
Egypt has other allies who may be able to fill the financial void. In fact, Saudi Arabia and some of its Gulf Arab partners have provided a critical financial lifeline for Egypt's new government, pledging at least $12 billion so far and aiding in regional crackdowns on Morsi's Muslim Brotherhood. On Monday, Egypt's interim president, Adly Mansour, visited Saudi Arabia on his first foreign trip in a sign of the importance of the Gulf aid and political backing.
But Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies in Washington, said he isn't convinced that Saudi Arabia, for instance, is interested in providing the amount of long-term aid that Egypt has received from the United States for more than three decades. The Gulf states, generally, will express their disappointment over any cuts in US aid to Egypt, he said.
"The Gulf states aren't happy because they think that not only has Egypt not done anything wrong, but that Egypt has done a lot of things right in snuffing out the early flames of political Islam," Alterman said. "They will feel that the US in the interest of ... democracy is acting against its own concrete interests and the interests of its friends."
"Countries like China and probably Russia will likely see this as an opportunity to find new markets and to build a new relationship," he added.
A suspension of US aid to Egypt, regardless of its size, also could feed the wave of nationalist sentiment gripping Egypt since the ouster of Morsi and boost the popularity of Egypt's military chief, el-Sissi, who has not ruled out a presidential run next year.
It will also resonate with Egyptians who believe that the United States was sorry to see Morsi go.
The aid decision is getting mixed reviews on Capitol Hill.
Rep. Eliot Engel, the top Democrat on the House Foreign Affairs Committee, criticized the Obama administration's expected announcement.
"The Egyptian military has handled the recent transition clumsily, but they have begun a democratic transition which will serve the Egyptian people well in the future and have also worked to maintain regional stability," Engel said in a statement. "During this fragile period we should be rebuilding partnerships in Egypt that enhance our bilateral relationship, not undermining them."
Others, including some sharp political opponents of Obama, supported the president's decision.
Sen. Rand Paul, R-Ky., whose bill to halt aid to Egypt was roundly defeated in the Senate in July, said he was happy to see the administration "finally thinking about following the law."
The administration has refrained from declaring that Morsi's removal amounted to a military coup, a designation that would have required the US to suspend all but humanitarian assistance to Egypt. It did delay the delivery of some fighter planes, and as Egypt's military began a crackdown on Morsi supporters the president's advisers started to consider more muscular action. Obama cancelled a joint military exercise and announced a new review of assistance.
Q&A: The trial of Egypt's ousted President Morsi
Here is a look at the case against Mohammed Morsi and 14 Brotherhood members on trial with him - and the politics around the case.
Q: What are the charges based on?
A: The charges are rooted in violence that erupted during one of the first major protests against Morsi during his year in office. On December 4, some 100,000 people protested outside the presidential palace against Morsi's decree granting himself sweeping immunity from judicial oversight. The decree allowed his Islamist allies to push a disputed draft of the constitution toward adoption without court challenge.
The protesters demanded he call off a referendum on the draft scheduled days later. Some scuffled with police outside the palace gates. Morsi left the palace from a backdoor, and his convoy was heckled. He later said one of his drivers was injured. A few thousand protesters set up a camp outside the palace while the Muslim Brotherhood called for a "general mobilisation" of members.
The next day, Islamists attacked the camp, tearing up tents and beating protesters. Videos at the time showed them marching in military-style lines and chanting, "God is great" and "Morsi's men are everywhere".
More anti-Morsi protesters streamed to the scene, and street battles lasted into the early hours of the next day, each side throwing stones and firebombs.
Amid the melee, Brotherhood members abducted protesters and held them in a makeshift room at the palace gates, beating them to confess they were paid thugs, according to later statements by those who were held. The next day, they handed the detainees to the police. A prosecutor later freed them, saying there was no evidence against them but that his Morsi-appointed boss had pressured him to implicate them.
At least 10 people were killed in the battle. One was a journalist who wrote articles critical of Morsi. The Brotherhood claimed all the dead were its members, but the families later said the group pressured them to say their slain relatives belonged to the Brotherhood.
A: Isn't this just a political show trial?
Q: That's complicated. Human rights lawyers say on the face of it, this is possibly the strongest case against Morsi. Laywers tried to raise a case against Morsi over the December 5 violence soon after it happened, giving some credibility to arguments it is not purely based on post-coup vengeance. (Under the Morsi-appointed chief prosecutor and justice minister at the time, the attempt went nowhere.)
However, this trial comes as part of the wide crackdown against the Muslim Brotherhood aimed at crushing it as a political force as the new military-backed government moves ahead with its own transition plan.
The Brotherhood says the charges are baseless and the planned trial a sham, aimed at giving legal cover to the coup.
There are concerns over how fair the trial will be. Morsi has been held in secret military detention undergoing questioning since his ouster, virtually incommunicado except for two calls with his family and visits by the EU foreign policy chief and an African Union delegation. He has not spoken to his legal team, which says it hasn't been given documentation on the prosecution's case.
Another issue reflecting the politics: Trials are selective. No one is prosecuting the military or police over deaths of protesters. Human rights lawyers say officials in office are almost never held to account.
Q: What is the evidence against Morsi?
A: The prosecution's case has not been made public. Morsi at the time accused the protesters of starting the violence.
In parts of the investigation leaked to the Egyptian press, the head of the police force at the time said he refused to use force to break up the unarmed protesters outside the palace, so Morsi called out his supporters to do so. According to the press reports, the head of the Republican Guards - which protect the palace - said Morsi gave him a one-hour ultimatum to forcefully break up the sit-in. The Guards chief said he asked for more time to disperse it peacefully, and one of Morsi's aides told him "our men" will take care of it.
At the height of the fighting, leading Brotherhood member Essam el-Erian went on the group's TV station and called for Morsi supporters to go to the scene "in the tens of thousands to besiege those thugs because now is the moment to arrest them." El-Erian is now a co-defendant in Morsi's trial, though he is currently on the run and in hiding, so would be tried in absentia unless caught.
At the time, the organised nature of the attack on the camp fuelled accusations by opponents that the Brotherhood runs "militias" to crack down on opponents, a claim the group denies.
Q: Any other trials coming up?
A: The Brotherhood's top leader, Mohammed Badie, and several other members are already on trial on incitement charges over a separate incident of violence. Prosecutors are preparing cases against some 2,000 Brotherhood members currently in prison, including on allegations of including inciting violence in clashes outside the Brotherhood headquarters in Cairo and holding and torturing policemen during a pro-Morsi sit-in.
Morsi could also face more trials. He is being investigated on charges of insulting judges when, during a presidential speech, he accused specific judges of helping rig elections under Mubarak. Another case concerns allegations he colluded with Hamas to carry out attacks on prisons that broke free Morsi and other Brotherhood leaders during the 2011 anti-Mubarak uprising.
Q: Speaking of Mubarak, he's still on trial?
A: Yes. In June 2012, he was convicted and sentenced to life in prison for failing to stop the killings of the around 900 protesters who died in 2011 uprising But an appeals court overturned the conviction, saying the prosecution failed to provide concrete evidence. Mubarak's retrial began last spring.