U.S. warns Egypt on aid, urges restraint

WASHINGTON Fri Jan 28, 2011 5:48pm EST

Secretary of State Hillary Clinton speaks to the media following her meeting with Jordan's Foreign Minister Nasser Judeh in Washington, January 26, 2011. REUTERS/Jason Reed

Secretary of State Hillary Clinton speaks to the media following her meeting with Jordan's Foreign Minister Nasser Judeh in Washington, January 26, 2011.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - The United States signaled to Egypt on Friday it could lose some $1.5 billion in aid if it fails to rein in security forces and allow peaceful protests, raising pressure on a key ally as demonstrations raged.

With thousands of people on the streets despite a nationwide curfew, the protests rocked the Middle East and put the United States in a quandary of its own.

Washington views Egyptian President Hosni Mubarak as a critical partner -- a linchpin for future Israeli-Palestinian peacemaking and a bulwark against Iran's regional clout -- but U.S. officials have stressed this week their long-standing support for democratic reforms in his country.

President Barack Obama and aides have intensified their rhetoric and the threat of a review of the assistance for Egypt raised that pressure to a new level.

Washington gave Cairo $1.3 billion in military aid and $250 million in economic aid in the 2010 fiscal year, making it one of the largest U.S. aid recipients across the globe.

"We will be reviewing our assistance posture based on events that take place in the coming days," White House spokesman Robert Gibbs told reporters.

"We are watching very closely the actions of the government, of the police, of all the security forces and all of those in the military -- that their actions may affect our assistance would be the subject of that review."

U.S. Secretary of State Hillary Clinton pressed all sides to refrain from violence.

"We urge the Egyptian authorities to allow peaceful protests and to reverse the unprecedented steps it has taken to cut off communications," she told reporters in Washington, referring to the blocking of Internet social networking sites.

"These protests underscore that there are deep grievances within Egyptian society, and the Egyptian government needs to understand that violence will not make these grievances go away."

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A U.S. official monitoring the events said the situation was fluid.

"Unless something breaks the current tension, we are approaching the point where either the military has to crack down hard or the regime has to give way," the official said, speaking on the condition of anonymity.

Steven Cook, an analyst with the Council on Foreign Relations, said the United States possesses very little leverage in altering the direction of events in Egypt.

"Any effort on our part ... to provide support to Mubarak is going to be read in Egypt as supporting a crackdown and supporting an inherently nondemocratic regime while people are out in the streets demanding an end to this regime," he said.

Washington urged U.S. citizens to postpone non-essential travel to Egypt and said Americans who are in the country should stay indoors.

Clinton called on the Egyptian government to view civil society as "a partner" rather than a threat and she emphasized partnership in her remarks.

"Egypt has long been an important partner of the United States on a range of regional issues," she said. "As a partner, we strongly believe that the Egyptian government needs to engage immediately with the Egyptian people in implementing needed economic, political and social reforms."

While Mubarak sent troops and armored cars onto the streets, a senior Egyptian military official cut short a previously scheduled visit to Washington.

The chief of staff of Egypt's armed forces, General Sami Enan, intended to return to Egypt on Friday rather than stay into next week, a top U.S. general said.

The White House said Obama received a 40-minute briefing about the events in Egypt on Friday. No call with Mubarak was scheduled, a spokesman said.

On Thursday, Obama called on Mubarak to make "absolutely critical" reforms.

(Additional reporting by Deborah Charles, Mark Hosenball, Will Dunham and Phil Stewart; Writing by Jeff Mason; Editing by John O'Callaghan)

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