UPDATE 1-Clinton keeps up US pressure over Egypt's political crisis

Mon Nov 26, 2012 2:58pm EST

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WASHINGTON Nov 26 (Reuters) - Secretary of State Hillary Clinton spoke with Egyptian Foreign Minister Mohamed Kamel Amr on Monday to underscore U.S. hopes that Egypt's political crisis can be resolved in a democratic manner, the State Department said.

Clinton reiterated U.S. concerns about Egyptian President Mohamed Mursi's decision to assume sweeping powers and checked in on the progress of discussions between Mursi and senior judges on the way forward, State Department spokeswoman Victoria Nuland told a news briefing.

"The secretary underscored the importance of settling these disputes in a democratic manner, so we look forward to seeing the outcome of that (discussion)," Nuland said.

"We are encouraged that the various important stakeholders in Egypt are now talking to each other, (and) that President Mursi is consulting on the way forward, but we're not going to prejudge where that is going to go."

Mursi's crisis talks on Monday followed a presidential decree last week that shielded his decisions from judicial review, a move that spurred new protests and fears of broader instability two years after Hosni Mubarak was ousted.

The United States last week raised concerns over the decree, which comes as many liberals and others say their views are not being considered by the Islamist-dominated assembly now drawing up a new constitution.

"We want to see the constitutional process move forward in a way that does not overly concentrate power in one set of hands," Nuland said.

"We want to ensure that, as this governance situation goes forward, that the rights of all Egyptians are protected, that there is a balance of power, that there are checks and balances in the system."

She said Clinton also used the phone call to discuss Gaza, where an Egyptian-brokered truce last week ended days of fighting between Israel and the Palestinians but called for more discussions of the underlying causes of the conflict.

"Our sense is that discussions are ongoing, that the sides are talking, and we will see what comes of that as well," Nuland said.

She said Clinton - who met Mursi in Cairo last week as part of her shuttle diplomacy over the Gaza crisis - had received no forewarning of his intent to assume greater powers just one day later.

And she hinted that future help for Egypt's badly battered economy, including a prospective $4.8 billion loan from the International Monetary Fund as well as a potential $1 billion debt relief package from the United States, could hinge on how the current crisis is resolved.

"Everybody is watching how this goes forward," Nuland said, adding that economic aid was aimed at supporting an increasingly democratic Egypt with an inclusive constitution.

"That's the trajectory that we want to see Egypt on, so we need to see how this latest round gets resolved," she said.

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