U.S. waived congressional restriction on Egypt aid

CAIRO (Reuters) - The Bush administration has released $100 million in military aid to Egypt after telling the U.S. Congress the money was necessary for national security reasons.

At a joint news conference with Egyptian Foreign Minister Ahmed Aboul Gheit in Cairo, U.S. Secretary of State Condoleezza Rice told reporters she had waived the congressional restrictions that had withheld the amount.

"I have exercised on behalf of the United States the waiver in terms of Egyptian assistance ... The Bush administration sought to have that flexibility. We believe that this relationship with Egypt is an important one and that the waiver was the right thing to do," Rice said.

Congress had withheld the sum until the administration certified Egypt had done enough to protect the independence of the judiciary, curb police abuses and put a stop to arms smuggling from Egypt to Gaza.

But it also gave the administration an option to waive the restrictions "in the national security interest of the United States".

Hamas took control of Gaza in June, prompting Israel to tighten its military and economic cordon around the coastal territory. But Israel said in December that Egypt was doing a "terrible" job of stopping arms smuggling to Gaza through the Sinai peninsula.

In turn Egypt accused Israel of encouraging pro-Israeli groups in the United States to lobby members of the U.S. Congress to the detriment of Egyptian interests, specifically by persuading Congress to withhold the aid.

Egyptian President Hosni Mubarak accused Israel of fabricating evidence to implicate Egypt and Aboul Gheit threatened diplomatic reprisals against the Jewish state.

Rice added: "I have said to the foreign minister even today the importance the United States attaches to democracy and reform in Egypt and the importance that we attach to progress on those fronts. But yes, I have exercised the waiver."

The U.S. administration has gradually softened criticism of Egypt's rights record in the years since 2005, and analysts say an easing of U.S. public pressure on Egypt has given the state a freer hand over the past year to act against critics in the run-up to an eventual transition of power from Mubarak who, at 79, has been in power for 26 years.

Rice arrived in the region on Tuesday to try to persuade Israelis and Palestinians to quickly resume U.S.-sponsored peace talks suspended over a recent Israeli offensive.

(Writing by Aziz El-Kaissouni, edited by Richard Meares)