| HERZLIYA, Israel
HERZLIYA, Israel Israel and Arab states have a common interest in containing nuclear Iran and that has not been affected by protests in Egypt against President Hosni Mubarak, a senior U.S. diplomat said on Wednesday.
The possibility of Mubarak falling to a more than two-week-old popular revolt has set off jitters in Israel, which sees Cairo as an important bulwark for Middle East powers that fear Tehran's ascendancy and nuclear programme.
Israeli Prime Minister Benjamin Netanyahu has warned of an Iran-style Islamist revolution in Egypt should Mubarak's Muslim Brotherhood rivals eventually take over.
Alexander Vershbow, U.S. assistant secretary of defense for international security affairs, said Washington sought order and reform in Egypt but did not see a wider strategic shakeup.
"The threat from Iran has created a unique opportunity. For the first time since the founding of the state of Israel, Israeli and Arab national interests are aligned to an unprecedented degree, based on the shared conviction that Iran's influence must be countered and contained," he told the Herzliya Conference, an annual Israeli security forum.
"The situation in Egypt has not changed this fundamental geopolitical reality."
He also said the United States would ensure that Egypt respects peace with Israel during its period of transition. "A strong Egyptian military, buttressed by robust defense relations with the United States, can be a force for moderation and for continued support of the peace treaty with Israel as Egypt makes the transition."
Egypt has received over $36 billion in U.S. military aid since 1979 when it made peace with Israel, becoming the second largest recipient of U.S. foreign aid.
A February 9, 2010 diplomatic cable published by WikiLeaks recorded the Obama administration's frustration at Egypt's reluctance to reorganize its military to counter "asymmetric threats" such as terrorism, weapons smuggling to Palestinians in neighboring Gaza and to support U.S. policy toward Iran.
Some Israeli officials quietly voice concern at the Egyptian emphasis on maintaining heavy conventional forces of the kind that could be used in a future nation-on-nation war, though the two countries are separated by the demilitarized Sinai desert.
Vershbow declined to comment on the leaked cable but confirmed Washington's concerns about the Egyptian posture.
"We try to encourage partner militaries throughout the region to bring their forces in line with the contemporary threats and challenges. That was a message we conveyed to the Egyptian armed forces," he told Reuters on the conference sidelines.
"In a day when we are facing more asymmetrical threats ... having more static force posture seems to us to be the wrong way to spend your money."
Asked if Mubarak's troubles had affected the U.S. view on Egyptian forces, he said:
"What we are focusing on right now is the stabilizing role of the military as an institution that really emanates from the people, that is playing an impartial, neutral role in the current situation and which has managed to maintain the respect of the Egyptians, whatever their political orientation. That's what we are focusing now, not what kind of missions they might conduct in future scenarios."
(Editing by Philippa Fletcher)