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The Obama administration has reacted cautiously to the election in Egypt of the Muslim Brotherhood's presidential candidate. President Obama called Mohammed Morsi to congratulate him. At the same time, the U.S. has been encouraging Egypt's current military rulers to ensure a transition to democratic rule. How they respond to that could impact future levels of financial aid, as NPR's Michele Kelemen reports.
MICHELE KELEMEN, BYLINE: The White House is walking a fine line on Egypt and one expert, Michele Dunne, says she was struck by the initial statements.
MICHELE DUNNE: In the paragraph where they spoke about congratulating Morsi, it was all about urging him to respect diversity and inclusivity and the rights of women and the rights of Christians and bringing others into his government.
KELEMEN: Dunne, who runs the Rafik Hariri Center for the Middle East at the Atlantic Council, says the White House says the White House had a separate message for the Egyptian military, praising it for allowing the election and for playing a responsible role in the region.
DUNNE: So it seems that, in the minds of the United States, there might be a bit of a division of labor that Morsi, as president, would be working on domestic issues and that the Supreme Council, the armed forces and the military will still be the ones that the United States counts on to keep the peace treaty with Israel.
KELEMEN: But much is still in flux and Dunne says the U.S. is worried about other actions taken by the military, stripping powers from the presidency and taking over legislative powers from the dissolved parliament. She says, to many Egyptians, the U.S. looked complicit in that because Washington has been a major financial backer of the Egyptian military for decades.
For months, Senator Patrick Leahy says Secretary of State Hillary Clinton missed an opportunity to use that aid as leverage when she waived the restrictions he wrote into law.
SENATOR PATRICK LEAHY: I have an enormous amount of respect for Secretary Clinton, but I felt this was the time to do, if anything, the good-cop-bad-cop routine on the money. I know that the administration is under a lot of pressure from arms manufacturers and others here in the United States, but I think, ultimately, it's in our best interest to have a stable forum of democracy in Egypt.
KELEMEN: Much of this year's aid is already out the door. State Department spokesperson Victoria Nuland says there's more than $1.3 billion in a joint account and both countries have keys.
VICTORIA NULAND: When the Egyptians want to pay a bill to a U.S. contractor who has provided services to the Egyptian military, they submit that bill for payment from this fund and then the U.S. side has to also approve the payment.
KELEMEN: So she says the U.S. retains the ability to manage the money, but Senator Leahy, who chairs the Senate Appropriation Subcommittee on Foreign Operations, had hoped the U.S. would fund Egypt differently.
LEAHY: The mistake was that the State Department really ignored the restrictions placed by the Congress and I think, as a result, there's going to be dire restrictions next time.
KELEMEN: U.S. aid isn't winning over Egyptians, anyway, according to Mohamad Younis, an analyst at the Center for Muslim Studies at Gallup.
MOHAMAD YOUNIS: One major sort of lesson from the Arab Spring - and I think it's been very well learned here in the Washington circles - is that the U.S. position on what happens in Egypt matters a lot less than it used to to the average Egyptian.
KELEMEN: Because, Younis says, Egyptians are fully aware that most U.S. aid goes to Egypt's military.
YOUNIS: In order for the U.S. to be relevant to the average Egyptian, its relationship with Egypt really needs to move beyond geopolitics and the military and really move into what the average Egyptian is citing as their number one concerns, which is jobs and economics.
KELEMEN: Right now, the U.S. gives about $1.3 billion a year to Egypt's military and $250 million in other assistance. Many analysts say it's time to rebalance that account.
Michele Kelemen, NPR News, Washington. Transcript provided by NPR, Copyright NPR.