By Patrick Werr
CAIRO (Reuters) - U.S. senators said in Cairo on Monday they hoped for a swift end to a row over U.S. pro-democracy activists accused of working illegally in Egypt and said they were committed to help Egypt nurture its democratic institutions and rebuild its economy.
Senator John McCain, leading the delegation, said Field Marshall Mohamed Hussein Tantawi assured them Egypt was working to solve the dispute that triggered a crisis between Washington and Cairo, threatening $1.3 billion in annual U.S. military aid.
Tantawi heads the military council that took control when U.S. ally Hosni Mubarak was ousted in a popular uprising last year. U.S. officials have previously cited Tantawi's assurances that the case was being resolved only for the row to deepen.
At least 43 activists, including 19 Americans, have been banned from leaving Egypt, where a court said it would start a trial on February 26 for those involved in the case that includes both U.S. and other non-governmental organizations (NGOs).
"The way we approach this issue of the NGOs is with some guarded optimism that we will resolve this issue very soon," McCain told a news conference with four other senators, adding their visit was planned before the NGO case erupted in December.
Among those accused is Sam LaHood, Egypt director of the International Republican Institute (IRI) and the son of the U.S. transportation secretary. Some of the Americans involved have taken refuge in the U.S. embassy.
Egypt says the case is a judicial matter and all NGOs, regardless of origin, must heed Egyptian law. Charges include accepting foreign funds without Egyptian government approval.
"We met with Field Marshall Tantawi. He gave us his assurance that they are working very diligently to try to resolve the NGO issue," McCain said.
The senators said they met representatives from the Muslim Brotherhood and its political party, which secured the biggest bloc in parliament after elections that ended in January.
"The speaker informed us they are working on a new NGO law to update the Mubarak era's rather restrictive and repressive NGO law," McCain said, adding the law could be passed in the coming months.
He said Washington supported Egypt and U.S. businesses wanted to "increase prosperity and development" for both nations.
Lindsey Graham, a Republican senator from South Carolina, said: "It is in our interest economically, politically, and certainly from a national security point of view to help this young, struggling democracy, because if it turns out well, everything in this region changes for the better."
He also said Washington valued relations with Egypt's military, a pillar of U.S. Middle East diplomacy since Egypt in 1979 became the first Arab state to make peace with Israel.
"This relationship between the US military and the Egyptian military has been invaluable," he said.
The U.S. pro-democracy groups whose staff have been charged deny that they have done anything illegal or improper. They say the crackdown on civil society groups is an attempt by Egypt's military rulers to derail democracy, with the main public accuser - Minister of International Cooperation Faiza Abul Naga - a throwback from Mubarak's era.
Graham, a member of IRI's board, dismissed the charges against the pro-democracy groups. "This was a politically motivated action. The person who brought this forward I think has an agenda that's not helpful. And as an American I'm offended that people would say things about these organizations," he said.
(Writing by Edmund Blair)