By Arshad Mohammed
WASHINGTON (Reuters) - The White House has made clear it is in no hurry to cut off U.S. aid to Egypt now, or perhaps at all, despite the military's role in toppling Egyptian President Mohamed Mursi, and it has several options to avoid doing so.
These range from putting off a decision on whether Mursi's ouster constituted a military coup, which would trigger a cut-off under U.S. law, to finding that a military coup took place but winning authority from Congress to keep the money flowing.
Current and former officials said the administration has no appetite for terminating aid, which runs at about $1.55 billion a year, $1.3 billion of which goes to the military, for fear of antagonizing one of Egypt's most important institutions.
Nor does it wish to do anything to increase instability in the most populous Arab nation, which is of strategic importance because of its peace treaty with U.S. ally Israel and its control of the Suez Canal, vital for the U.S. military.
"The surpassing American national interest is in a stable Egypt friendly to the United States and our interests in the region," said a former senior U.S. official who spoke on condition that he not be identified. Ending the aid to Egypt "would compromise our relationship and those interests."
The simplest tactic may be delay.
Under U.S. law, most aid must stop to "any country whose duly elected head of government is deposed by military coup d'etat or decree" or toppled in "a coup d'etat or decree in which the military plays a decisive role."
The law, however, does not set a deadline for a decision, not does it state the criteria by which determination must be made, giving the Obama administration some leeway in how and when it may choose to interpret the facts in Egypt.
'ELEPHANT IN THE ROOM'
The Obama administration has taken its time in the past.
Four years ago, when Honduran President Manuel Zelaya was arrested by soldiers while still in his pajamas, put on a army plane and flown into exile against his will on June 28, 2009, the administration took more than two months to make a decision.
Although it quickly suspended aid to the Honduran government and terminated it on September 3, 2009, the administration did not ultimately conclude that a military coup had occurred, arguing that many institutions of the Honduran state were involved.
While Zelaya was ousted in a dawn coup carried out by the military, the Honduran Supreme Court said it had ordered the army to remove him and the country's parliament quickly voted to name an interim president.
According to a congressional aide, the coup provision - first enacted in the mid-1980s after military coups in Guatemala - was likely intended to deter military officers from toppling elected governments by force and installing themselves in power.
Egypt's case appears less clear cut.
White House spokesman Jay Carney last week said the administration would not immediately cut off aid to Egypt and was not in a hurry to make a decision on whether a military coup took place, which he described as the "elephant in the room."
If Obama were to cut off aid under the law, it can only resume if the president certifies to Congress that "a democratically elected government has taken office."
Because of the across-the-board U.S. spending cuts known as sequestration, U.S. aid to Egypt in the current fiscal year to September 30 will be slightly lower than usual at about $1.5 billion, including $1.23 billion for the military and $241 million in economic aid.
A U.S. official said $650 million in military aid had been released so far and none of the $241 million in economic aid. Just two and a half months remain in the fiscal year, allowing limited time for a decision before the rest of the money would likely have to be disbursed.
Since much of the military aid ultimately goes to U.S. arms makers who produce tanks and aircraft for Cairo, congressional aides said the administration may be forced to make a decision whenever the next such payments come due.
A State Department official declined comment on when the next payments were due.
Former State Department legal adviser John Bellinger saw two possible outcomes: The administration concludes that a military coup has occurred but works with Congress to pass legislation to prevent a termination of assistance. Or the administration stretches to conclude that a military coup did not occur to avoid triggering sanctions, with Congress' acquiescence.
"There certainly have been cases where presidents of either party have, with the acquiescence of Congress, not adhered closely to some foreign assistance restriction," said Bellinger, who served under former U.S. Secretary of State Condoleezza Rice and who is now a partner at the Arnold and Porter law firm.
"The better, cleaner avenue which would be really respecting the letter and the spirit of the law, would be to find that a coup had occurred, terminate assistance, but - having engaged in advance consultations - virtually simultaneously get Congress to pass very targeted waiver authority," he said.
Former President George W. Bush did something similar in 2001 after the September 11 attacks on New York and Washington, winning legal authority from Congress to waive the sanctions against Pakistan.
In that case, the United States had invoked the "military coup" sanctions against Pakistan after General Pervez Musharraf ousted Prime Minister Nawaz Sharif but, in its desire to secure Pakistan's support against the Taliban after the 2001 attacks, then won specific permission to waive them.
NOT ALL OR NOTHING
While some U.S. lawmakers have called for aid to Egypt to be cut off, notably Senators John McCain and Rand Paul, broader sentiment appears to be more mixed, with little desire for quick steps.
Lawmakers will begin to vote as soon as this week on legislation that could continue aid to Egypt even if the Obama administration determines that Mursi's ouster was a military coup.
Senator Patrick Leahy, who chairs the Senate Appropriations Committee's subcommittee on the State Department and foreign operations, has said he regards Mursi's overthrow as a coup.
However, a Leahy aide said the senator acknowledged this was ultimately the administration's call to make and suggested he might be open to a partial reduction in U.S. aid to Egypt.
"(He) recognizes that it is the administration's prerogative to interpret the law and that there is a lot at stake," the aide said. "But he has long believed that this and previous administrations should use U.S. leverage more effectively.
"There is a gradation of things the United States could do. It is not, and never has been, all or nothing," he added.
(Additional reporting by Patricia Zengerle; Reporting By Arshad Mohammed; Editing by Alistair Bell and Cynthia Osterman)