By Yasmine Saleh
CAIRO (Reuters) - Egypt has rejected a request from eight U.S.-based civil society groups for licenses to operate in the country after a crackdown on their activities sparked the first diplomatic spat with Washington since the ousting of Hosni Mubarak.
In a move that may damage Cairo's relations with Washington, the Insurance and Social Affairs Ministry rejected the applications because it believed the groups' activities violated state sovereignty, Egyptian state news agency MENA reported on Monday.
It said the Carter Center for Human Rights, set up by former U.S. President Jimmy Carter, Christian group The Coptic Orphans, Seeds of Peace, and other groups had all had their requests rejected.
It was not immediately clear if any of the groups were also targeted in a previous crackdown on non-governmental organizations.
Washington threatened to withdraw $1.3 billion in military aid until an Egyptian judge lifted a travel ban on several American democracy activists last month and allowed them to leave the country and avoid possible imprisonment.
"I don't understand how a charity group like the Coptic Orphans, which works with over 35 churches in Egypt to provide medical and social aid, was rejected," said the group's lawyer Negad al-Borai.
Sanne van den Bergh, field office director for the Carter Center in Egypt, said the group had not been formally notified of the decision to deny it a license "but we are aware of the media reports about it and we are looking into them".
The precise nature of what the groups had been planning to do if their licenses had been granted was unclear, but some of the democracy activists targeted in the previous dispute had monitored Egypt's parliamentary election. Egypt elects a new president next month.
Under Mubarak, foreign-funded democracy and human rights groups were allowed to operate in Egypt but were kept in legal limbo by the government, which repeatedly turned down their applications for licenses.
Some NGO workers saw it as a deliberate policy to keep them on a tight leash.
Separately on Monday, the Interpol General Secretariat said it had refused a request from the Egyptian authorities to issue international wanted persons alerts for 15 individuals linked to several U.S.-based NGOs, saying such a move would violate its regulations.
Twelve of the individuals concerned were American, two were Lebanese and one was Jordanian, Interpol said in a statement.
It was not immediately clear who the individuals were.
Signaling a tougher line after Mubarak was ousted, Egyptian police raided the offices of U.S. pro-democracy groups in late December.
Prosecutors later charged 43 people including 16 Americans - one of them the son of U.S. Transportation Secretary Ray LaHood - with working for organizations that received illegal foreign funding.
Tensions have since eased, but human rights campaigners say they now fear the decision to deny them licenses may signal a new crackdown on their activities.
"This decision is moving illogically and in opposition to the path of history as the entire world is magnifying the importance of civil society," Hafez Abu Saeda, the head of the Egyptian Organization for Human Rights, said on Monday. "The government insists on stifling civil work in Egypt."
Most of the groups' criticism is directed at the military generals who took power after Mubarak who are due to hand it to whoever wins the presidential election at the end of June.
The NGOs filed their applications for licenses before the raids in December - the imminent shift to a more democratic, civilian administration may have left some hoping for a change of heart by government officials.
(Additional reporting by Shaimaa Fayed, Ashraf Fahim and Ali Abdelatti, Writing by Yasmine Saleh; Editing by Andrew Osborn)