By Susan Heavey and Patricia Zengerle
WASHINGTON (Reuters) - The United States declined on Wednesday to criticize Egypt's military, even as it was ousting Egyptian President Mohamed Mursi from power.
Minutes before Egypt's army commander announced that Mursi, the country's first democratically elected president, had been deposed and the constitution suspended, the U.S. State Department criticized Mursi, but gave no public signal it was opposed to the army's action.
Asked whether the Egyptian army had the legitimacy to remove Mursi from power, State Department spokeswoman Jen Psaki said, "We're not taking sides in this."
The muted U.S. response - at least thus far - to the dramatic events in Cairo suggested that Washington may be willing to accept the military's move as a way of ending a political crisis that has paralyzed Egypt, a longtime U.S. ally.
Still, the distant attitude toward Mursi, who has come under U.S. criticism in recent days, could open up President Barack Obama to complaints he has not supported democracy in the Arab world.
There was no immediate reaction from the White House or the State Department to the military's announcement that it was installing a technocratic government eventually to be followed by new elections.
But the fact the Egyptian military announced plans for elections and a constitutional review, and that those plans were immediately backed by the country's leading Muslim and Christian clerics, could help the transition road map earn Washington's backing.
Earlier, Psaki made clear that U.S. officials were disappointed in Mursi's speech on Tuesday night. In that speech, Mursi said he would defend the legitimacy of his elected office with his life.
Mursi must "do more to be truly responsive" to the concerns of Egyptian people" after huge rallies over the weekend, she said. "We are calling on him to take more steps."
ROLE OF MILITARY
Specifically, Psaki said Mursi should call for an end to violence, including violence against women. He should also take steps to engage with the opposition and the military and work through the crisis in a political fashion, she added.
In a daily briefing with journalists, Psaki was asked at least six times either to give an opinion about the Egyptian military's role in the crisis, or to say whether their actions amounted to a coup.
"We think that all sides need to engage with each other and need to listen to the voices of the Egyptian people and what they are calling for and peacefully protesting about. And, you know, that's a message we've conveyed at all levels to all sides," she said when asked whether Washington sided more with the armed forces than with Mursi.
The head of the Egyptian armed forces, General Abdel Fattah al-Sisi, spent a year at the U.S. Army War College in Pennsylvania from 2005 to 2006.
The military move also presents Obama with a dilemma over continuing U.S. aid to Egypt. Underlying the importance for Washington of keeping ties to Egypt's military, Secretary of State John Kerry in May quietly approved $1.3 billion in military assistance, even though the country did not meet democracy standards set by the U.S. Congress for it to receive the aid.
U.S. law requires most American aid to be cut off "to the government of any country whose duly elected head of government is deposed by military coup d'etat or decree."
But the law gives the State Department discretion to decide whether a coup has taken place, according to Republican and Democratic congressional aides.
Senator Patrick Leahy, chairman of the Senate subcommittee that oversees foreign aid, said on Wednesday his panel would review the $1.5 billion in annual assistance the country sends to Egypt in the wake of the Mursi's ouster.
"Egypt's military leaders say they have no intent or desire to govern, and I hope they make good on their promise," Leahy said in a statement. "In the meantime, our law is clear: U.S. aid is cut off when a democratically elected government is deposed by military coup or decree."
The International Monetary Fund is likely to wait until it is clear who is in charge in Egypt before considering whether to renew talks on a $4.8 billion loan program. The Washington-based lender traditionally does not do business with countries undergoing serious political turmoil.
"We are following the situation in Egypt closely. The developments of the last few days are very serious. We hope all of the participants will work constructively for a peaceful outcome," an IMF spokesperson said.
Egypt and the IMF have held protracted negotiations over a loan needed to help combat a severe economic crisis. The talks have stalled as Mursi rebuffed IMF conditions that he cut fuel subsidies and raise sales taxes.
(Additional reporting by Laura MacInnis; Writing by Warren Strobel; Editing by Alistair Bell and Peter Cooney)