Move to shelter 3 Americans points up U.S. rift with Egypt Reporting from Washington and Cairo - The State Department's decision to provide refuge for three U.S. pro-democracy workers in Egypt illustrated the widening gulf between Washington and an ally it considers key to stability in the Middle East. After a month of friction over the status of Americans working to promote democracy in Egypt, U.S. officials confirmed Monday that they had agreed to provide shelter in the U.S. Embassy in Cairo to the three, who fear they could be arrested or physically harmed because of their activities. The three are Sam LaHood, son of Transportation Secretary Ray LaHood, and two other employees of the International Republican Institute, a U.S.-funded group that seeks to promote democratic practices around the world, say employees of other private groups. The government has barred the workers from leaving the country as it proceeds with a criminal investigation of what it perceives as foreign meddling in Egyptian politics. The dispute highlights how much U.S. leverage has diminished since the revolution a year ago that toppled longtime President Hosni Mubarak. The U.S. has only begun reaching out to the Islamists who now dominate parliament, after decades of keeping them at arm's length. Activists pushing for more Western-style democracy remain critical of the Obama administration for supporting Mubarak too long. The Egyptian military, a bulwark for U.S. policy in the region for 30 years, holds the real power in Egypt, even after the parliamentary elections. It appears to have concluded that Washington needs it to protect the Egypt-Israeli peace treaty and contain Islamic extremism - and that the U.S. won't risk a rupture in the relationship by following through on threats to withhold $1.3 billion in annual aid, most of it to the military. "We've reached a crisis point in the relationship," said Charles Dunne, head of Mideast programs for Freedom House, another U.S. group that promotes human rights and democracy. This is the last thing needed by the Egyptians, who depend on U.S. help ... and it's just bewildering to the administration. But, he added, "it seems to just keep getting worse." In the month since Egyptian officials raided the offices of 17 U.S.-funded and Egyptian nongovernmental groups, American officials have been demanding that the military return confiscated money and property, reopen the groups' offices and restore their freedom to provide advice and technical assistance to Egyptian groups seeking to make their way in the evolving political system. Yet U.S. officials and private organizations say the Supreme Council of the Armed Forces has refused to give ground. This month, Deputy Secretary of State William J. Burns met with top military leader Field Marshal Mohamed Hussein Tantawi, urging Egypt to back off. He warned that U.S. aid, which the military views as an entitlement, could be cut as a result. But Tantawi made it clear that he didn't believe the threat. Since then, a series of top U.S. officials, including President Obama and Defense Secretary Leon E. Panetta, have called Tantawi with the same message - and received the same results. U.S. aid is one of the Egyptian army's largest sources of revenue. In addition, the country needs Washington's backing for a $3.2-billion loan from the International Monetary Fund to help Egypt prop up its reeling economy. All the same, the army appears willing to play a risky political game. Not only does it doubt a cutoff of U.S. aid, U.S. officials and private groups say, but it may fear that giving in would weaken its position with ordinary Egyptians, many of whom regard Washington as an interloper determined to impose its will. Some speculate that the military also is receiving bad advice from civilian officials, including Minister of International Cooperation Fayza Aboul Naga, a Mubarak-era holdover who has made the issue her signature cause. A delegation of senior Egyptian military officials is visiting Washington on a previously scheduled visit this week and will meet with civilian, military and congressional leaders. "They're going to find out that the administration is angry, Congress is angry, and their money is in jeopardy," said a senior congressional aide who spoke on condition of anonymity. But will this change their minds? We're not sure. The Senate has already stipulated in a pending appropriations bill that the $1.3 billion in aid is conditional, and lawmakers insist they are prepared to send Egypt a tough message. The younger LaHood and his colleagues decided to seek refuge at the U.S. Embassy after Egyptian military authorities barred them and three other employees of U.S. pro-democracy groups from flying out of the Cairo airport. They were worried they might be arrested on charges that carried penalties of up to several years in jail or that they could be harmed by angry Egyptians in the street, say staffers of nongovernmental organizations familiar with their situation. The state-run media have made the issue a popular cause, and "in this environment, it's realistic to be concerned about physical safety," Dunne said. The National Democratic Institute, another U.S. group that promotes democracy abroad, said three Americans working for its office in Egypt also have been served with travel bans but have not sought sanctuary at the embassy. The Obama administration has frequently expressed strong support for the Egyptian revolution. But the generals, still guided in many ways by Mubarak-era sensibilities, are suspicious of Western-funded nongovernmental groups. The military has used the term "foreign hands" to convince much of the population that outside forces are behind the nation's postrevolution political and economic turmoil. The argument may not play in Cairo's Tahrir Square, where pro-democracy activists congregate. But it does in the provinces, where the military is still revered. The army and the Muslim Brotherhood, now the largest entity in parliament, have been negotiating over provisions of a new constitution and the transfer of power after a president is elected in June. The army is seeking a guarantee that the constitution will not weaken its role or impose too much oversight of its budget. Richter reported from Washington and Fleishman from Cairo.