With the death toll in Egypt soaring and no sign that the country’s generals are heeding American calls to stop the violence, however, administration officials said they now faced a more wrenching choice: to keep backing the generals, whatever the cost, or to admit that the current relationship is no longer tenable. 
 
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 “While we want to sustain our relationship with Egypt, our traditional cooperation cannot continue as usual when civilians are being killed in the streets and rights are being rolled back,” Mr. Obama said, reading a statement in front of his rented vacation house here, the sun-splashed trees an incongruous backdrop for his stark message. 
 
 In his remarks, Mr. Obama noted “it’s tempting” inside Egypt to blame the United States, saying that protesters accused it alternately of backing Mr. Morsi or colluding with those who ousted him. But Mr. Obama’s reluctance to be drawn into conflicts in the Mideast, from Syria to Bahrain, has frequently been criticized. 
 
 Until the latest eruption of violence, White House officials were still uncertain whether the Egyptian military might yet rewind history and give democracy a fresh chance, or if it was simply restoring the sort of autocracy that has dominated Egypt in the past. Now they said they seem to have the answer. 
 
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 But while their frustration is palpable, officials said there were voices in favor of working with Egypt and of cutting off its aid, and they expected the debate would take time to play out. 
 
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 White House officials said Mr. Obama issued the order to pull the United States out of the military exercises, known as Bright Star, in a phone call with his national security adviser, Susan E. Rice, on Wednesday evening. The Egyptians were notified before the president’s announcement, and Defense Secretary Chuck Hagel later spoke by telephone with Egypt’s defense minister, Gen. Abdul-Fattah el-Sisi. 
 
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 Despite the large scale of the exercises, and the fact that they date to the 1980s, administration officials said they had few illusions that the decision would by itself stop the crackdown. Egypt’s military leaders, they said, regard the Islamist protests as an “existential threat” to the nation, which they must crush at all costs. 
 
 Mr. Obama said he had instructed his national security staff to weigh additional measures. He did not specify what those could be, though he said nothing about suspending the military aid. “We’ll be looking at both the case-by-case examples but also the more fundamental relationship,” said a senior official, who spoke on the condition of anonymity to discuss internal deliberations. “There’s a basic threshold where we can’t give a tacit endorsement to them.” 
 
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 Given the deep schism in Egypt, this official said, the White House is still skeptical that cutting off aid would compel the generals to return the country to a democratic transition. And it could destabilize the region, particularly the security of Israel, whose 1979 peace treaty with Egypt is predicated on the aid. 
 
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 For weeks, officials from Israel and several Arab countries have pressured the administration to maintain the flow of aid. If it were cut off, they said, Saudi Arabia, Kuwait and the United Arab Emirates would move quickly to make up the shortfall — and then some. 
 
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 Saudi Arabia and the emirates pledged $8 billion in grants and loans to Egypt’s post-Morsi government last month: $5 billion from Saudi Arabia in grants and loans; $3 billion from the emirates. That is more than enough, analysts say, to offset any cutoff from the United States, even if the two countries do not fulfill their entire pledges. 
 
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 Shutting off the aid spigot now would not have an immediate impact on the Egyptian military, defense officials say, because this year’s military assistance has already been delivered. Beyond money, Arab officials worry that a rupture between Washington and the Egyptian military would further erode American influence in a country that has historically been a bellwether in the Arab world, and would open the door to rivals like Russia or China. 
 
 “If the aid gets cut, you can be sure that Putin will arrive in Cairo in two or three months,” one senior Arab official said. “And he will give aid with no strings attached.” 
 
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 Still, even with the aid flowing, Defense Department officials fear that whatever leverage the Pentagon might have had with Egypt’s military leadership is ebbing quickly. Since the military’s ouster of Mr. Morsi on July 3, Mr. Hagel has had more than 15 phone calls with General Sisi, pleading in vain for him to change course. 
 
 Mr. Hagel, in a statement on Thursday, said that in his latest exchange with the general, “I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk.” 
 
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 While administration officials acknowledge that Egypt could replace the lost American military aid, they said it would pay a long-term price in lost foreign investment and a ruined tourism industry — a point that Mr. Obama made in his statement on Thursday. 
 
 Some analysts said the administration had hurt itself by not undertaking a thorough review of its policy toward Egypt after the ouster of President Hosni Mubarak in 2011. The United States, they said, was too wedded to the privileges it gained from the relationship, like fly-over rights and fast-track transit through the Suez Canal. 
 
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 “They’ve limited their own options by believing the idea that in order to influence things, you need to remain engaged,” said Steven A. Cook, an expert on Egypt at the Council on Foreign Relations. “We’ve never tested the proposition of cutting them off.” 
 
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 Other experts said Mr. Obama had few attractive alternatives and mainly wanted to keep out of the situation. 
 
 “Anything they do that is dramatic puts the United States in the middle of a story that we really don’t want to be in the middle of,” said Steven Simon, a former National Security Council official under Mr. Obama who is now head of the Washington office of the International Institute for Strategic Studies. 
 
 Heather Hurlburt, a former Clinton White House official who is now the executive director of the National Security Network, said the administration should cut off “targeted” cooperation with Egypt’s military without halting all aid. “No matter where you’re coming from ideologically,” she said, “the playing field we face in the Middle East is not the playing field we faced a month ago.” 
 
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 Senator John McCain, the Arizona Republican who just returned from a trip to Cairo at Mr. Obama’s request, was sharply critical of the president for not acting more forcefully against the military takeover, citing a law requiring the cutoff of American aid to countries where a military coup has dislodged an elected government. Mr. McCain has said the Muslim Brotherhood needs to accept that Mr. Morsi will not be returned to power, but he has also urged the military to establish a democratic process. “We violated our own rule of law by not calling it for what it is,” Mr. McCain said on CNN. “We undercut our own values.” ||||| White House condemns crackdown in Egypt, state of emergency 
 
 By Justin Sink and Julian Pecquet - 
 
 The White House on Wednesday condemned violence in Egypt that has killed more than 100 people and said it opposed the state of emergency declared in that country. 
 
 The escalating violence poses a challenge to the Obama administration, which refused to declare it a coup when Egypt's military toppled Mohamed Morsi, who had been democratically elected president. 
 
 A growing number of lawmakers are raising concerns that the Egyptian military is ignoring U.S. calls for moderation as it continues to crack down on the Muslim Brotherhood, which is alligned with Morsi. 
 
 President Obama was briefed about the latest violence at Martha's Vineyard, where he is vacationing. National Security Adviser Susan Rice briefed Obama, who then headed out for a vacation round of golf. 
 
 The White House said Obama would receive subsequent briefings later on Wednesday. The U.S. embassy in Cairo announced via Twitter that it would remain shuttered after closing early on Wednesday amid the unrest. 
 
 White House spokesman Josh Earnest said actions taken by Egypt's military run "directly counter to pledges" by the interim government to "respect basic rights." 
 
 "We will continue to hold the interim government accountable for the promise they have made to speed the transition to a civilian democratic government," Earnest said, calling the violence a "step in the wrong direction." 
 
 The White House spokesman wouldn't detail what form that accountability would take, but stressed that administration officials had been in contact with their counterparts in Egypt in the buildup to the crackdown and said conversations would continue in the coming days to "remind them of the promises they have made." 
 
 
 
 Earnest would not say whether the president or any other senior administration officials had called officials in Egypt in the immediate aftermath of the violence. 
 
 
 
 Labeling the military's ouster of Morsi a coup which would have automatically frozen the $1.3 billion in annual military aid to the country. 
 
 
 
 By not calling it a coup, the adminsitration believes it will preserve U.S. leverage and contracts with Americans arms-makers. 
 
 Earnest repeated on Wednesday that the White House was not likely to make a determination about whether a coup had occurred. 
 
 
 
 "It has been determined by senior foreign policy officials in this administration to not make a determination" on the subject, Earnest said. 
 
 
 
 The violence comes days after Sens. John McCain (R-Ariz.) and Lindsey Graham (R-S.C.) met with military leaders in Egypt and urged them to hold new elections and quickly shift to civilian rule. 
 
 
 
 McCain said on Sunday that Congress should consider cutting aid to Egypt if the military violently cracked down on the protesters. 
 
 
 
 “If they go ahead and crack down in a violent way,” McCain told Fox News, “I’m afraid the Congress of the United States would have to consider carefully the elimination of aid.” 
 
 
 
 The United Nations quickly condemned in the “strongest terms” the army's move against pro-Morsi sit-ins that has left dozens dead, as did the British government. 
 
 
 
 “The Secretary-General condemns in the strongest terms the violence today in Cairo that occurred when Egyptian security services used force to clear Cairo of sit-ins and demonstrations,” Ban Ki-moon's spokesman said in a statement. “While the UN is still gathering precise information about today's events, it appears that hundreds of people were killed or wounded in clashes between security forces and demonstrators.” 
 
 
 
 British Foreign Secretary William Hague shared similar sentiments in a statement carried by the British embassy in Washington. 
 
 
 
 “I am deeply concerned at the escalating violence and unrest in Egypt, and regret the loss of life on all sides,” Hague said. “The UK has been closely involved in intensive diplomatic efforts directed at reaching a peaceful resolution to the standoff. 
 
 
 
 “I am disappointed that compromise has not been possible. I condemn the use of force in clearing protests and call on the security forces to act with restraint. Leaders on all sides must work to reduce the risk of further violence. Only then will it be possible to take vital steps towards dialogue and reconciliation.” 
 
 — This story was first posted at 10:54 a.m. and has been updated. ||||| Egyptian President Mohammed Morsi calls for dialogue 
 
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 Egyptian President Mohammed Morsi has called for a meeting with the opposition on Saturday to defuse a political crisis. 
 
 He was speaking hours after five people died and 644 were injured in clashes between his opponents and supporters. 
 
 Mr Morsi said he supported the right to protest but alleged that some people had been paid to foment violence. 
 
 The Muslim Brotherhood - which backed Mr Morsi for the presidency - says its Cairo HQ has been set on fire. 
 
 'Violent acts' 
 
 In a televised speech, Mr Morsi expressed sorrow over the deaths in recent days. 
 
 He said that 80 people had been detained as they had been "implicated in violent acts". 
 
 He blamed supporters of the ousted regime of President Hosni Mubarak for being behind recent violence. 
 
 Mr Morsi offered little in the way of concessions to his opponents but said that a controversial article in a recent decree which gave him sweeping powers could be modified. 
 
 US President Barack Obama welcomed Mr Morsi's call for talks, but stressed they should be "without preconditions", the White House said in a statement on Thursday. 
 
 "President Obama called President Morsi today to express his deep concern about the deaths and injuries of protesters in Egypt," the statement said. 
 
 "The president emphasised that all political leaders in Egypt should make clear to their supporters that violence is unacceptable," it added. 
 
 Mr Morsi's recent decree stripped the judiciary of any power to challenge his decisions. 
 
 The decree would be cancelled after a referendum on a new constitution planned for 15 December, whatever the result, Mr Morsi added. 
 
 Mr Morsi confirmed that the referendum would go ahead as planned, saying that if the constitution was voted down, another constituent assembly would be formed to write a new draft. 
 
 The speech is likely to inflame an already heated situation in Egypt, the BBC's Jon Leyne reports from Cairo. 
 
 It is not clear whether the opposition will be willing to take up his offer of dialogue, given that none of their demands have been met, our correspondent adds. 
 
 There will be fears that the attacks on the Muslim Brotherhood's headquarters could be just the start of a new round of violence and confrontation, he says. 
 
 The April 6 movement, which played a prominent role in the 2011 uprising that ousted President Mubarak, has rejected Mr Morsi's offer of dialogue, Reuters reported. 
 
 The activist group has called for fresh protests on Friday against Mr Morsi, who narrowly won June's first free presidential election. 
 
 Constitution row 
 
 Earlier on Thursday, the army set up barricades outside the presidential palace after ordering protesters to leave the area. 
 
 Most anti-Morsi protesters had left the area around the palace by the 15:00 (13:00 GMT) deadline, though some opposition activists remained and their numbers increased as evening fell. 
 
 There is controversy over the proposed constitution. 
 
 Critics say the draft, drawn up by a body dominated by Morsi-supporting Islamists, was rushed through parliament without proper consultation and does not do enough to protect political and religious freedoms and the rights of women. 
 
 Four of Mr Morsi's advisers resigned on Wednesday - three others did so last week and the official Mena news agency reported a further resignation on Thursday. 
 
 The opposition said before Mr Morsi's speech that it will continue to hold demonstrations. 
 
 "We had many injuries last night, and we are not going to have their blood wasted," said an unnamed member of the National Salvation Front, a recently formed group which has united some of the most prominent anti-Morsi figures. 
 
 The National Salvation Front has brought together former presidential candidates such as leftist Hamdeen Sabahy, former Arab League head Amr Moussa, and Mohammed ElBaradei, the former head of the UN's nuclear watchdog. 
 
 The April 6 movement and other activist groups are mostly made up of young Egyptians who were opposed to President Mubarak's rule and many have turned against Mr Morsi in recent months. 
 
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 Read the terms and conditions ||||| To Mr. Morsi, there was no mention of appreciation. Instead, the White House said in a separate but parallel statement that Mr. Obama “underscored the importance of Egypt following through on its commitment to cooperate with the United States in securing U.S. diplomatic facilities and personnel.” 
 
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 President Obama, speaking in the Rose Garden on Wednesday, pointedly noted that Libyan authorities had tried to help the American effort to protect diplomats in Benghazi. “This attack will not break the bonds between the United States and Libya,” Mr. Obama said. The Libyans “helped some of our diplomats find safety, and they carried Ambassador Stevens’s body to the hospital, where we tragically learned he had died,” he added, referring to the envoy J. Christopher Stevens. 
 
 The president found less reason to be pleased with Egypt, historically the second-largest recipient of American foreign aid after Israel, at $2 billion a year. Mr. Morsi issued only a mild rebuke of the rioters — and on Facebook — while his movement, the Muslim Brotherhood, has called for a second day of protests against the lurid anti-Muslim video that set off the riots. And though the Egyptian police coordinated with American officials, Mr. Morsi waited 24 hours before issuing his statement against the militants who stormed the embassy; Libyan authorities issued immediate, unequivocal statements of regret for the bloodshed in Benghazi. 
 
 On Thursday, Mr. Morsi said in a televised statement that while he supported peaceful protests, it was wrong to attack people or embassies, Reuters reported. “Expressing opinion, freedom to protest and announcing positions is guaranteed but without assaulting private or public property, diplomatic missions or embassies,” he said. Reuters also said that he condemned the ambassador’s killing. 
 
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 Mr. Obama seemed to indicate that the American relationship with Egypt is evolving. “I don’t think that we would consider them an ally, but we don’t consider them an enemy,” he said in an interview with Telemundo that was broadcast Wednesday night on The Rachel Maddow Show on MSNBC. “I think it’s still a work in progress, but certainly in this situation, what we’re going to expect is that they are responsive to our insistence that our embassy is protected, our personnel is protected.” 
 
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 For the United States, “politically the bigger issue is Egypt,” said Martin S. Indyk, a former United States ambassador to Israel. “On the one hand, you didn’t have Americans getting killed, but this was the fourth time an embassy was assaulted in Cairo with the Egyptian police doing precious little,” Mr. Indyk said. “And where was President Morsi’s condemnation of this?” 
 
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 Several foreign policy experts said they worried that Mr. Morsi was putting appeasement of his country’s Islamist population ahead of national security. That comes on top of other moves by his government, including restrictions on press freedom and squabbling with Israel over how to crack down on terrorists taking root in the Sinai Peninsula. 
 
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 While the killing of Mr. Stevens is a “tragedy,” said Robert Malley, Middle East and North Africa program director at the International Crisis Group, “in the longer term, Libya mainly is a problem for Libyans.” What happens in Egypt, by contrast, from “popular attitudes toward the U.S., to its domestic economy, to relations between the Muslim Brotherhood and the army, to relations between Cairo and Jerusalem, to the situation in Sinai, will profoundly affect the region, and so will profoundly affect America’s posture in the region,” he said. 
 
 What makes Egypt’s uncertain course so vexing for the White House is that Mr. Obama, more than any other foreign leader, has sided again and again with the Arab street in Cairo, even when it meant going expressly against the wishes of traditional allies, including the Egyptian military, the Persian Gulf states and Israel. 
 
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 As recently as June, Mr. Obama was calling on the Egyptian military to quickly hand over power to the democratically elected civilian government — a move that helped Mr. Morsi, whose movement has called for greater use of Islamic law, assume power. At the same time, the administration was chastising the military, which has for 30 years served as the bulwark of a crucial American strategic interest in the Middle East: the 1979 Camp David peace treaty between Egypt and Israel. 
 
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 For anti-American unrest to erupt in Egypt after all that could reflect a deeper divergence of a once-staunch ally from the United States. Mr. Morsi’s belated reaction came after other actions that have troubled American officials, from his decision to attend a meeting of nonaligned countries in Tehran to his choice of China for one of his first overseas trips. Mr. Obama has pledged to forgive $1 billion in Egyptian debt. 
 
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 “How does the president go to the Hill and say, ‘We need to forgive $1 billion in Egyptian debt?’ “ said Steven A. Cook, a senior fellow at the Council on Foreign Relations. “The complication is that this is happening six weeks before the election. The things that the administration wants to do in Egypt have become a heavier lift.” 
 
 David Makovsky, a senior fellow at the Washington Institute for Near East Policy, said: “There are some real serious questions about the direction of the Egyptian government. Some of this will be submerged because of the election, but it is likely to come back later.” 
 
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 The violence in Libya and Egypt reinforces what has been true from the start of the Arab uprisings last year: These are homegrown popular movements over which the United States has at best limited influence. 
 
 The odds of success may be greater in Libya, some analysts said, since that country’s problems are rooted in a lack of effective governance and security problems with a heavily armed populace, rather than in a newly empowered movement with a long history of suspicion of the United States. 
 
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 The killing of Mr. Stevens sets back American efforts to help Libya with its transition, officials said, but only because he was such a tireless figure in this work. 
 
 “Libya’s public is quite pro-American, so it might produce a backlash against those responsible,” said Dennis B. Ross, a former senior adviser on the Middle East in the White House. 
 
 In Egypt, by contrast, Mr. Ross said: “Morsi and the Muslim Brotherhood continue to live according to their own reality. If they want to attract any amount of economic support and investment from the outside, they’re going to have to create an environment of security.”
– President Obama interrupted his vacation today to condemn the violence in Egypt and announce that the US is canceling joint military exercises with the nation, reports CNN. "Our traditional cooperation cannot continue as usual while civilians are being killed in the streets," said Obama in his brief address this morning. The move likely won't do much to appease critics who think the White House should be far more aggressive and, say, cut off its $1.3 billion in US military aid. But this is the "first concrete American response," notes the New York Times. "We appreciate the complexity of the situation," said Obama. While conceding that Mohamed Morsi's government wasn't exactly a pillar of democracy, Obama said the military should not have used force to oust him. A peaceful political solution was still possible immediately after the ouster, but yesterday's violence shows that military leaders instead chose a "more dangerous path." The president called for the newly declared state of emergency to be lifted and asked "people who are protesting to do so peacefully." He spoke as the official death toll passed the 500 milestone, a figure certain to rise. The AP reports that Morsi supporters set fire to two government buildings today in Giza, home to the pyramids. The city is next to Cairo.