Israel has urged the US to back the Egyptian military, saying losing Egypt to Islamists could pose a risk to newly-relaunched Israeli-Palestinian peace talks, the Wall Street Journal reported on Monday.
According to an Israeli official quoted by the paper, Egypt and Saudi Arabia have traditionally played an important role in providing the Palestinians the support to stay in the negotiations and to make concessions, and without them there is a chance the talks will fail.
The paper also reported on a parallel effort by Israel, Saudi Arabia and the United Arab Emirates to influence the US into backing the Egyptian military.
According to the report, Israel and the US's Gulf allies are urging the Obama administration to encourage the Egyptian military to confront rather than reconcile with the Muslim Brotherhood.
Israel is interested in an Egyptian government that will aggressively fight the Islamists in the Sinai Peninsula and protect the border, the report said.
The paper quotes an Israeli official as calling anti-Muslim Brotherhood nations "the axis of reason."
The head of the Israeli-Palestinian Center for Research and Information, Gershon Baskin, is quoted by the paper as saying Israel's leaders view Islamist president Mohamed Morsi's overthrow as "an opportune time to give a real blow to political Islam throughout the region and get the more sensible people back in power."
Despite that, Israel remains wary of the Egyptian military, fearing the army's crackdown on Muslim Brotherhood supporters could spark an Islamist insurgency that could erode Israeli security, the Journal reported.
As a result, Israel has been pushing the US not to cut its military aid to Egypt, the Journal reported, arguing that such a cut would jeopardize counterterrorism cooperation in Sinai and the 1979 Israeli-Egyptian Camp David peace accord.
The Egyptian military on July 3 overthrew Morsi, who emerged from Egypt's Muslim Brotherhood movement to become the country's first freely elected president last year after the February 2011 fall of long-time authoritarian ruler Hosni Mubarak.
The United States has refused to call Morsi's ouster a military coup and it has never called for him to be reinstated.
Nor has it done much to curb the extensive military and economic aid that Cairo receives from Washington.
On July 24, Obama decided to suspend the delivery of four F-16 fighters to Egypt and on August 15 he canceled a regular military exercise with the Egyptian army.
However, he has largely left the aid intact. In recent years, it has run at roughly $1.3 billion in military assistance and about $250 million in economic aid annually.
Because of the across-the-board US government spending cuts, US aid to Egypt in the current fiscal year to September 30 will be slightly lower, amounting to about $1.23 billion for the military and $241 million in economic aid.
The media was filled with reports on Monday that the US was either mulling, or already decided, to suspend its military aid to Egypt.
American website the Daily Beast quoted the office of US Senator Patrick Leahy as saying the Obama administration has decided in private to temporarily suspend military aid to Egypt, despite deciding not to publicly condemn the military's overthrow of Morsi as a coup.
According to the report, the Obama administration decided behind the scenes to temporarily suspend the disbursement of direct military aid, the delivery of weapons and some form of economic aid, while it reviews its relations with the new Egyptian government.
State Department spokeswoman Jen Psaki, however, denied a similar New York Times report on Monday that the department had put a hold on its funding for economic programs that directly involve the Egyptian government.
Psaki told reporters the State Department was reviewing the economic aid to see how much, if any, might be curtailed as a result of Morsi's ouster and the subsequent violence in Egypt, but stressed that no decisions had been made.
She said this might apply to less than half of the $241 million but was unable to provide a specific amount.
Under US law, economic aid that goes to non-governmental groups as well as to government programs that promote free and fair elections, health, the environment, democracy, rule of law, and good governance are exempt from such a cut-off, Psaki said.
Economic programs that do not cover these areas may be affected, she said.
"We are reviewing each of those programs on a case-by-case basis to identify whether we have authority to continue providing those funds or should seek to modify our activities to ensure that our actions are consistent with the law," she said.
Psaki also said the Obama administration could choose to cut some of the $1.23 billion in military aid this year.