Mideast deadlock strains Egypt-U.S. ties

By Alistair Lyon

CAIRO (Reuters): Friction over Middle East peace and regional conflicts is fraying the partnership built by the United States and Egypt over a quarter of a century, analysts say.

"There is frustration on both sides," said Egyptian political analyst Mohamed Sid-Ahmed. "Egypt's policy today does not coincide with much of American policy."

Sid-Ahmed said Washington could not "throw overboard" its longstanding ties with Egypt, but "there is much questioning on both sides as to what extent we see eye to eye".

Both sides, whose relationship was constructed after a previous Egyptian president, Anwar Sadat, kicked Soviet advisers out of Egypt in the early 1970s, like to keep their dissensions private.

"The vitality and strength of the strategic partnership between Egypt and the United States is a fact of life today," new U.S. ambassador to Cairo Daniel Kurtzer said last week.

"If we did not have a strong and healthy relationship with Egypt, we would have a list of a hundred problems and all of them would be in crisis mode," he told a news conference.

Accentuating the positive may be good tactics for the United States, eager to preserve ties with a key Middle East ally, and for Egypt, recipient of over $2 billion of U.S. aid a year.

"What options does Egypt have?" asked Tim Trevan of the London-based International Institute for Strategic Studies. "A large part of the problem is not bilateral but lies in the generally poor state of U.S. policy in the Middle East."

He cited widely held Arab perceptions that the United States uses a double standard, holding Iraq's feet to the fire of U.N. Security Council resolutions on weapons of mass destruction, but dealing softly with an aggressive and nuclear-armed Israel.

Egyptian President Hosni Mubarak has played a key role in bridging disputes between Israelis and Palestinians and in marshaling Arab support for U.S.-led peace efforts.

But he has not concealed his anger at Israeli Prime Minister Benjamin Netanyahu's tough tactics and his impatience at Washington's reluctance to counteract them more vigorously.

"Egypt can only justify a privileged status for itself in the area if it proves able to do something with Israel when Israel balks as now -- and it is unable," Sid-Ahmed said.

Foreign Minister Amr Moussa said on Tuesday the "moment of truth" was near in a week when Palestinian and Israeli leaders hold separate talks with U.S. President Bill Clinton.

"Pessimism is still outstanding and frustration continues in the Middle East," he said. "Hopes are pinned on the Washington meetings to stop the quick deterioration toward the total failure of the peace process."

Some Arab states once saw revolutionary Iran or Saddam Hussein's Iraq as greater immediate threats than Israel. "Now with Netanyahu, nothing worse can be imagined," Sid-Ahmed said.

Egypt is uncomfortable with the U.S. policy of "dual containment" of Iran and Iraq, as well as Washington's punitive approach to other "rogue states" such as Libya and Sudan.

While it still has its own bones to pick with Iran, Egypt has shown interest in the moderate tone adopted by Iranian President Mohammad Khatami.

It has spoken out against any use of force against Iraq in its quarrels with U.N. arms inspectors and public opinion abhors U.N. sanctions seen as cruel to the Iraqi people.

The Cairo government has defied Washington by backing an end to U.N. sanctions imposed on Libya for its refusal to turn over suspects in the 1988 Lockerbie airliner bombing.

Millions of Egyptians benefit from the earnings of relatives working in Libya, a factor Cairo policymakers must consider. Differences of approach have also emerged over Sudan.

Stepping up pressure on the Islamist government in Khartoum, U.S. Secretary of State Madeleine Albright last month in Uganda met leaders of armed Sudanese rebel groups.

Egypt, in contrast, has been moving cautiously towards improving chilly ties with its southern neighbor, while maintaining contact with opposition groups.

Kurtzer sought to correct what he said was a misconception that the United States wanted the Khartoum government toppled, but, like Egypt, was looking for it to change its behavior.

"How we engage or do not engage with the regime in Khartoum is a different issue," he said, adding this would remain part of Washington's dialogue with the Egyptian government.

Kurtzer, an Orthodox Jew, has himself come under fire in at least one Egyptian newspaper for criticizing Arab countries, including Egypt, which boycotted last year's regional economic conference in Qatar in protest over Israeli policies.

"The U.S. ambassador should look after his country's interests and make sure his remarks do not touch the sovereignty of the country where he is working," Al-Akhbar daily scolded.