CAIRO // A row over US funding for pro-democracy groups has strained relations between Egypt and the US and exposed a widening rift between the country's military rulers and the youth groups behind the uprising that toppled Hosni Mubarak.
The dispute dates back to March when the USAID office in Cairo placed adverts on the internet and in newspapers inviting civil-society groups to apply for funding. The ads attracted dozens of applicants, whose representatives stood in long lines outside the USAID offices to apply, while separate ads for USAID-run workshops to coach applicants resulted in packed classrooms.
In all likelihood, the USAID thought nothing of what it did. After all, this was Egypt, where 18 days of protests forced the country's authoritarian leader of 29 years to step down. Civil-society groups, furthermore, were a dominant political force, with only the military enjoying comparable powers.
But the Ministry of International Cooperation was watching and it did not like what it saw. Foreign funding for Egyptians NGOs, argued the minister, Faiza Abul-Nagah, should have been channelled through the government and not directly given to NGOs.
The military did not seem to be bothered by the fuss over the funds, which were estimated to have been about US$40 million (Dh 147m).
The generals sitting on the ruling Supreme Council of the Armed Forces may have had bigger issues to address. But that changed and the military was now embroiled in a bitter dispute with the youth groups over a range of issues. Borrowing a page from the Mubarak-era manual, the generals decided to use the funding to discredit the groups.
Many, however, believed the tension between the Egyptian generals and the US government would soon disappear.
The Egyptian military has been closely linked to the US since the 1970s. It is the recipient of some $1.3 billion in aid every year and its commanders regularly travel to the US for extended visits.
The military's decision to use the funding against its rivals came when the generals and the youth groups were at odds. The protesters were accusing the generals of using excessive force to evict demonstrators from Tahrir square and trying 10,000 civilians before military tribunals. They also accuse the generals of bungling the transition to democratic rule and of operating like a secret organisation.
The generals accused two key pro-democracy groups - Kifaya!, or Enough!, and April 6 - of receiving foreign money and training, charges that suggest the organisations were stooges of foreign powers. An investigation was launched and a security official involved in the inquiry said there were plans to examine the finances of the groups suspected of getting money from the Americans.
April 6 and Kifaya! were credited with key roles in the uprising that toppled Mr Mubarak. They rejected the charges and lodged a complaint with authorities against the general who made them.
Deepening the crisis, the military this week went after Asmaa Mahfouz, one of the main faces of the uprising. She was formally charged with insulting the military council and sedition in comments she posted on social networks. She was released on $3,400 bail.
"The only thing I regret after this [interrogation] is that we didn't work hard enough in the streets and with the people to explain why we need to continue this revolution ... until this country gets what it deserves," she told a privately owned TV station on Sunday.
The dispute over the funding and the xenophobia fanned by the generals have prompted the Americans to respond.
The USAID director in Egypt, Jim Bever, flew to Washington last week after less than a year on the job in what many claim was development related to the dispute.
His departure came one day after the US government chastised Egyptian leaders for stoking anti-American sentiment.
The US Embassy spokeswoman Elizabeth Colton said Mr Bever was returning to Washington to take a "unique opportunity" as an instructor at the War College.
Washington weighed in on the dispute, saying Mr Bever did not leave Egypt because of the growing anti-US sentiment in the country. The embassy in Egypt, in a statement that provided more questions than answers, said the USAID in Egypt would have an entirely new leadership in a change "designed to complement the new leadership at the US Embassy in Egypt, including the arrival of a new ambassador".