By Maggie Fick
CAIRO (Reuters) - Relations between the United States and Egypt are now in turmoil and the entire Middle East could suffer, the Egyptian foreign minister said in remarks made a week after Washington moved to curtail military aid to Cairo.
Nabil Fahmy told state-run Al-Ahram newspaper that Egypt had been dependent on U.S. aid for too long but Washington was wrong to assume the Cairo government would always follow its line.
"We are now in a delicate state reflecting the turmoil in the relationship and anyone who says otherwise is not speaking honestly," he said in comments published on Wednesday.
U.S. officials said the aid cut reflected Washington's unhappiness with Egypt's path since the army overthrew freely-elected President Mohamed Mursi of the Muslim Brotherhood on July 3.
Egypt has already criticized the decision and suggested it could turn to other countries for military aid, possibly Russia.
Egyptian security forces have cracked down hard on Islamists since the army seized power, killing hundreds and arresting thousands, including Mursi and other leaders accused of inciting or carrying out violence.
Muslim Brotherhood leaders say they face more severe repression than under veteran autocrat Hosni Mubarak, who was toppled by a popular uprising in 2011. The army-backed government calls the Brotherhood terrorists.
Islamists accuse the military of staging a coup and sabotaging democratic gains made since Mubarak's demise.
Egypt has long been the second-largest recipient of U.S. aid after Israel and its military - the largest in the Arab world - has worked closely with Washington for decades.
The United States now faces a policy dilemma - how to promote democracy while not alienating an Arab ally which has a peace treaty with Israel and controls the strategic Suez Canal.
Fahmy said an extended period of instability in ties would "reflect negatively on the entire region, including American interests".
The current situation was not solely the result of the U.S. decision to withhold aid, he said.
"The truth is that the problem goes back much earlier, and is caused by the dependence of Egypt on the U.S. aid for 30 years. (The aid) made us choose the easy option and not diversify our options," he said.
The long-standing military relationship caused Washington to wrongly assume that Egypt would always go along with its policies and goals, Fahmy said.
TURN TO RUSSIA?
Most worrying for the United States is the possibility that the army will turn to a rival country for military aid.
Egypt's army is exploring its options. Military sources told Reuters last week that the army is planning to diversify its source of weapons, including a possible turn to Russia.
The government has insisted Egypt would not bow to U.S. pressure, saying it found American policy strange at a time when the country was facing what it calls a war against terrorism.
U.S. military aid to Cairo, put at $1.3 billion a year, was born out of the 1979 peace treaty between Egypt and Israel.
The U.S. State Department made clear it was not cutting off all aid and would continue military support for counterterrorism and security in the Sinai, bordering Israel, where Al Qaeda-inspired militants have stepped up attacks on soldiers and police since Mursi's overthrow.
Egypt's Western allies had been trying to persuade the government and Muslim Brotherhood to engage in an inclusive political process, but neither side demonstrated enough flexibility to ease the crisis.
(Additional reporting by Arshad Mohammed and Patricia Zengerle in Washington; Editing by Michael Georgy and Angus MacSwan)