CHILMARK, Mass. -- President Barack Obama announced Thursday that the United States had canceled long-standing joint military exercises with the Egyptian army set for next month, using one of his few obvious forms of leverage to rebuke Egypt's military-backed government for its brutal crackdown on supporters of ousted President Mohammed Morsi.
Although the decision is an embarrassment to the generals in Cairo, and will deprive Egypt of much-needed revenue, it lays bare both the Obama administration's limited options to curb the military's campaign against Islamists in Egypt and the United States' role as an increasingly frustrated bystander. Repeated pleas from U.S. administration officials to the generals to change course have gone unheeded, and the United States' first punitive measure, a Pentagon delay in the delivery of four F-16 fighter jets to the Egyptian air force, also had no effect.
Mr. Obama, interrupting his vacation on Martha's Vineyard in Massachusetts to address the violence, struck a now-familiar balance. He expressed outrage at the harrowing scenes this week in Cairo and other cities, while taking pains to preserve the U.S. relationship with the Egyptian military, which is underwritten by $1.3 billion a year in aid to it.
But with Egypt's death toll soaring, and no sign that its generals are heeding U.S. calls to stop the violence, Obama administration officials said they now faced a more wrenching choice: to keep backing the generals -- whatever the cost -- or admit that the current relationship is no longer tenable.
"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 in Chilmark.
The military-appointed Cairo government said Mr. Obama failed to grasp what it called the "terrorist acts" Egypt is facing. In a statement, the office of figurehead interim President Adly Mansour said Mr. Obama's remarks "would strengthen the violent armed groups and encourage them in their methods inimical to stability and the democratic transition."
In his comments, Mr. Obama noted the "temptation inside Egypt" to blame the United States, saying 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 Middle East, 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 whether it was simply restoring the sort of autocracy that has dominated Egypt in the past. Now, they said, they seem to have the answer. But while their frustration is palpable, officials said there were voices both in favor of working with Egypt and of cutting off aid, and they expected that the debate would take time to play out.
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 Wednesday evening with his national security adviser, Susan Rice. The Egyptians were notified before the president's announcement, and Defense Secretary Chuck Hagel later spoke by phone with Egypt's defense minister, Gen. Abdel Fattah el-Sissi.
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, although 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 condition of anonymity to discuss internal deliberations. "There's a basic threshold where we can't give a tacit endorsement to them."
Given the deep schism in Egypt, this official said, the White House was still skeptical that cutting off aid would compel the generals to return the nation 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.
For weeks, officials from Israel and several Arab nations have pressured the Obama 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.
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, and $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.
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 U.S. influence in a nation that historically has been an Arab world bellwether, and would open the door to rival benefactors such as Russia or China.