President Barack Obama and top aides Tuesday scrutinized US strategy on Egypt, while the White House denied it had quietly frozen millions of dollars in aid after Cairo's military crackdown.
Obama chaired a meeting of his National Security Council, which includes top diplomatic, defense, intelligence officials and uniformed military brass.
The meeting produced no imminent changes to US policy amid a cresting political row on aid to Egypt following the ouster last month of ex-president Mohamed Morsi.
An administration official told AFP the meeting was part of a broad review of US policy towards Egypt following a tumultuous two months in the country and was not limited to considering the size of future US aid shipments.
At stake is the entire US strategy towards Egypt, the shape of US assistance, which annually hits $1.3 billion, and Washington's response to how key regional players are responding to the coup.
Saudi Arabia, an ally with which Washington has delicate ties, has warned it would step in and help Cairo if US aid trickles to a halt.
The crackdown, which has killed nearly 900 people, has left Obama balancing US political values and hopes for Arab democracy, and national security interests guarded by Cairo's military.
The White House also took a new public shot at Egypt's military-backed government, by calling the arrest on Tuesday of Muslim Brotherhood leader Mohamed Badie incompatible with the military's pledge for an "inclusive political process."
Badie had been in hiding since July 10 when a warrant was issued for his arrest over accusations he incited the deaths of protesters outside the Muslim Brotherhood's Cairo headquarters in late June.
Egypt's authorities have this month rounded up dozens of senior Brotherhood leaders, drawing US rebukes.
Debate over US aid to Egypt was fueled by a report that suggested that Washington had already frozen pending military aid shipments.
Several of Obama's top congressional opponents say sending billions of dollars to Egypt is now incompatible with US values, after protesters were shot dead in the streets.
White House spokesman Josh Earnest said there had been no final decision on a review of US aid to Egypt, launched after the military's ouster of Morsi, the country's first democratically elected leader.
"Reports to the contrary that suggest that assistance to Egypt has been cut off are not accurate," he said.
In an increasingly confusing game of semantics, Earnest insisted that the flow of aid was not a "faucet" that could be turned off and on.
"Assistance is provided episodically, assistance is provided in tranches... This is not a matter of turning the dial one way or the other," he said.
Earlier, an aide to Senator Patrick Leahy, a Democrat who heads the subcommittee on foreign operations, said the flow of aid had been "stopped."
"This is current practice, not necessarily official policy, and there is no indication of how long it will last," the aide said.
The Obama administration has decided not to make a determination on whether the overthrow of Morsi was a coup, to avoid tangling its Egypt policy in a law which requires aid to be cut in such circumstances.
"We have not made a policy decision to suspend our aid to Egypt, period," said Marie Harf, a State Department spokeswoman.
"We have not made a decision to suspend all of our assistance to Egypt or to slow our assistance; any reports to the contrary are simply false."
Around $585 million in US aid and equipment is still due to the military this year, part of a multi-billion dollar program in place since the Camp David peace accords were negotiated in the late 1970s.
In the report disputed by the White House, The Daily Beast website earlier reported that the administration had decided to treat the events in Egypt as a coup, but without making an official designation.
Such a tack gave the administration flexibility to reverse its stance if required at the end of the policy review, the report said.
Egypt's interim Prime Minister Hazem el-Beblawi said in an interview Tuesday it would be a mistake if the United States cut off military aid but insisted Cairo could survive without it.
Such a move would be a "bad sign and will badly affect the military for some time," Beblawi told ABC News in an interview.
But in a veiled warning to Washington, Beblawi said in the past, Egypt had turned to Russia for weapons and would find a way forward, even without American help if necessary.
"Let's not forget that Egypt went with the Russian military for support and we survived. So, there is no end to life," he said.
Saudi Arabia has said it and other Arab states would step in to provide assistance if Washington shut the flow of military aid which has included fighter jets, anti-terror equipment and battle tanks.
© AFP 2013