The United States is suspending a large part of the more than A$1.3 Billion in military and economic aid to Egypt until “credible progress” is made towards the restoration of free and fair elections.  And it’s not sitting well with America’s closest ally in the region.

Washington started to take a closer look after the Egyptian interim government launched a major crackdown on the Muslim Brotherhood.  The group supported ousted president Mohammed Morsi, who was dumped by the military after millions of Egyptians took to the streets to protest his increasingly draconian, anti-democratic, and Islamist rule.  Hundreds have been killed in clashes.  But the backlash is proving too much for the US.

“We will continue to hold the delivery of certain large-scale military systems and cash assistance to the government pending credible progress toward an inclusive, democratically elected civilian government through free and fair elections,” state department spokeswoman Jen Psaki said.

America is halting the delivery of Apache Helicopters, Harpoon Missiles, and tank parts; a US$260 Million cash transfer; and a US$300 Million loan guarantee.

Officials and experts in Israel are alarmed. Israel maintains the aid is an integral part of its 1979 peace treaty with Egypt, and essential to maintaining stability in the region.

“You cannot disassemble the peace treaty and take out this part or that part,” said one Israeli official, speaking on the condition of anonymity, “But there are other elements in this conundrum. This is not just about Israel. This is about America’s standing in the Arab world.”