The U.S. provides Egypt with $1.5 billion a year in aid, $1.3 billion of which is military assistance. The rest is economic assistance. Some of it goes to the government and some to other groups. Only the money that goes to the government would be suspended. Obama will have to decide how much aid will be suspended, but the officials said the recommendation calls for a significant amount to be withheld. The money could be restored once a democratically elected government is returned.
While leaving the exact amount to be suspended up to the president, the principals have recommended that it include all foreign military financing to Egypt's army except for money that supports security in the increasingly volatile Sinai Peninsula and along Egypt's border with the Gaza Strip, the officials said.
Assistance that is used to pay American companies that sell Egypt military equipment would be suspended if Obama accepts the recommendation, but those firms would be compensated with so-called "wind up" payments that could amount to hundreds of millions of dollars, according to the officials.
The White House and State Department declined to comment on the recommendation.
Any decision on suspending assistance to Egypt would follow months of internal deliberation over how to respond to Morsi's ouster during which the administration has struggled to enunciate a coherent policy.
The administration determined that it was not in the U.S. national interest to determine whether a coup had taken place, as such a designation would have required it to suspend all but humanitarian assistance to Egypt. It did delay the delivery of some fighter planes, but, as Egypt's military began a heavy-handed crackdown on Morsi supporters despite U.S. appeals for restraint the president's advisers started to consider more muscular action. Obama then cancelled a joint military exercise and announced a new review of assistance.