While President Barack Obama’s administration has stopped short of condemning the July 3 military takeover, it has called on Egyptian leaders to pursue “a transparent political process that is inclusive of all parties and groups,” including “avoiding any arbitrary arrests of Mursi and his supporters,” Bernadette Meehan, a spokeswoman for the National Security Council, said July 4 in a statement.

The administration has urged the Egyptian military to stop using heavy-handed tactics, according to two U.S. officials who asked not to be identified commenting on private communications. They said the administration is concerned that some in the military may want to provoke the Islamists to violence and provide a rationale for crushing the movement once and for all.

Such a move would fail and probably prompt a shift to al-Qaeda type terrorist tactics by extremists in the Islamist movement in Egypt and elsewhere, the U.S. officials said.

Changing the Game

Participating in politics means agreeing that differences will be settled through political means, said Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies, a Washington policy group.

“What I think the Brotherhood has concluded is the game is stacked, and the only way to get what they deserve is to change the game, not to play in the game,” Alterman said in an interview for Bloomberg Television’s “Political Capitol with Al Hunt” airing this weekend. “That’s a big change from where the Brotherhood was a year ago.”

At least 12 people died and scores were hurt yesterday as security forces clashed with Islamist supporters of Mursi, who has been detained since his ouster.

The Muslim Brotherhood had appealed for peaceful demonstrations following the crackdown on its leadership, and its supreme guide, Mohammed Badie, spoke at a pro-Mursi rally last night, denying reports in state-run media that he had been arrested. The military-appointed government had said it would respect such protests.

Not ‘Arbitrary’

Mohamed Tawfik, Egypt’s ambassador to the U.S., said July 4 that “not a single arrest will be made in an arbitrary way” and that “we also have to work on national reconciliation.” “We don’t want to exclude anyone,” he said in an interview with CNN. “We don’t want to repeat the mistakes made by the Mursi government.’

Locking out the Muslim Brotherhood from the early elections promised by the military ‘‘would be a cure worse than the ill, almost certainly driving Islamist groups underground and giving rise to a generation of radicalized Islamists, in Egypt and beyond, who will have lost faith in peaceful, democratic change,” the International Crisis Group, a New York-based organization that offers recommendations to policy makers, said in a July 3 statement.

A crackdown on the Brotherhood by Egyptian authorities in the early 1950s contributed to its radicalization. After an army coup ousted Egypt’s monarchy in 1952, the Brotherhood was accused of trying to assassinate the president. The party was banned and thousands of its members were tortured, imprisoned and held for years.

Al-Qaeda Links

Members of the group counseled a young Osama bin Laden in Saudi Arabia, and Khalid Sheikh Mohammed, the architect of the Sept. 11 attacks, was a member of the Brotherhood before joining al-Qaeda. Ayman al Zawahiri, the current al-Qaeda leader, also was a member.

The Brotherhood faced repeated crackdowns under successive Egyptian presidents until the revolt that led the military to topple authoritarian President Hosni Mubarak in 2011 opened the door for it to compete and win a democratic election.

Now “the Islamists feel very much that they’ve been deprived of a legitimately won election” said Michele Dunne, who heads the Middle East program at the Atlantic Council, a Washington policy group.

Victimhood Narrative

The events in Egypt will become part of a broader Islamist narrative of marginalization and victimhood, Dunne said.

In Algeria, the military stepped in to void an election as Islamists neared victory in 1991. After Hamas won a 2006 election in the Palestinian territories, Western countries including the U.S. cut funds to the Palestinian Authority and Israel withheld tax revenue. Hamas is considered a terrorist organization by the U.S. and Israel.

While the Brotherhood hasn’t used violence in a long while, “some of their allies -- Salafi or jihadi groups -- could turn to violence” more readily, Dunne said in an interview.

The Obama administration has avoided describing the military takeover in Egypt as a coup because that could force a cutoff in $1.55 billion in annual U.S. aid to Egypt. A U.S. law bars “any assistance to the government of any country whose duly elected head of government is deposed by a military coup d’etat or decree,” or a coup “in which the military plays a decisive role.”

General Dynamics, Lockheed

The administration previously has sought to avert provisions restricting aid to Egypt. In March and May, the State Department let assistance continue despite conditions imposed by Congress that the country demonstrate progress on democracy and human rights. The State Department cited national-security interests, while administration officials also said the potential loss of thousands of U.S. jobs was a consideration.

Among American companies benefiting from the military aid are General Dynamics Corp. (GD), which sells M1A1 tanks that are assembled in Egypt, and Lockheed Martin Corp. (LMT), which provides F-16 jets.

Suppression of the Brotherhood also would raise new doubts about Egypt’s continuing efforts to negotiate terms of a possible $4.8 billion loan from the International Monetary Fund.

An IMF spokeswoman, who asked not to be further identified, said in an e-mail on July 1 that the fund was following developments closely. The spokeswoman reiterated the IMF’s call for Egypt to develop and implement a homegrown program to resolve economic and financial challenges facing the country.

Doing Deals

As Egypt seeks a transition to democracy, it’s hobbled by the lack of a road map to follow, according to Amy Hawthorne, a senior fellow at the Atlantic Council and a former State Department official who worked on the country’s transition after Mubarak’s ouster.

First, the military made an arrangement with the Islamists to the exclusion of other groups in Egypt, she said.

“Now we might see the military doing a deal with non-Islamist groups and excluding the Islamists,” Hawthorne said. “The only way Egypt is going to be able” to establish democracy “is if all groups agree on the basic rules of the game.”