The United States said on Wednesday it would withhold deliveries of tanks, fighter aircraft, helicopters and missiles as well as $260 million in cash aid from Egypt's military-backed government pending progress on democracy and human rights.

The decision, described by US officials, demonstrates US unhappiness with Egypt's path since its army on July 3 ousted Mohamed Morsi, following mass protests against him.

But the State Department said it would not cut off all aid and would continue military support for counterterrorism, counter-proliferation and security in the Sinai Peninsula, which borders U.S. ally Israel.

It also said it would continue to provide funding that benefits the Egyptian people in such areas as education, health and the development of the private sector.

The split decision illustrates the U.S. dilemma in Egypt: a desire to promote democracy and human rights along with a need to cooperate with a nation of strategic importance because of its control of the Suez Canal, its 1979 peace treaty with Israel and its status as the most populous nation in the Arab world.

"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 in a statement.

Egypt for decades has been among the largest recipients of U.S. military and economic aid because of its 1979 peace treaty with U.S. ally Israel, which agreed as a result of the pact to withdraw from the Sinai Peninsula it seized from Egypt in 1967.

The United States has long provided Egypt with about $1.55 billion in annual aid, including $1.3 billion for the military.

Edited by Ahram Online