Ending Egypt's political crisis will require compromise and there is still time for dialogue, the State Department said on Wednesday, as international envoys returned home and Egypt's interim government said the talks had failed.

Egypt's presidency announced on Wednesday that talks between foreign delegates and the Muslim Brotherhood have failed, adding that the Brotherhood and its allies bear "full responsibility for the failure and what will follow."

"Diplomatic efforts ended today. The state gave room for all necessary efforts to be exhausted in order to urge the Muslim Brotherhood and its supporters to reject violence, prevent bloodshed and cease the disruption of Egyptian society by holding its future hostage," the presidency's statement read.

State Department spokeswoman Jen Psaki said talks in Cairo with envoys from the United States, European Union, Qatar and the United Arab Emirates provided a "strong basis to create an environment in which Egypt can move forward."

"We believe that any solution will require both sides to make compromises," Psaki told a briefing. "These decisions can only be made by Egyptians for Egyptians. We certainly hope they will make them soon," she added.

Psaki said Washington was concerned with the statement from the army-installed government that said the talks had failed, adding: "Now is not the time to assess blame but to initiate a dialogue that can help restore calm for the long term."

Meanwhile, Dutch foreign minister Frans Timmermans, who was in Cairo for talks, said the diplomatic mediation failed to break Egypt's political deadlock because the country's new rulers see no point in talking to the Muslim Brotherhood, but they will have to do so eventually

Asked why diplomacy had failed, Timmermans told Reuters in a telephone interview: "Having spoken to the interim president, the prime minister and the foreign minister, my impression is that they simply see no merit at this stage in talking to the Muslim Brotherhood."

Noting that local media had denounced foreign interference in Egypt's affairs, he said: "Whether there is foreign mediation or not, they will have to come to terms with the fact that they have to talk to the Brotherhood, and better sooner than later."

Timmermans voiced concern at the prospect of violence, saying it was clear that tensions were mounting and that as more people turn to the streets to protest, "the tendency in the armed forces to repress that will mount, and that is certainly not going to de-escalate the situation".

It was hard to see how other Arab countries could succeed in their transition towards democracy if Egypt failed, he said.

"What I see here in Egypt is a knee-jerk reflex in some parts of the political system where people have a feeling of nostalgia for the past, and not just in the military but also in parts of the Muslim Brotherhood, which might feel more at ease in their traditional comfort zone of not being part of the political system but being outside the system," he added.

Egypt's transition would take a long time and there was still hope that democracy and human rights could take root over time, he said, especially given signs that a younger generation in the Muslim Brotherhood wanted to stay in the political arena.

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