Egypt has turned down a request from eight US-based civil society groups for licences to operate in the country after a crackdown on their activities sparked the first diplomatic spat with Washington since the ousting of Hosni Mubarak.
The case led to threats from Washington to withdraw $1.3 billion of military aid until an Egyptian judge lifted a travel ban on several American democracy activists last month, allowing them to leave the country and avoid possible imprisonment.
Requests for licences were rejected for the Carter Center for Human Rights, set up by former U.S. President Jimmy Carter, Christian group The Coptic Orphans, Seeds of Peace and others, Egyptian state news agency MENA reported on Monday.
MENA said the Insurance and Social Affairs Ministry rejected the applications because their activities violated state sovereignty. It was not immediately clear if any of the groups were targeted in the previous crackdown.
"I don't understand how a charity group like the Coptic Orphans, which works with over 35 churches in Egypt to provide medical and social aid, was rejected," said the group's lawyer Negad al-Borai.
The NGOs filed their applications for licences before the raids in December but the imminent shift to a more democratic, civilian administration may have left some hoping for a change of heart by government officials.
Sanne van den Bergh, field office director of the Carter Center in Egypt, said the group had not been formally notified of the latest decision to deny it a licence "but we are aware of the media reports about it and we are looking into them".
It was not clear what work any of the groups had been planning to do if their licences had been granted, but some of the democracy activists targeted in the previous dispute had monitored Egypt's parliamentary election. Egypt elects a new president next month.
Foreign-funded democracy and human rights groups were allowed to operate in Egypt under Mubarak but were kept in legal limbo by the government, which repeatedly turned down their applications for licences.
Some NGO workers saw it as a deliberate policy to keep them on a tight leash.
Signalling a tougher line after Mubarak was ousted, Egyptian police raided offices of U.S. pro-democracy groups in late December. Prosecutors later charged 43 people including 16 Americans - one of them the son of U.S. Transportation Secretary Ray Lahood - with working for organisations that received illegal foreign funding.
The NGO crisis has eased but human rights campaigners say they fear the case signalled a new move to curtail their activities. Most of their criticism is targeted against the military generals who took power from Mubarak and are due to hand it on to the elected president at the end of June.