By Arshad Mohammed and Matt Spetalnick
WASHINGTON, Jan 30 (Reuters) - U.S. Secretary of State Hillary Clinton's call on Sunday for a transition to democracy in Egypt compounded the pressure on President Hosni Mubarak to loosen -- if not eventually relinquish -- his grip on power.
While Clinton stopped short of pressing Mubarak to step down, her blunt comments on U.S. news programs marked the furthest the Obama administration has gone so far in distancing itself from him. [ID:nN30161335]
Here are some of the policy options available to U.S. President Barack Obama and his aides.
BALANCING ACT, WITH HEAVY PUSH FOR REFORM (MOST LIKELY)
Even with Clinton taking a more assertive line on Mubarak, she made clear that the United States is not ready to abandon him, at least for now, and that it wants his government to quickly open a dialogue with democracy activists on sweeping reforms.
The United States is expected to keep walking a fine line between supporting the democratic aspirations embodied in Egypt's mass protests and not wanting to give the impression of pulling the rug out from under an ally of 30 years.
But Clinton's insistence that Egypt's presidential election in September be "free and fair" could be seen as a message to Mubarak that the United States would not accept him seeking re-election or trying to anoint his son Gamal as successor.
Notably, Clinton repeatedly dodged questions on Sunday on whether Mubarak was likely to survive in power.
"Mubarak by this point is a dead man walking," Martin Indyk, a former U.S. ambassador to Israel and a Middle East expert based in Washington, told CNN. "And the United States has to get on the side of history if it's going to preserve its interests."
Clinton's talk of the need for an orderly, well-planned transition made clear, however, that the United States wants to avoid creating a political vacuum that it fears could be filled by anti-American Islamists.
The result is a balancing act that analysts suggest aims to position the United States to be able to work with whomever prevails -- the Mubarak government or its successor.
The risk, however, is that this cautious U.S. approach will be overridden by events on the ground, where mass protests have seethed for days.
Clinton's praise for the Egyptian army's restraint -- in contrast to a harsh police crackdown last week -- showed the Obama administration is hedging its bets on the military, considered the most powerful institution in the country and also the key to Mubarak's fate.
BACKING MUBARAK TO THE HILT (NOT HAPPENING)
The idea that the Obama administration would give Mubarak unstinting support is already out the window.
Without doubt, Mubarak, a former air force officer who replaced assassinated President Anwar Sadat in 1981, has been a vital U.S. partner because of his support for Egypt's peace treaty with Israel, his backing for a wider Arab-Israeli peace and his help on counterterrorism and other issues.
And stability in Egypt for the past three decades has been of immense value to U.S. ally Israel, which has not had to worry about its Egyptian flank since the 1979 peace treaty that flowed from the Camp David Accords brokered by U.S. President Jimmy Carter.
But blanket U.S. backing for Mubarak would run the risk of being on the wrong side of history and of sticking with an authoritarian leader whose police have already used rubber bullets, tear gas and water cannon against protesters.
To offer Mubarak uncritical support would also antagonize not only Egyptians but also Arabs throughout the region, many of whom deeply resent Washington for backing their authoritarian leaders, supporting Israel and invading Iraq and Afghanistan.
FULLY ABANDONING OR SANCTIONING MUBARAK (LEAST LIKELY)
Though tangible U.S. options are limited in response to the Egyptian crisis, if Washington were to turn its back on Mubarak altogether, it could take any of the following steps:
-- cutting off some or all of the ${esc.dollar}1.3 billion in military aid and roughly ${esc.dollar}250 million in economic assistance Washington gives Cairo annually;
-- demanding the United Nations Security Council take up the issue of Egypt's crackdown on the protesters;
-- telling Mubarak behind the scenes that he should go.
None of these seems likely yet, though U.S. officials have made clear that Egypt's aid package will be reviewed depending on how the government handles the unrest.
Clinton said on Sunday that a cutoff of aid was not under discussion, at this point.
But if the violence were to worsen, or if it were to become clear Mubarak has no intention of allowing political reform, analysts said the chances of a partial aid suspension would rise.
Cutting off such a long-standing ally could send a chilling signal to other U.S. allies that the United States cannot be relied upon and perhaps push them toward closer ties with others such as China or Iran.
Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies think tank, on Saturday said the United States had limited influence.
"Trying to steer the actions of someone who believes his life's work may be crumbling before his eyes is a difficult proposition," he said.
(Editing by Will Dunham)
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