"I truly believe we are approaching a precipice beyond which our bilateral relations could suffer permanent damage," said Representative Gary Ackerman, a Democrat from New York.
The warnings came as Egyptian authorities proceeded toward a trial of at least 43 activists, including 19 US citizens, working for non-governmental groups aiding the country's transition to democracy.
The United States provides about $1.3 billion in military aid to Egypt a year, plus development assistance.
Republican Representative Steve Chabot urged Egyptian authorities to drop charges and travel bans that have been slapped on the American and Egyptian NGO employees, and allow the groups to operate free of restraints.
Failure to do so, he said at a congressional hearing, "will certainly have a most negative effect on the broader US-Egyptian relationship, and will necessitate a reconsideration of US assistance."
Ackerman said US-Egyptian relations have already been damaged by the crisis.
"Until it is resolved, or worse spirals out of control, it could very quickly legally foreclose our ability to provide any bilateral assistance," he said.
He added, "If people here conclude that Egypt is not on a path of democracy, but is instead on its way to becoming another Iran, a bilateral relationship will not survive.
"We're not at that point yet, but we are getting closer every day," he said at the hearing, which was held by a House Foreign Affairs subcommittee on the Middle East.
Washington's relationship with Cairo is a pillar of US policy in the Middle East, key to Egypt's 1979 peace with Israel and of crucial importance to US counter-terrorism efforts and broader relations in the Arab world.
"We're not at that point yet, but we are getting closer every day," he said at the hearing, which was held by a House Foreign Affairs subcommittee on the Middle East.
Washington's relationship with Cairo is a pillar of US policy in the Middle East, key to Egypt's 1979 peace with Israel and of crucial importance to US counter-terrorism efforts and broader relations in the Arab world.
Experts testifying at the hearing noted, however, that a recent Egyptian poll found that 70 percent of Egyptians say they do not want US aid, and that the crackdown on NGOs plays to nationalist sentiments.
They singled out Fayza Abul Naga, Egypt's minister of planning and international cooperation and a holdover from the regime of Hosni Mubarak, for orchestrating the crackdown with the backing of the military to turn public opinion against the country's pro-western liberals.
"As the chief agent provocateur in this whole ordeal, Abul Naga has shown very clearly that she cannot be trusted as the custodian of US taxpayer dollars, and accordingly US assistance should be conditioned on her removal as the administrator of foreign aid," Chabot said.
But Ackerman urged both sides to redouble their efforts to defuse the crisis, and cautioned against pushing Egyptian leaders into a corner.
"We can't just turn our back on this very big relationship, of 80 plus million people, the largest country in the Arab world, and not expect bad things to happen," he said. "We learned from September 11 that if you don't visit bad neighborhoods, they will visit you."
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