Sen. John McCain thinks we should cut off aid to Egypt. It’s a “coup,” the Arizona Republican and 2008 presidential candidate says, and the law requires it.

He’s right that former President Mohammed Morsi’s ouster by the army was a coup. And Mr. McCain may even be right that the law requires cutting off aid.

Less clear is whether he’s right as a matter of policy. It comes down to whether you believe the army’s actions advance or deny democracy in the long run.

The question is tricky. Most military coups are indeed anti-democratic. But not always: In Portugal’s 1974 “Carnation Revolution,” the army overthrew an authoritarian dictatorship. Even the Egyptian army’s 2011 unseating of President Hosni Mubarak was technically a coup, albeit one that set up democratic elections. There is a difference between a military coup meant to establish a junta that will rule the country directly, as in Burma, and one that puts in motion a process that eventually leads to a democracy.

Only time will tell if the Egyptian army’s action against Mr. Morsi produces a democratic outcome. The last time around, the elections were relatively free and fair but did not produce a democratic government. By a narrow margin in the 2012 presidential election, the Egyptians elected a leader from the Muslim Brotherhood — a movement openly contemptuous of democratic values. At the very least, this should show the limitations of equating democracy with elections.

Democracy is not only about holding elections. It also entails upholding the rule of law, respecting the rights of all people (including minorities), and governing in a democratic manner. Mr. Morsi's government was not doing these things. Islamists may try to wrap themselves in a democratic flag, arguing they’re on the side of democratic “legitimacy.” We should not be fooled.

Do the subtleties matter? According to Section 508 of the Foreign Assistance Act, the U.S. government is barred from giving “any assistance [to] the government of any country whose duly elected government is deposed by a military coup d’etat or decree.” That is pretty clear: If what happened in Cairo is a coup, then U.S. aid would eventually have to be cut off. It could be restored provided a new democratic government is elected. Mr. McCain is right: U.S. aid is in jeopardy.

But is he right that aid should be terminated now? I think not. It would be better to wait until the situation is clearer before making that decision. The president has no official waiver authority, but he does have discretion and therefore time to consider the right course of action. It may be that the army will not call elections; or it may use excessive force against its opponents. If this happens, it will be difficult if not impossible to continue aid.

On the other hand, elections may be called, in which case it could be some time before we know whether democracy is established.

These complexities show that our aid policy is much too simplistic. It’s not just about coups or elections, but about whether a society is mature enough to create a stable democratic order. What Egypt needs is a prolonged period of political peace in which to plant the values and build the institutions of a representative democracy. If a new election produces yet another authoritarian ruler, no matter whether the vote is free or not, we should not bless that outcome by calling it “democratic.” Instead we should cut off aid.

At the same time we should start insisting that Egyptian parties take up the cause of economic reform. No one — most assuredly not the army — is talking about the reforms needed to turn Egypt’s economy around. Unless they do, our aid will be wasted.

Egypt is likely in for a long and possibly bloody struggle. We will never be able to navigate the twists and turns in her fate until we adopt a more sophisticated understanding of what democracy really means, in Egypt and in the world.

- Kim R. Holmes, a former assistant secretary of state, is a distinguished fellow at the Heritage Foundation.