Egyptian opposition groups have called for massive demonstrations on June 30 to protest the first anniversary of President Mohamed Morsi’s inauguration. Morsi’s Muslim Brotherhood–dominated government has grown increasingly unpopular due to its authoritarian nature; growing curbs on political, social, and religious freedoms; and failure to effectively address Egypt’s worsening economic problems.

The Obama Administration should drop its kid-glove treatment of Morsi’s Islamist regime and warn Cairo that it risks losing all U.S. aid if it restricts the freedom and human rights of Egyptians, reduces its commitment to fight terrorism, or violates its peace treaty with Israel.

A Perfect Sandstorm

Egypt has plunged into political turmoil, economic depression, falling living standards, and social chaos since the overthrow of President Hosni Mubarak’s regime in February 2011. Egypt’s army formed a transitional government that supervised the presidential election last year, which Morsi narrowly won. Once in office, the new president dropped any pretense of consensual politics and sought to ram through his Islamist agenda and maximize his own power and that of his Freedom and Justice Party—the political arm of the anti-Western Muslim Brotherhood. After Egypt’s judiciary dissolved parliament because one-third of its members won their seats illegitimately, Morsi granted himself unprecedented powers unchecked by judicial oversight.

Morsi’s drive to consolidate his own power provoked a mushrooming opposition coalition that has denounced him as a “new pharaoh” who has betrayed the original goals of the 2011 revolution. The opposition Tamarod (“Rebel”) movement claims that it has accumulated more than 15 million signatures on a petition calling for early elections. A recent opinion poll indicates 61 percent of Egyptians are unhappy with Morsi. But rather than reach out to the opposition, Morsi has further polarized Egypt’s politics by empowering the Muslim Brotherhood and cultivating support from even more radical Islamist extremists.

Growing sectarian tensions whipped up by Salafis—hardcore Islamic fundamentalists who demand the immediate imposition of Sharia (Islamic law)—have undermined public order. On Sunday, four Egyptian Shiites were dragged from their homes and beaten to death by a lynch mob incited by a local Salafi cleric. Egypt’s Christian minority has also been targeted for mounting attacks, and Christians are fleeing Egypt in growing numbers.

Energized by widespread popular disaffection, the disjointed opposition has called for nationwide demonstrations on June 30 to protest Morsi’s misrule. The Muslim Brotherhood and its Salafist allies announced that they will hold counter-demonstrations today and some have threatened to disperse anti-Morsi demonstrations by force.

Egypt’s army has warned that it will not permit Egypt to slide into civil war. Defense Minister General Abdel-Fattah el-Sissi issued a thinly veiled warning to Morsi’s supporters that the army will intervene if the protesters are attacked. But violence is likely this weekend as Egypt enters a new phase of its revolution.

Washington Should Restrain Morsi

The Obama Administration, which quickly broke ranks with the Mubarak regime, a longtime U.S. ally, has been ponderously slow to withdraw its support for Morsi’s increasingly autocratic rule. The Administration only mildly protested earlier this month when Cairo staged politically motivated show trials and sentenced 43 workers at pro-democracy nongovernmental organizations (NGOs), including 16 Americans in absentia, to prison for civil society activities that the Mubarak regime tolerated before 2011.

The witch hunt against the NGOs is a symptom of an unaccountable government, which is why Egyptians will be out marching this weekend. But the Administration’s limp response signaled that it will do little to defend Americans working for democracy and human rights in Egypt, let alone Egyptians who share those goals.

Morsi may have interpreted the Administration’s weak response as a green light to continue down an increasingly authoritarian path with a sense of impunity. Washington should closely monitor the situation and warn him that a crackdown on the opposition will trigger a total cutoff of America’s $1.5 billion in annual aid to Egypt and opposition to any International Monetary Fund loans.

If the Administration fails to do so, Congress should act in a bipartisan manner to block further U.S. aid to Egypt. Aid should be renewed only if the Egyptian government permits peaceful demonstrations, overturns the NGO verdict, reinstates the NGOs, and makes public commitments to:

• Fully protect U.S. citizens and property, particularly the U.S. embassy and other diplomatic posts;
• Maintain the peace treaty with Israel;
• Cooperate in fighting al-Qaeda and other terrorist organizations; and
• Implement policies that protect the rights of its citizens, including freedom of religion, expression, and association, as well as due process of law.

If and when the aid is frozen, it should be done in a way that makes it clear that Morsi’s Islamist regime, not the Egyptian army, is responsible. The army is widely respected by Egyptians as a guardian of the nation, and it may be forced to intervene again in politics, as increasing numbers of opposition leaders have suggested. Washington should take care not to undermine Egypt’s military leaders as long as they remain a bulwark against Islamist extremism.

The closure of the U.S. embassy in Cairo this weekend is a prudent move. Islamist extremists have a track record of conducting terrorist attacks under the cover of demonstrations, going back to the 1979 seizure of American hostages Iran. The Obama Administration should also demand stepped-up security precautions by the Egyptian government, which displayed a lackadaisical attitude in responding to the September 11, 2012, attack on the U.S. embassy in Cairo.

Do Not Abandon Founding Principles

President Morsi is more focused on expanding his own power and consolidating the control of the Muslim Brotherhood than in advancing the declared goals of Egypt’s democratic revolution and reviving Egypt’s worsening economy. The Obama Administration should not abandon America’s founding principles in supporting the rule of law, liberty, religious tolerance, and political freedom. It should push back against Morsi’s illegitimate assertion of unchecked power and refuse to subsidize his power grab and repression of political freedom.

—James Phillips is Senior Research Fellow for Middle Eastern Affairs in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.