By Edmund Blair and Marwa Awad
CAIRO (Reuters) - The cases of 40 foreign and Egyptian activists, including 19 Americans subject to travel bans over their work for pro-democracy and other groups, have been referred to court, judicial sources said Sunday, deepening a row with the United States.
Washington, which provides $1.3 billion in military aid annually to Egypt, has strongly criticized the crackdown on the non-governmental organizations (NGOs) which has taken place under the army-backed government. An unspecified number of U.S. citizens involved have sheltered in the U.S. embassy.
The latest step in the judicial process will further strain ties with the United States, which counted Egypt under ousted President Hosni Mubarak as a vital regional ally and lynchpin in its Middle East policy.
"We are deeply concerned by these reports and are seeking clarification from the Egyptian government," State Department spokeswoman Victoria Nuland told reporters.
Egyptian officials say the crackdown is part of an investigation into foreign funding of NGOs. For the authorities, it is a matter of law; the non-governmental organizations broke it by receiving foreign funding without government approval.
Activists say the ruling military may be using the issue to whip up nationalist sentiment and distract attention from criticism the army is facing from protesters over its handling of the transition to civilian rule.
"The cases of 40 foreign and Egyptian suspects have been transferred to the Cairo criminal court related to foreign funding," a judicial source told Reuters. State news agency MENA also carried the report.
Even before the move to refer the NGO cases to court, Secretary of State Hillary Clinton had warned that relations could be harmed if Egypt did not resolve the issue.
"We are very clear that there are problems that arise from this situation that can impact all the rest of our relationship with Egypt. We do not want that," Clinton told reporters in Munich where she met Egyptian Foreign Minister Mohamed Kamel Amr on the sidelines of an international security conference.
Several U.S. citizens and others involved in the probe have been barred from leaving Egypt. They include Sam LaHood, the country director of the International Republican Institute (IRI) who is the son of the U.S. transportation secretary.
"The continued assault on American, German and Egyptian civil society is not a 'legitimate judicial process,' the IRI said in a statement. "It is a politically motivated effort to squash Egypt's growing civil society, orchestrated through the courts, in part by Mubarak-era hold overs."
U.S. officials said soon after the row erupted in late December that they had received assurances from the Egyptian leadership that the issue would be resolved. That followed talks with Field Marshal Mohamed Hussein Tantawi who heads the military council and others. Instead, the row has deepened.
Civil society groups say the ruling military council ordered the raids to harass activists who were at the forefront of the anti-Mubarak revolt and have been pressing for the army to swiftly hand power to civilians.
The NGO activists include 19 Americans alongside others who are Serbian, Norwegian, Lebanese as well as Egyptian, according to a statement issued by judges overseeing the probe and seen by Reuters. One judge involved said the list included LaHood.
The charge listed in the statement was "running organizations without getting the required licences." One of the judges running the probe said that investigations were continuing with Egyptians in other similar cases.
Egyptian Foreign Minister Mohamed Kamel Amr told Clinton during his meeting with her that all groups, regardless of country of origin, had to abide by Egypt's laws on registering, the ministry's spokesman Amr Rushdy said in a statement.
NGOs say that the authorities have failed to respond to past requests to register and insist they have worked in full view of and in contact with the Egyptian authorities for years.
The National Democratic Institute, one of the U.S.-funded groups whose staff are facing travel bans, said it began work in 2005 and sought to register the same year but after responding to some official queries after that no progress was made.
However, the group says it has operated openly since then, engaging with officials regularly.
President Barack Obama's administration is finalizing its budget for the 2013 fiscal year, which will be presented on February 13 and is expected to include continued assistance for Egypt's military, albeit subject to new conditions imposed by U.S. lawmakers.
Those include evidence that Egyptian military authorities are committed to holding free and fair elections and protecting freedom of expression, association, and religion.