Relations between Cairo and Washington are on a slippery slope now that Washington's man former president Hosni Mubarak can no longer protect them. The row is over Egypt's investigation of non-profit organisations operating in the country without licence and suspected of criminally receiving foreign funding to foment unrest against the ruling military.

They include Freedom House, the International Centre for Journalists as well as the National Democratic Institute and the International Republican Institute that work closely with individuals in the US Congress.

Egypt is set to try 43 employees of the non-governmental organisations (NGOs) in question, including Americans, Germans, Serbs, Norwegians, Palestinians, Jordanians and Egyptians, accused of breaching the state's sovereignty.

Egyptian investigators have searched their offices and removed their computers while those defendants still in Egypt have been barred from travelling. Some American suspects have sought refuge inside the US Embassy in Cairo where, somewhat unusually, they have been permitted to stay, while others will be tried in absentia.

Needless to say, the US Congress is up in arms. How dare Egypt arrest Americans! Surely the Supreme Council of the Armed Forces (SCAF) understands that Americans are off limits, which is why George W. Bush declined to ratify the International Criminal Court.

Unsurprisingly, US officials have threatened to cut-off aid to Egypt, amounting to $1.5 billion (Dh5.50 billion) annually, unless US citizens are allowed to leave. Secretary of State Hillary Clinton has confirmed that under the current circumstances, aid to Egypt is under review. She, together with other Obama administration figures, have urged the Egyptian military to drop the case or else, which is far from easy when since the 2011 revolution, the judiciary is believed to be independent.

Sounds simple, but it's not. Depriving Egypt of American aid, the bulk of which goes to the military, breaches Washington's obligations as a co-signatory to the 1978 Israel-Egyptian Camp David Accords, brokered by president Jimmy Carter. Following SCAF's cancellation of a scheduled meeting with senators John McCain, Joe Lieberman and Kelly Ayotte, they accused Cairo of deliberately escalating tensions to "advance a narrow political agenda" while warning that a "disastrous" break-up of relations could be on the cards.

Tinderbox border

In response to US threats, leaders of the Muslim Brotherhood that dominates Parliament's new Lower House say America has no authority to interfere in any Egyptian legal process and has warned Washington that any withdrawal of US financial aid will necessitate a review of Camp David.

Thus, the US is on the spot. It cannot tolerate leaving its nationals vulnerable to foreign courts but, at the same time, when the Middle East is in the greatest turmoil in living memory it does not want to lose the friendship it's enjoyed with Cairo ever since president Anwar Sadat. Moreover, in the event Camp David is quashed the neighbourhood would become a far more dangerous place. The Israeli-Jordanian peace treaty would likely go the same way leaving Israel entirely without regional partners.

The Egyptian public would viscerally support Camp David's cancellation; most Egyptians see it as an embarrassment. However, those old enough to have memories of the 1967 and 1973 wars with Israel that devastated the Egyptian economy may shudder.

Even the existing frosty relations between Cairo and Tel Aviv have to be better than a tinderbox border that could erupt into conflict at any moment. It seems to me that both sides of this dispute need to cool down. If the defendants are guilty of stirring the pot, Egypt has a right to try them, irrespective of their passport — and it's time that the US respected the laws of other countries in the same way it demands respect for its own.

That said for the sake of diplomacy the Egyptian government would have been wiser to take a leaf out of the Bahraini government's book. Foreign activists who travelled to Bahrain to take part in anti-government protests in recent days were indeed arrested but were immediately deported.

Outraged US administration officials should get off their high horse long enough to get the message that the days of American exceptionalism in Egypt are over. Adopting an arrogant posture isn't the way to go when the Islamic Republic of Iran is courting cash-strapped Cairo.

Mojtaba Aman, the head of Iran's interest office in Egypt, recently announced that "Iran is ready to resume diplomatic relations within a day as soon as Egypt agrees to resume them".

He further promised that in that event, "Iran will immediately render economic assistance to Egypt if Cairo can withstand the pressure from the US" and is poised to send 5,000 Iranian tourists each day to boost Egypt's flagging tourist industry. Indicative of warming links between the two countries was the swift passage of two Iranian warships en route to Syria through the Suez Canal last Saturday.

Both Cairo and Washington are failing to see the big picture. For Egypt to align itself with Iran is a bad idea that would alienate the country from most of the Arab World not to mention the West — and the US would be guilty of puerile pride if it's prepared to throw Cairo into Tehran's arms out of arrogance.