By Steve Holland and Patricia Zengerle
WASHINGTON (Reuters) - The White House refused to label the military ouster of Egypt's president a coup on Monday and said there would be no immediate cut-off in U.S. aid to Egypt in a move that distances Washington from the country's toppled Muslim Brotherhood leadership.
White House spokesman Jay Carney, peppered with questions about Egypt at a daily briefing, struggled to explain how Washington could avoid calling the ouster of Egyptian President Mohamed Mursi a coup.
"This is an incredibly complex and difficult situation," said Carney, noting that millions of Egyptians had legitimate grievances with Mursi. "There are significant consequences that go along with this determination, and it is a highly charged issue for millions of Egyptians who have differing views about what happened."
Under a law dating back to the 1980s, a "coup" label would force the United States to cut off the flow of $1.55 billion in aid it sends to Egypt each year and take away what little leverage Washington has with Cairo, leaving it with few options to help shape events in Egypt, an important regional ally.
President Barack Obama and his top aides have denounced the ouster of the democratically elected Mursi but have been careful to avoid calling for him to be reinstated, prompting speculation that the United States tacitly supported his ouster.
Instead, they have voiced support in general for a return to democratic rule, a reflection at least in part of U.S. weariness with the Mursi government, which officials felt was largely ineffective.
But in Congress, where lawmakers must approve the Obama administration's request for next year's aid to Egypt, some members have moved quickly to label the military takeover a coup.
"It is difficult for me to conclude that what happened was anything other than a coup in which the military played a decisive role," said Senator John McCain, an influential voice on foreign policy.
"I do not want to suspend our critical assistance to Egypt, but I believe that is the right thing to do at this time," he said in a statement.
Democratic Senator Patrick Leahy, who heads the subcommittee that oversees the aid to Egypt, has also said he views Mursi's ouster as a coup.
NEXT YEAR'S AID
Leahy's panel is expected to begin considering Obama's fiscal 2014 request that Congress appropriate $1.55 billion in aid for Egypt - including $1.3 billion in military aid and $250 million in economic assistance - around July 25.
Lawmakers stressed that it is up to the Obama administration to decide what to call Mursi's ouster.
If it is deemed a coup, the part of this year's aid that has not yet been disbursed - about a third of the military aid and all, or nearly all of the $250 million in economic aid - would be blocked, congressional aides said.
The administration might have an out if the violence stops, elections are announced and a prime minister is appointed quickly, congressional aides said.
On Monday Egypt's interim head of state issued a decree setting a time frame for new parliamentary elections in about six months.
From the Obama administration's perspective, it might serve long-term U.S. interests better to delay making a decision.
Carney said the U.S. government will take its time reviewing what happens in Egypt and monitoring efforts by Egyptian authorities to create an inclusive democratic process. He gave no indication of how long this review might take.
"We will take the time necessary to do that in a way that is responsible and serves our longer-term policy objectives," he said.
Jen Psaki, a State Department spokeswoman, said the administration was in touch with all the parties in Egypt and would continue to be.
She said the legal advisers office at the department would make the determination about Egypt, with an inter-agency process.
"This is a situation where we are taking a very close look at what has happened on the ground. There are ongoing conversations at a very high level of the government," she said.
Congressional aides said they expect a decision by the department to take months.
Egypt has been engulfed by protests and violence since last Wednesday's military takeover.
The State Department called on the Egyptian army to exercise "maximum restraint" in dealing with protesters after at least 51 people were killed when the military opened fire on Mursi supporters on Monday.
"We strongly condemn any violence as well as any incitement of violence," Psaki said. "We call on the military to use maximum restraint responding to protesters, just as we urge all of those demonstrating to do so peacefully."
(Additional reporting by Lesley Wroughton, Arshad Mohammed and Roberta Rampton; Editing by Xavier Briand)