CAIRO (AFP) – Egypt's interim prime minister said his country could live without aid from the United States as Washington and the EU review ties with Cairo amid a bloody crackdown on supporters of deposed president Mohamed Morsi.
A defiant Hazem al-Beblawi told ABC news his country was heading in the "right direction" and he did "not fear civil war" despite the death of more than 900 people in a military-led campaign against Morsi backers.
Earlier Tuesday, authorities detained the head of Morsi's Muslim Brotherhood, stoking fears of fresh violence between security forces and Islamists protesting at the former president's July 3 ouster by the army.
An Egyptian court remanded Mohamed Badie in custody for 15 days on suspicion of inciting the murder of protesters, the first time since 1981 that a Brotherhood supreme guide has been arrested.
The political party of the Brotherhood, reeling from the imprisonment and death of hundreds of its members, moved swiftly to replace Badie with Mahmoud Ezzat, a hawkish deputy in the organisation.
Ezzat has been jailed repeatedly, and is often referred to as the organisation's "iron man".
Meanwhile, in Washington, President Barack Obama huddled with top aides to review policy towards Egypt, traditionally a strong US ally in the Middle East.
The White House criticised Badie's arrest, saying it was incompatible with the military's pledge for an "inclusive political process" but denied reports it was halting its $1.3 billion annual aid package.
Spokesman Josh Earnest said a review of US aid ordered in early July had not yet been completed and that "reports ... that suggest that assistance to Egypt has been cut off are not accurate."
The Daily Beast news website had said the Obama administration had "secretly pulled" its financial backing to Cairo.
On Wednesday, foreign ministers from the European Union, which has pledged nearly 5 billion euros ($6.7 billion) in aid for 2012-13, were set to meet in Brussels.
The EU was likely to stop short of pulling the plug, however, with one French diplomat saying that would "risk penalising Egyptian people above all."
"We can't act as if nothing has happened, but at the same time we need to be careful not to be counter-productive," said the official, who asked not to be named.
Beblawi, however, insisted that while it would be a "bad sign" for the US to cut off aid and would "badly affect the military for some time", Egypt would survive.
"Let's not forget that Egypt went with the Russian military for support and we survived. So, there is no end to life. You can live with different circumstances," he said.
Oil-rich Saudi Arabia has said it and other Arab states would step in to fill any funding gap if Washington withdrew aid.
Meanwhile, unrest in Egypt continued to have a wider diplomatic impact as Turkey accused Israel of having a hand in Morsi's removal.
Turkish Prime Minister Recep Tayyip Erdogan said he had "evidence" Israel was behind Morsi's ouster.
He cited what he said were comments by an Israeli justice minister in 2011, who allegedly said the Muslim Brotherhood would not be able to remain in power even if they won elections.
"What do they say about Egypt: democracy is not the ballot box. Who is behind this? It's Israel," Erdogan, a Morsi supporter, told a meeting of his Islamic-rooted Justice and Development Party (AKP).
Erdogan's comments sparked robust reaction in Cairo and Tel Aviv.
Beblawi's office said the accusations "have no basis in fact and are not accepted by any sane or fair person."
And an aide to Israeli Prime Minister Benjamin Netanyahu told AFP: "These comments by the Turkish prime minister are nonsense."
The United States also criticised the remarks, describing them as "offensive and unsubstantiated and wrong."
In a fresh bid to reach a diplomatic solution to the violent stand-off, the United Nations sent top official Jeffrey Feltman to Cairo to mediate between the authorities and the Muslim Brotherhood.
Feltman will hold "wide-ranging talks with a focus on how the UN can best support initiatives to restore peace and forge reconciliation in Egypt," said spokesman Martin Nesirky.
But Feltman will have his work cut out for him in the wake of nearly a week of bloodshed after authorities violently cleared two Cairo protest camps packed with Morsi supporters.
On Monday morning, militants shot 25 policemen in the restive Sinai.
This followed the death of 37 Muslim Brotherhood detainees who were killed on their way to a jail in northern Cairo.
Officials say they suffocated on tear gas fired in a bid to release a police officer they had taken hostage but the Brotherhood accused police of "murder" and "cold-blooded killing."