Reacting to the killing of more than 500 anti-government protesters, the US president interrupted his family vacation on Martha's Vineyard to condemn the bloodshed, but stressed that any move toward peaceful democracy was a difficult process that could take decades.
"We appreciate the complexity of the situation," he said. "We recognise that change takes time. There are going to be false starts and difficult days. We know that democratic transitions are measured not in months or even years, but sometimes in generations."
Obama also issued a reminder of why the US
had initially chosen to support the ousting of Egypt's first elected president following the overthrow of dictator Hosni Mubarak.
"While Mohamed Morsi was elected president in a democratic election, his government was not inclusive and did not respect the views of all Egyptians. We know that many Egyptians, millions of Egyptians, perhaps even a majority of Egyptians, were calling for a change in course."
Nevertheless, the White House statement was designed to reinforce a recent hardening of US criticism of the violence, which began on Wednesday with condemnation from secretary of state John Kerry and tough language from spokesman Josh Earnest.
Obama criticised the "arbitrary arrests" and persecution of Morsi supporters as well as the violence on Wednesday.
After Morsi was removed there remained an "opportunity to pursue a democratic path," Obama said. "Instead we've seen a more dangerous path taken."
His statement will disappoint some who hoped for a suspension, or even cancellation of $1.3bn in annual US military aid to Egypt, but Washington is anxious to retain this link for future leverage over the generals.
The Bright Star military exercise cancelled by the president was due to take place in September, but may have been in jeopardy regardless of US disapproval, since the fragile security situation in Egypt makes it hard to imagine the Pentagon sanctioning the deployment of hundreds of US troops into a hostile environment for mere training purposes.
Obama said he had notified the interim government that he is cancelling the bi-annual exercises and was asking advisers to "assess implications" of interim government's actions and consider "further steps."
"The Egyptian people deserve better than what we've seen over the last several days … The cycle of violence and escalation needs to stop," he added.
Obama ended by saying: "America cannot determine the future of Egypt. That's a task for the Egyptian people. We don't take sides with any particular party or political figure."
Obama ignored questions from reporters outside his rented vacation home about whether the US would cut off aid. His audio statement was not initially televised, but video was released later.
The US criticism of the violence in Egypt was echoed in other western countries, but opposition parties called for a firmer response.
British foreign secretary William Hague is being urged by the Labour opposition to convene an emergency meeting of European Union foreign ministers that could halt EU aid to Egypt.
The UK shadow foreign secretary, Douglas Alexander, also asked the foreign secretary to urge the US to suspend military assistance, saying the west should use "any lever" available to show that such crackdowns could not be tolerated.
In November, following the election of Mohamed Morsi, the European Union pledged nearly €5bn in loans and grants for 2012-13, plus potential loans through the European Investment Bank of up to €1bn a year.
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