The Obama administration is in a 'very high stakes' standoff with Egypt over the authorities' prosecution of non-governmental democracy groups, says a leading democracy assistance official.

But the architect of the crackdown today dismissed suggestions that the dispute would have wider ramifications or threaten U.S. aid to the country's military, while a leading Egyptian activist expressed disappointment with Washington's lack of 'consistent strategy' on the issue.

'Egypt needs the U.S. and the U.S. needs Egypt,' said Faiza Aboul Naga. 'This is just one of many files and it shouldn't affect strategic relations.'

Naga, a Mubarak holdover, was speaking alongside Prime Minister Kamal ...