The office of Egyptian President Mohammed Mursi has said that the decree giving him sweeping new powers is temporary and not intended to concentrate power in his hands

“The presidency reiterates the temporary nature of those measures, which are not intended to concentrate power, but to avoid … attempts to undermine democratically elected bodies and preserve the impartiality of the judiciary,” the statement said.

Mr Mursi said he was committed to engaging all political forces to reach common ground on the constitution.

The protests, both on the street and in the courtroom, do not appear large enough to dent the president’s momentum, says Mustapha Kamel Al Sayyid, a political science professor at the American University in Cairo.

“I think that the fact that the Muslim Brotherhood is planning a big demonstration … on Tuesday suggests that they are not inclined to accept a compromise,” he says. “I think they are planning to send a message that they have more support in the country than the secularists, and they will not change their position.”…

Some of the young men joining in the rock-throwing against police complained bitterly that this police force was no different than the one that was notorious for brutality and abuse under Mr. Mubarak, and which continued those policies under military rule. “Morsi’s police is attacking us and shooting us just like Mubarak’s police did,” said Ahmed Ali, a 14-year-old protester who wore a scarf because of tear gas. “And now Morsi wants to be a dictator. We won’t allow a new dictator to take Mubarak’s place.”

Precisely because he represents the Muslim Brotherhood, the vanguard of Arab Islam, and precisely because he was democratically elected, if Morsi threw his weight behind an Israeli-Palestinian peace deal, it would be so much more valuable to Israel than the cold peace that Sadat delivered and Hosni Mubarak maintained. Sadat offered Israelis peace with the Egyptian state. Morsi could offer Israel peace with the Egyptian people and, through them, with the Muslim world beyond.

Ironically, though, all of this would depend on Morsi not becoming a dictator like Mubarak, but on him remaining a legitimately elected president, truly representing the Egyptian people. That is now in doubt given Morsi’s very troubling power grab last week and the violent response from the Egyptian street. President Obama has to be careful not to sell out Egyptian democracy for quiet between Israel and Egypt and Hamas. We tried that under Mubarak. It didn’t end well.

No doubt Morsi’s price for engaging with Israel would be the Arab Peace Initiative — full Israeli withdrawal from the West Bank and Arab East Jerusalem, save for mutually agreed-upon land swaps, and some return of refugees, in return for full normalized relations. If Morsi advanced such a proposal in direct talks with Israelis, he could single-handedly revive the Israeli peace camp.

Do I expect that? No more than I expect to win the lottery.

Whatever the administration is saying publicly about Egypt, it should privately be spelling out to Morsi that robust relations with the United States depend on more than simply not breaking Egypt’s peace treaty with Israel. The administration has been poor at nuanced diplomacy (“smart diplomacy,” if you will) in which carrots and sticks are deployed to try to influence events where possible.

We should be very clear, however, that we stand with governments that move toward respect for individual rights, protection of minorities (whether ethnic or religious) and economic reform. Morsi may be an ally, but we cannot give the impression that we approve of or are indifferent to domestic repression. Understanding that we have limited abilities to determine events, we nevertheless should undertake what steps we can take with Egypt to try to deter repressive behavior and to encourage Morsi to fulfill his obligations (including limiting smuggling of arms to Egypt).

After Morsi’s announcement, the US State Department merely observed that Morsi’s moves “raise concerns for many Egyptians and for the international community”, hardly a resounding US denunciation.

The ‘stability and peace’ trade-off that was reached between Clinton and Morsi in Cairo is clear; in return for Morsi persuading Hamas to agree to a ceasefire with Israel, the US would allow him to seize new ‘temporary’ political powers under the guise of ensuring ‘stability’, both in Egypt and in the region…

As will become clear, in the longer-term Clinton’s deal with Morsi has weakened Israel by linking its security to the Muslim Brotherhood’s political ambitions: if the US does not give a free hand to the Brotherhood in Egypt, the Egyptians will cease to rein in Hamas.

Clearly, this new dynamic works actively against Israel; the more Hamas threatens Israel, the more the US will have to concede to the Brotherhood in Cairo; a formula that only motivates the Brotherhood to allow Hamas’ military capabilities strengthen further, all while the Brotherhood uses its control of Egypt to advance towards its planned ‘last stage’, namely the eventual liquidation of Israel.

Mubarak was our friend, but a bad guy. So he had to go, and Obama denounced him and helped force him out. Morsi is our enemy, and also is a bad guy. So Obama thinks he’s A-OK, and helped Morsi take power. That’s called “smart diplomacy.” You probably wouldn’t understand.

Other things are confusing, too. Did Obama know that Morsi was about to claim dictatorial powers when he made Morsi the “hero” of the Israel-Gaza cease fire? If so, did he mind? If Obama didn’t know–which seems more likely–does he now think that Morsi double-crossed him by capitalizing on his faux diplomatic mission to proclaim himself a dictator? Or is that one more thing that is A-OK with Obama? If Obama doesn’t like the fact that Morsi has cut “Arab Spring” democracy off at the knees, does he intend to do anything about it? Or, when bad things happen, is it “smart diplomacy” to do nothing and pretend you don’t mind?

McCain said that “American taxpayers expect” the president to tell Morsi that “our dollars will be directly related to the progress towards democracy, which you promised the people of Egypt, when your party and you were elected president.”

Click the image to watch.