An Egyptian court on Sunday adjourned the trial of dozens of democracy activists including 16 Americans to April, raising hopes among their supporters that the case could be dropped to spare further damage to Egypt's ties with its ally Washington.
Forty-three foreign and Egyptian non-profit workers - including the son of the U.S. transportation secretary - are accused of receiving illegal funds from abroad, carrying out political activities unrelated to their civil society work and failing to obtain the necessary operating licences.
The groups say they have long sought to register in Egypt.
The case has underscored tension between the United States and the generals who took power in Egypt when President Hosni Mubarak was overthrown. Washington officials have said annual military aid to Egypt, worth $1.3 billion, is under threat.
But they want to avoid burning bridges with Egypt's rulers, who have upheld a peace treaty with staunch U.S. ally Israel and are promising to hand power to civilians this year.
A senior U.S. official said on Saturday that Washington and Cairo were holding what he described as intense discussions to resolve the crisis within days and Secretary of State Hillary Clinton said Washington was evaluating developments.
Prosecution lawyer Khaled Suleiman told the court: These organisations are accused of espionage and going against the law. Most of them are in contact with the CIA. These organisations gathered information and reports on Egypt and sent them to the U.S. State Department.
Lawyers who said they were volunteering in the case demanded the defendants were jailed.
But Judge Mahmud Mohamed Shukry said the trial would resume on April 26 and the defendants could stay out of jail until the next hearing. A ban on them travelling outside Egypt remains.
Some of the Americans have taken refuge in the U.S. embassy and others were already out of Egypt when the charges were brought.
Only 13 of the 43 non-governmental organisation workers accused in the case stood in the cage for defendants on Sunday, all Egyptians. The rest were not in court and many had not been formally summoned to appear there.
Supporters took heart from the adjournment of the case.
This late date is intentional to give an opening for a solution, either by registering the NGOs or amending the law, said Nancy Okail, a local representative of Freedom House, one of the groups targeted in the crackdown.
Certainly things could change for the NGOs in the meantime in such a way that would make their positions stronger by the time of the second hearing, she added.
Speaking after the trial in the crowded courtroom on the outskirts of Cairo was adjourned, Clinton said her government was evaluating the outcome.
We'll have more to say after we have finished that analysis and gathered as much information as possible, Clinton told reporters on a visit to the Moroccan capital Rabat.
Clinton, who arrived there after visits to Algeria and Tunisia, has met Egypt's Foreign Minister Mohamed Kamel Amr twice in the past three days, the U.S. official said on condition of anonymity on Saturday.
The U.S. pro-democracy groups whose staff have been charged deny they have done anything illegal.
Egypt says the case is a judicial matter and all groups must heed Egyptian law. The groups are accused of establishing branches of their organisations without permission and offering unauthorised political training and workshops to parties.
One of the judges leading the probe has said the NGOs violated Egyptian tax laws by not declaring their income from abroad or paying taxes on their workers' pay and had carried out political activities unrelated to their civil society work.
Negad al-Borai, a lawyer representing the accused in Cairo, said the charges referred only to a short period in the groups' activities and could therefore be argued against.
The charges made involve only the period from March 2011 to December 2011, he told Reuters. These groups have applied for permits before that period.
Some Egyptian officials have linked the funding of civil society initiatives to a U.S. plot to undermine Egypt's sovereignty - accusations the United States and the civil society workers deny.
Among those accused is Sam LaHood, Egypt director of the International Republican Institute (IRI) and the son of the U.S. transportation secretary.
The crisis escalated on December 29 when Egyptian judicial authorities swooped on the offices of IRI and the National Democratic Institute, confiscating documents and computers and cash. They have been unable to fully resume their work.
The government and the ruling military council say the case was initiated by the judiciary and is out of their hands.
(Additional reporting by Arshad Mohammed in Rabat; Writing by Dina Zayed; Editing by Tom Pfeiffer and Alison Williams)