BRUSSELS - The European Union warned Egypt on Wednesday it could lose funds from its 5 billion euro ($6.5 billion) aid package if democratic reforms fail to satisfy Brussels, and said Cairo has already lost some additional funding.
In a report on reforms in Eastern Europe, the Middle East and North Africa, the European Commission said Cairo has shown insufficient progress since the 2011 revolt that overthrew President Hosni Mubarak and handed power to the Islamist Muslim Brotherhood movement.
It listed "serious setbacks" in areas such as human rights, and criticized Egypt's President Mohamed Morsi for pushing through constitutional changes that have plunged the country into "a deeply divisive political crisis".
Failure to address EU concerns could result in cutbacks in aid for Morsi's cash-strapped government, the EU's commissioner for enlargement, Stefan Fuele, told a news conference.
"Egypt has to deliver for those up to 5 billion euros this year and next," he said. "This is the way how we could strengthen our point."