Secretary of State Antony Blinken said in September that the aid would be withheld if Egypt did not address specific human-rights-related conditions Washington has set out, which activists say included the release of certain individuals deemed political prisoners.

Rights groups had called on the administration to block the entire $300 million of foreign military financing to Abdel Fattah al-Sisi's Egyptian government. Sisi, who ousted the Muslim Brotherhood in 2013, has overseen a crackdown on dissent that has tightened in recent years.

"While the Secretary has not made the final decision, if there are not major developments over the next couple of days, the Secretary will re-program the $130 million to other national security priorities as he previewed in September," a State Department official said in a call with reporters.

The portion of the aid withheld accounts for 10 percent of the $1.3 billion that was allocated for Egypt for fiscal year 2020. This amount has been appropriated to Egypt every year since 2017, according to a congressional research report.

But Friday's announcement comes after the administration earlier this weekapproved the potential sale of air defense radars and C-130 Super Hercules planes to Egypt for a combined value of more than $2.5 billion, raising doubts about the impact of the withheld amount.

Advocates welcomed the decision to withhold $130 million but also expressed partial disappointment.

"This was the right decision. Egypt's atrocious human rights record should leave no room for compromises from the US government. But we also saw $2.5 billion in US arms sales to Egypt notified this same week.... It's not much more than a slap on the wrist given those handouts," said Sarah Holewinski, Washington director at Human Rights Watch.

U.S. SECURITY INTERESTS

U.S. officials say the relationship with Egypt is complex. The most populous Arab country is a vital ally and Washington is still committed to support it for its "legitimate defense needs". They also add that the $2.5 billion sale is a deal that specifically serves U.S. interests.

"They're sort of emblematic in the types of things we would like to see Egypt procuring because these are things that have direct relations to U.S. security interests more broadly," one of the State Department officials said.

U.S. Senator Chris Murphy, a Democrat and an ally of President Joe Biden, welcomed the decision, and said Sisi had failed to meet the administration's "narrow and wholly achievable human rights conditions."

"It sends the important message abroad that we will back up our commitment to human rights with action and gone are the days where dictators receive blank checks from America,” Murphy said in a statement.

There are no official figures on detainees, but rights groups estimate that tens of thousands were jailed on security-related charges, as Sisi tightened control. Most remain behind bars, rights groups say.

Former army chief Sisi has faced years of criticism from activists and some foreign leaders, including Biden, for crushing dissent since coming to power in 2014 after leading the ouster of elected President Mohamed Mursi.

At a youth forum this month, Sisi characterized criticism over human rights as an attack on Egypt and said it did not reflect reality on the ground. He says the government has tried to provide economic welfare after overcoming turmoil following a 2011 uprising.

Biden has pledged to put human rights at the heart of his foreign policy and rights advocates have pushed Washington to get tougher on Sisi, even though ties with Egypt have improved after Cairo's mediation to help end hostilities in April between Israel and Hamas militants.