CAIRO // Lawyers for the 43 non-govermental organisation employees charged with operating without a licence and receiving illegal foreign funding entered a not guilty plea in court yesterday.
Judge Mahmoud Mohammed Shoukry adjourned the case until April 26.
That could give Egyptian authorities and foreign diplomats time to negotiate a plea deal that would satisfy the government and spare the employees serious punishment.
Just 14 of the defendants - and none of the 16 Americans charged - were present at the hearing.
The courtroom became so rowdy with photographers and video journalists jostling for a view that Mr Shoukry called a recess just minutes after arriving in the court. He threatened to arrest anyone disrupting the proceedings.
The case has damaged Egypt's relationship with the US. Several US officials have said they will press to end more than US$1.5 billion (Dh5.5bn) of military and economic aid to Egypt if it continued with its "crackdown" on civic society and pro-democracy groups.
The case is particularly contentious because one of the defendants is Sam LaHood, the son of the US transportation secretary, Ray LaHood, and the head of the Egypt office of the International Republican Institute (Iri).
Iri and the National Democratic Institute (NDI), which are affiliated with the two dominant US political parties, are the most prominent groups targeted in the case.
Despite the brinkmanship of US politicians, the ruling council of generals in Egypt have countered that they would not interfere with the court proceedings. Negotiations have continued, however, but it is not yet clear whether the two sides can work out a solution that "saves face" for Egypt, analysts said.
On a visit last week, Senator John McCain, a Republican from Arizona who is also the chair of Iri, adopted a diplomatic tone about the dispute, and described it as a symptom of an outdated law rather than Egyptian officials trying to stifle civic society.
Randa Fahmy Hudome, the acting chief executive of the lobbying group American Egyptian Strategic Alliance, said his remarks were evidence that a deal could be in the works to allow the NGO employees to leave the country without a criminal sentence. Under Egyptian law, each defendant faces up to five years in prison.
Tensions over US NGOs in Egypt date back to well before the Egyptian uprising that toppled Hosni Mubarak last year. Fayza Abul Naga, the minister of planning and international cooperation and a rare holdover from Mr Mubarak's regime, complained about the activity of unlicensed NGOs in Egypt in 2006, according to a US diplomatic cable published by Wikileaks.
The tensions turned to confrontation last year when Ms Abul Naga announced an investigation into foreign NGOs in Egypt, as well as several Egyptian NGOs that received funding from abroad. The prosecution in yesterday's hearing said that the NGOs in the case received nearly $30 million of unregistered foreign funding last year.
An Egyptian official, who asked for anonymity, said that remarks from the US ambassador to Egypt, Anne Patterson, last year about more funding for US NGOs gave the impression that the US was trying to meddle in Egyptian politics without the approval or oversight from the interim government.
The trial has also hit a nerve for Egyptian protesters, some of whom have described the investigation as an attempt to stifle criticism of the military generals. After the proceedings ended yesterday, there were chants of "down with military rule" by in the courtroom.
* With additional reporting by the Associated Press