President Obama faces a difficult task in trying to influence events in post-revolutionary Egypt. With its military rulers brutally abusing the human rights of their people and a rising tide of Islamism threatening to drag the most populous Arab nation into a morass of fundamentalism and violent conflict, maintaining the U.S. relationship with Egypt is inherently problematic. But as he did during the last days of the Mubarak regime last year, the president may have just managed to make a bad situation worse.

On the heels of the Egyptians’ attempt to imprison Americans seeking to promote democracy, Obama has directed the State Department to exercise a national security waiver that will enable $1.3 billion in military assistance to once again flow to Cairo despite legislation linking the aid directly to human rights concerns. It is believed the waiver was payment to the Egyptian military for its decision to allow seven Americans to leave the country this month. The ransom might have seemed reasonable to their families (especially because the father of one of those in peril was Secretary of Transportation Ray LaHood). But the move will disillusion Egyptian democrats as well as send a signal to both the military and the Islamist majority in the new parliament that not only is Obama not interested in human rights but that the U.S. is willing to bow to blackmail.

Egypt has gotten billions in aid since the early 1980s, largely as a bribe intended to both keep the country out of the Soviet orbit and to preserve the peace treaty it signed with Israel in 1979. But with Egypt now moving away from an ice-cold peace with Israel to a situation barely distinguishable from belligerence, the same criteria no longer should apply to the annual grant of U.S. largesse. For too long, the aid was rightly seen by the Egyptian people as merely a baksheesh payment to Mubarak and his cronies that did nothing to better their lives. In continuing this practice now that a new group hostile to American interests has replaced the dictator, Obama has not only demonstrated his contempt for ordinary Egyptians but also told the Middle East it is the Brotherhood and not America that is the “strong horse” in the region.

If the United States is truly going to use its $1.3 billion present to the Egyptian military as leverage over the country, then it might have been advisable to employ it as more than a ransom payment. Egypt has opened up its border with Gaza, relieving the isolation of the Hamas government of the strip. The military has embraced the Muslim Brotherhood in an uneasy alliance rather than seeking to work with secular liberals. Under these circumstances, it is difficult to envision Egypt as either a bulwark against fundamentalism or a force for peace in the region.

By throwing away its one bargaining chip, the administration has lost its ability to have any impact on the situation. While it is reasonable to argue that a complete cutoff of aid would deprive Washington of any ability to influence Egypt’s rulers, by not even waiting until after a new presidential election is held to replace Mubarak, Obama has made it clear that both the generals and the Brotherhood will have a free hand in the coming months no matter what they do.

Given the administration’s obvious disinterest in human rights issues throughout the first three-plus years of Obama’s presidency, this decision can hardly be seen as a surprise. But by demonstrating it is willing to continue to throw good money after bad into an Egyptian cesspool, the president and Secretary Clinton will further undermine American prestige at a time when Islamists already believe they represent the future of the region.