Last week’s terror attack on Egyptian army troops by jihadists whose ultimate aim was to kill Israelis provoked an unexpectedly harsh reaction from Egyptian President Mohammed Morsi. The chaos in the Sinai is the direct result of the revolution that brought down the Mubarak regime. The Hamas government looked to benefit from the triumph of their Muslim Brotherhood allies, but the embarrassing slaughter of Egyptians by anti-Israel terrorists has led the new government in Cairo to shut down the smuggling tunnels between Egypt and Gaza. The prospect of increased security cooperation between Egypt and the United States is slightly encouraging, though Israel’s exclusion from talks concerning its border is both spiteful and foolish.

But while the crackdown in the Sinai and along the border with Gaza may be a hopeful sign the new Egyptian government is unwilling to be dragged into conflict with Israel by the Palestinians, the real news in the aftermath of the shooting is very bad indeed. Morsi’s sacking of Egypt’s intelligence chief (who ignored warnings from Israel about a possible terror attack) is one thing, but the decision of the Egyptian leader to fire two of the country’s leading generals is more than just a personnel shuffle. If Morsi has assumed power of the country’s military, the notion that the army would or could act as a brake on the Muslim Brotherhood has been shown to be a myth. His firing of Egypt’s defense minister and the army chief of staff makes it clear the Brotherhood is now completely in control of the country. This calls into question not just the future of regional stability but the Obama administration’s equivocal attitude toward the Brotherhood’s push to power.

In the aftermath of the Egyptian election in which Morsi triumphed over the military’s preferred candidate, optimists believed the army’s acquiescence to the Brotherhood’s victory was bought by the group’s willingness to share power. The assumption was that the military would remain in charge even if Morsi would have the trappings of power. But the firing of the two defense chiefs has shown foreign observers underestimated both Morsi and the Brotherhood’s will to come out on top. It’s also apparent that such thinking overestimated the ability of the army to retain the influence it had when Mubarak, himself a former general, ran things.

The implications of what Time aptly termed a Muslim Brotherhood “coup” are far-reaching.

Morsi may not be interested in a direct confrontation with Israel or in allowing Hamas’ desire to keep the border in flames. For all of the fraternal bonds between the Brotherhood and Hamas, even Egyptian Islamists may believe, as most of their countrymen do, the Palestinians are ready to fight Israel to the last Egyptian.

But if there are no longer any effective checks on the Brotherhood, the idea that the United States or Israel can rely upon the army to keep Egypt from being transformed into an Islamist country is without any rational basis. This ought to do more than scare the country’s secular community or even the Christian Copts who constitute up to ten percent of Egypt’s population. It will mean the start of a process whereby the Brotherhood obtains control over every segment of Egyptian society and government. Optimists hope this will mean nothing worse than a copy of Turkey’s drift from secular freedom to Islamist authoritarianism under President Obama’s friend Recep Tayyip Erdoğan. But no one should be surprised if a more radical group like the Brotherhood is not satisfied with that and eventually pushes for more radical changes in both Egyptian society and its relations with Israel.

The Obama administration thought it was managing the situation in Egypt via support of the military while conducting outreach to the Brotherhood. But what they find themselves with now is a situation in which the U.S. is giving $1.5 billion per year to a country controlled by an extremist group whose ideology places it in a state of continual conflict with the West. President Obama and his cheerleaders in the media may think he has deftly handled an Arab Spring which has seen the region’s most populous country transformed from a Western ally to an Islamist loose cannon. If this is foreign policy success, I’d hate to see what failure looks like.