U.S. intelligence agencies recently monitored a secret meeting between Egypt’s intelligence chief and a senior Iranian spy that is raising new fears the Muslim Brotherhood government in Cairo could begin covertly supporting global terrorism.

According to U.S. officials, the head of the Egyptian General Intelligence Service, Maj. Gen. Murad Muwafi, met in early August with a senior official of Iran’s Ministry of Intelligence and Security (MOIS).

Disclosure of the Egyptian-Iranian intelligence meeting comes as the Obama administration is planning to provide $1 billion in aid to bail out Egypt’s new Islamist government. The administration is said to be seeking closer ties to the new regime in Cairo, following the ouster in February 2011 of long-time ally Hosni Mubarak.

Many members of the pro-democratic, anti-Muslim Brotherhood opposition in Egypt believe the Obama administration has made a covert pact to support the Morsi regime.

Meanwhile in Cairo, Islamic protesters on Tuesday stormed the U.S. Embassy and pulled down the American flag to protest what they said was a U.S. film production the protesters claimed insulted Islam.

U.S. intelligence gathering targeting Egypt has been stepped up over the past year as the Egyptian Muslim Brotherhood, an Islamist party, came to power in June. The group’s credo includes the phrase, "Allah is our objective; the Quran is our law, the Prophet is our leader; jihad is our way; and death for the sake of Allah is the highest of our aspirations."

Since the revolution that led to the ouster of the pro-U.S. regime of Hosni Mubarak, a large number of radical Islamists have been released from prison and have gone back to preaching anti-Western and anti-Israel jihad, or holy war.

The meeting between Muwafi and the Iranian, identified by officials only with his last name, Gerami, set off security concerns because the Iranian spy service is a key player in Tehran’s international support for terrorism, as well as anti-U.S. and anti-Israel operations.

Within days of the meeting, however, Egypt’s new President Mohamed Morsi replaced Muwafi in a political shakeup following a terrorist attack in the Sinai Peninsula that killed 16 Egyptians in August.

It is not known if the meeting with Gerami was the cause of Muwafi’s ouster, or if it was the result of the Sinai attack.

News reports in Egypt quoted Muwafi as saying his service had some advance intelligence warning of the Aug. 5 Sinai attack but failed to alert other military and security authorities.

Asked about the Egyptian-Iranian intelligence meeting, a U.S. official told the Free Beacon: "The Egyptians are still skeptical of Iranian motives. There’s a lot of baggage to overcome with Tehran, so for now any efforts to expand outreach and build a new relationship are likely to be cautious and fairly limited."

Reuel Marc Gerecht, a former CIA officer who specialized in Middle Eastern affairs, said it is difficult to gauge the significance of the Gerami-Muwafi meeting, and noted that liaisons between spy agencies are common.

"Sometimes those meetings are significant," said Gerecht. "Other times, not much at all."

"If they are meeting it is probably different than in the past," he said, noting that it is possible the Egyptians met with the Iranians under the regime of Hosni Mubarak.

"I'd guess they would be chatting about Syria and Hamas and Palestinian Islamic Jihad," said Gerecht, now with the Foundation for Defense of Democracies. "The U.S. would certainly be in that mix. A Muslim Brotherhood-guided service will be more open to Iranian contact than was the case under Mubarak. But Syria is and will remain a huge problem."

U.S. officials said Morsi’s firing of several security officials following the Sinai attack was a clear sign the Muslim Brotherhood, which publicly advocates nonviolent jihad, is moving to take control of key power centers.

Muwafi was a key figure during the Mubarak regime and the intelligence service he headed remains one of the most powerful elements within the Egyptian government.

Muwafi is known to U.S. and western officials. He met Defense Secretary Leon Panetta in Egypt last July.

Officials believe Muwafi’s ouster is part of Muslim Brotherhood efforts to purge the government of pro-military elements.

The news outlet Ahram Online quoted Egyptian presidential office sources as saying Muwafi was fired as the culmination of disputes between Muwafi, the military, and Morsi over the handling of intelligence affairs.

The new Egyptian intelligence chief is Maj. Gen. Mohamed Raafat Shehata, Muwafi’s deputy who was reportedly involved in the October 2011 prisoner swap between Israel and Hamas that resulted in the freeing of Israeli soldier Gilad Shalit.

Iran’s foreign minister said Aug. 22 that Iran and Egypt were moving toward restoring diplomatic relations, which they severed more than 30 years ago. Ali Akbar Salehi told Egypt’s state-run Al-Ahram newspaper that Tehran wants ties of "friendship and brotherhood" with Cairo.

Iran’s MOIS and the paramilitary Islamic shock troops known as the Islamic Revolutionary Guards Corps (IRGC) are considered the lynchpin of the Islamic regime in Tehran.

The MOIS has conducted aggressive intelligence operations, including assassinations, and is known to support terrorist groups in the Middle East, including al Qaeda, Hezbollah, and Hamas. It is also backing the regime in Syria of Bashar al-Assad.

The U.S. Department of the Treasury said in a Feb. 16 statement that the MOIS is "Iran's primary intelligence organization."

David S. Cohen, then-Treasury under secretary for terrorism and financial intelligence, said in the February statement that "we are designating the MOIS for its support to terrorist groups, including al Qaeda, al Qaeda in Iraq, Hezbollah and HAMAS, again exposing the extent of Iran’s sponsorship of terrorism as a matter of Iranian state policy."

The MOIS also was sanctioned for "abusing the basic human rights of Iranian citizens and exporting its vicious practices to support the Syrian regime’s abhorrent crackdown on its own population," he said.

For Hezbollah, the MOIS has provided money, material, and technological support, and also took part in multiple projects with Hezbollah in conducting computer attacks.

The Iranian spy agency also funds and supports the Palestinian terrorist group Hamas, and "has facilitated the movement of al Qaeda operatives in Iran and provided them with documents, identification cards, and passports."

"MOIS also provided money and weapons to al Qaeda in Iraq (AQI), a terrorist group," the Treasury Department said.

In Syria, the MOIS was linked to IRGC Qods Force support of "the Syrian regime’s violent repression of dissent in Syria," the statement said.

"MOIS, like the IRGC-QF, and the Iranian [Law Enforcement Forces] LEF, has provided financial, material, or technological support to the Syrian [General Intelligence Directorate], whose property and interests in property are blocked pursuant to [Executive Order] 13572," Treasury Department stated. "MOIS has provided substantial technical assistance to the Syrian GID for the purpose of assisting the Syrian regime in its violent crackdown on protesters."

The service was not the main source of the plot uncovered last year by Iran’s government, through the IRGC Qods force, to assassinate the Saudi Arabian ambassador to the United States. But U.S. officials said it is very likely that the MOIS was involved in, or at the very least informed about, the plot.

According to U.S. officials, "dozens" of pro-terrorist Islamist preachers have been released from prison, including former members of the terrorist group Egyptian Islamic Jihad.

For example, an Egyptian military court set free six imprisoned members of Egyptian Islamic Jihad (EIJ), including Mohammed al-Zawahiri, brother of current al Qaeda leader Ayman al-Zawahiri. Mohammed al-Zawahiri had been sentenced to death for conspiracy to commit terrorist attacks.

Earlier, EIJ leader Sheikh Murjan Mustaff Salem, also known as Abd al-Hakim Hassan, was released.

Ahmad Ashush was also released from prison. Ashush fought in Afghanistan and was close to Osama bin Laden and al-Zawahiri.

Many of the radical Islamists have formed a new group called "the Salafi jihadist trend," also known as Ansar al-Shariah in Egypt, which seeks to set up an Islamist state ruled by Shariah law.

The Salafists have criticized less radical Salafists and the Muslim Brotherhood for taking part in the democratic process. The radicals want to use force to create a hardline Islamic regime without secular groups.

The radicals are active in the Sinai region of Egypt.

In February, the Treasury Department identified the MOIS as a key facilitator of terrorism and supporter of human rights abuses in Iran and Syria.