CAIRO — It was a recent Saturday night at the U.S. Embassy and a delegation of more than 100 American business leaders was rubbing shoulders with Egyptian counterparts, some of them affiliated with the newly dominant Muslim Brotherhood.

Hassan Malak, a longtime Brotherhood leader, sat on a couch in deep conversation with an economic official from the embassy as executives from Boeing and Cisco floated through the crowd. Malak, who made his fortune selling furniture and software, was blunt. “We need investments,” he told a group of foreign reporters, in a break from his tete-a-tete with the embassy official.

After much uncertainty following the revolution that ousted longtime American ally Hosni Mubarak, Egypt’s new power brokers, the once-outlawed Brotherhood, looked to be turning the page. The Brotherhood once had consistently railed against America’s Middle East policies and Mubarak had portrayed himself as the sole force staving off an anti-Western tide.

Within days of the embassy confab, however, the spectacle of Islamist demonstrators climbing the embassy’s walls strained relations between the United States and Egypt’s new rulers. Though the U.S. and Egypt have vowed to push ahead with economic aid plans, the hope that an already divided U.S. Congress would speedily approve an Obama administration pledge to offer Egypt $1 billion in debt forgiveness has fallen into doubt.

“It is very difficult for the Brotherhood to make such a rapid switch from criticizing and attacking American policy in the region to being a close friend of the United States,” said Deyaa Rashwan, an analyst at Al Ahram Center for Political and Strategic Studies.

The fractious episode, and the Brotherhood’s muddled and contradictory response, also put in sharp focus an emergent rift within the group’s leadership over how to stay true to its Islamist roots yet survive in a world where a close economic relationship with the U.S. appears necessary.

At first, the Brotherhood issued a statement praising the rowdy demonstrators. Then came a rushed apology by senior Brotherhood leader and onetime presidential candidate Khairat Shater. Finally, two days after the protests, recently elected Egyptian President Mohamed Morsi offered a similar conciliatory communique.

“Morsi was late. We couldn’t wait,” said one Brotherhood member, speaking on condition of anonymity as he explained the decision by Shater, who is a business partner of Malak, to preempt Morsi. “Morsi was really put under pressure [by the Brotherhood] to apologize. He was obviously hesitating.”

The Brotherhood, founded in 1928 by a Nile Delta-born schoolteacher named Hassan Banna, was long outlawed by Egypt’s then-secular, military-fueled leadership. When the revolution to oust Mubarak began, the Brotherhood said it would not field a presidential candidate, but later reneged. Shater was the initial candidate but was forced to bow out by a court ruling, with Morsi taking his place.

In taking power, the Brotherhood has shed longtime positions such as favoring the abrogation of Egypt’s peace treaty with Israel. It has also found accommodation with the military.

But the sloppy response to the embassy incident reflects the broader push and pull within the religious movement about how to approach the United States. Such challenges are likely to become harder as the Brotherhood, no longer in the shadows, actually runs the country.

Analyst Rashwan said that particularly tough choices will probably come after the U.S. presidential election, as the group’s reformist and conservative camps can no longer simply paper over differences, particularly regarding how to approach Israel and America’s ambitions to revive the dormant Israeli-Palestinian peace process.

The formulation of Morsi’s response will be complicated by the group’s simmering resentments over other compromises, including negotiating loan packages with the West bearing interest, a concept that flies in the face of Islamic law.

“They will have splits within the Brotherhood, and also among the Islamists in general. There will be a struggle among Islamists, [especially] because the Palestinian issue has been one of their major causes,” Rashwan said. Already since the revolution, younger Brotherhood members have quit the party, complaining it is not progressive enough, but Rashwan predicts conservative factions might do the same. “The splits are likely to be political and very radical,” he said.

Morsi, a Brotherhood member for more than 30 years who served on the organization’s executive council, formally quit the party when he became president. His office is staffed by Brotherhood officials, some of them considered close to Shater.

The Brotherhood member who asked to remain anonymous, a confidant to senior leaders of the group, described the movement’s current infighting pitting Brotherhood members in their 20s, 30s and 40s against many members of the group’s rigidly conservative first and second generations.

For now, the more pragmatic agenda, supported by younger members, has been championed by the group’s most prominent senior figures, including Morsi and Shater, especially regarding outreach to the West and the pursuit of aid.

“The [younger] generation is insisting to reform and move ahead,” the member said.

He acknowledged, though, that the decisions are far from unanimous: “The majority of the [older] generation are against this,” but for now Morsi and Shater are pursuing policies that break with the older generation’s orthodoxy.

The member warned that if the Brotherhood didn’t compromise and show flexibility in dealing with Egypt’s crumbling infrastructure and widespread poverty, the group would lose its chance to rule and create a modern Islamic state. “We cannot afford for the project to fail,” he said.

Yet the anti-American protests this month demonstrated how complicated the situation remains for the Brotherhood.

The anonymous member said that Morsi and his office advisors misplayed their hand as they sought popularity with the Islamists outside the embassy, including the competing ultra-fundamentalist Salafist movement. The scenes pointed to the difficult road ahead among even like-minded colleagues confronted with unexpected crises and conflicting interests.

“There are some differences [now] between Morsi and Shater, but it’s hard to pinpoint. This is the problem of transparency in Egypt,” Rashwan said.

The Brotherhood does not publicly acknowledge any internal fissures, and the member insisted that no tension exists now.

However, Ahmed Samir, a former member who quit the group in November, said it was hiding its division over its post-Mubarak policies, including the matter of aid from the West.

“You can say your views within the Brotherhood, but if you publicly announce these opposing views, then you are shunned and considered an outsider,” Samir said.

ned.parker@latimes.com

Abdellatif is a special correspondent.