It's unclear whether scrapping the Bright Star exercise will have any impact in stopping the clashes between Egypt's military-backed interim government and supporters of ousted President Mohammed Morsi. Obama said his administration would look at possible further steps, but he gave no indication that the U.S. planned to cut off its $1.3 billion in annual military aid to Egypt.
Speaking from his vacation home on Martha's Vineyard, Obama said the U.S. wants democracy in Egypt to succeed. But he said achieving that outcome is not the responsibility of the United States.
"America cannot determine the future of Egypt," Obama said in his first statement since violence erupted Wednesday. "That's a task for the Egyptian people. We don't take sides with any particular party or political figure."
More than 500 people have died in Egypt since Wednesday in clashes between the interim government and Morsi's supporters. The government has declared a nationwide state of emergency and a nighttime curfew.
Obama said the United States informed Egypt's interim leaders Thursday morning about plans to cancel the military exercises. The president also ordered his national security team to "assess the actions taken by the interim government and further steps that we may take as necessary with respect to the U.S.-Egyptian relationship."
The Bright Star maneuvers, long a centerpiece of the deep ties between the U.S. and Egyptian militaries, were scheduled to begin next month and last about three weeks. Several other countries, including Turkey, Jordan and Britain, have also participated.
The U.S. and Egypt have not held the biennial exercises since 2009, as Egypt grappled with the fallout from the revolution that ousted its longtime autocratic leaders Hosni Mubarak. Morsi, a member of the Muslim Brotherhood, was elected president in 2012 during Egypt's first democratic elections.
Critics of Morsi expressed increasing concern over the past year that he was cracking down on democracy. He was ousted by the military on July 3, and his whereabouts remain a mystery.
The U.S. has refrained from declaring Morsi's ouster a coup, a step that would require the Obama administration to suspend its military aid. Officials have said such a move would not be in line with American interests.
"We appreciate the complexity of the situation," Obama said Thursday. "While Mohammed Morsi was elected president in a democratic election, his government was not inclusive and did not respect the views of all Egyptians."
The president urged all parties in Egypt to refrain from further violence, calling it a "dangerous path." He said Egypt would have "false starts" in its efforts to embrace democracy and recalled America's own "mighty struggles to perfect our union."
Pace reported from Washington. Associated Press writers Matthew Lee, Robert Burns and Lolita C. Baldor contributed to this report.