CARS burning on the streets of Cairo and Alexandria, more than 30 civilians killed, an overwhelming atmosphere of unresolved tensions: this is the latest phase of the Arab Spring as once again Egypt hovers on the abyss of chaos.

Firstly thousands of demonstrators demanded the army remove President Mohammed Mursi, then thousands more members of the Muslim Brotherhood insisted he should be returned to office

As Egypt's failed experiment with democracy enters its second week, everything still depends on which direction the army will take and how it will react to the gatherings of protesters across the country. Traditionally the army has been respected by the civilian population and its supreme commander, General Abdul Fatah Saeed Hussein Khalil al-Sisi, is regarded as an honest broker, but all that has been thrown into doubt by the emergence of last week's protest movements. The fulcrum remains Cairo's Tahrir Square, where thousands gathered to voice their protest against the rule of Mursi, who was forced to demit office last Wednesday.

That decisive action should have been the catalyst, as the president stood accused of pursuing an Islamist agenda and failing to address the country's economic problems. The army had given the mob exactly what it wanted but still the crowds refused to leave, and as the tension continues to rise the army is left holding the ring – just as it was in 2011 when it carried out a similar action against former president Hosni Mubarak. Then the soldiers were hailed as the heroes of the hour; this time around no-one seems to know what should be done next, what the protesters' demands are or how they might be met.

Following Friday prayers, traditionally a potential flashpoint, the army gave a hint of what might be in store for the people of Egypt when it began rounding up the leadership of the Muslim Brotherhood, including those closest to Mursi, who is being held in custody inside the headquarters of the Republican Guards in Cairo. The message from the army was clear: there is no hiding place for those who were allied to a politician who stands accused by the generals of "insulting the presidency". On Friday, not only was the Muslim Brotherhood largely thwarted in its plans to hold a "day of rage" to support its ousted leader, but its own impotence was underlined by the arrest of Mohamed al-Badie, who was a leading light of Mursi's rule and whose arrest could be a sign of things to come.

Despite the crackdown, the army continues to insist it is acting as an honest broker and that it will not take "arbitrary measures against any faction or political current". A statement issued on Friday was supposed to reassure people they had nothing to fear provided the country's best interests remained paramount: "Peaceful protest and freedom of expression are rights guaranteed to everyone, which Egyptians have earned as one of the most important gains of their glorious revolution."

However, the army is not acting in isolation. It has a powerful backer in the shape of the US, supplying it with military equipment as part of a deal done 35 years ago during the Camp David talks that halted the long-running wars with Israel. Last month, Secretary of State John Kerry authorised $1.3 billion (£0.8bn) to be granted to Egypt in military aid, making it the second-largest beneficiary after Israel. Much of this is earmarked for military equipment including aircraft and armoured vehicles but the Egyptian forces also receive additional aid in the shape of training teams and intelligence sharing.

This aid might not have become an issue but for the events of last week. Following the army's role in ousting Mursi, questions are being asked about the legitimacy of the US role in backing the Egyptian armed forces.

According to some observers such as Dr Maha Azzam, associate fellow at the international think-tank Chatham House, the US is now in danger of being allied with an element in Egypt that has engineered an illegal coup. She claims that will be "understood in the Arab world as an antagonistic move against an Islamist president".

At a time when the Muslim Brotherhood has grudgingly embraced the democratic process it also sends a message that elections are meaningless and unwelcome results can simply be overturned by the mob or the military. That could play into the hands of fundamentalists who have never put faith in democracy and are inherently opposed to Western influence throughout the Middle East.

However, despite US engagement in Egyptian affairs neither President Barack Obama nor John Kerry seem unduly worried by the crisis. Both have called for calm and Obama expressed his "deep concern" but the truth is that neither is unduly troubled by Mursi's demise. During a visit to Cairo last year Obama made little headway in establishing a relationship with the Egyptian president.

So far, the lack of widespread bloodshed and the general humour of the crowds have combined to create reasonable calm on the streets, and it would be fair to say the army has managed to retain the good will of the population. Whenever the military mounted impromptu displays in the skies above Cairo's streets they were greeted with unalloyed enthusiasm.

Nerves have also been calmed by the emergence of a temporary leader in Adly Mahmud Mansour, a senior judge in the country's constitutional court who has promised elections will take place in the near future.

This could be crucial, as one of the factors in Mursi's downfall was his failure to find common cause with the judiciary.