Egypt could become a failed state if its newest wave of bloodshed doesn’t end, and that would hurt not only its people but also Israel, the Arab World and beyond, U.S. Sen. Lindsey Graham said.

This week’s violence led to more than 500 deaths and is first a humanitarian concern, but the nation’s downward spiral ultimately could affect both the security and pocketbooks of those in the United States, he said.

“A failed state in Egypt is al-Qaida’s dream come true,” he said Wednesday. “Egypt, which has been a source of stability for American national security interests, could become a platform for the spread of radical Islam.”

Graham, R-S.C., also noted a sizeable portion of the world’s oil comes from this region and flows through Egypt’s Suez Canal, which also is used by the U.S. military.

Earlier this month, Graham and U.S. Sen. John McCain, R-Ariz., flew to Egypt to try to help end the country’s political crisis, which stems from the military’s overthrow of former President Mohamed Morsi. His ouster resulted in protests by the Muslim Brotherhood, which turned lethal this week.

One nation with the most at stake is Israel, which has lived under a peace treaty with Egypt for more than 30 years. Graham said he fears Egypt’s instability might break the Camp David Accords and sever ties between Israel and Egypt.

Dr. Sherif Yacoub, a Charleston medical doctor and a U.S. citizen of Egyptian heritage, said Thursday he has been following developments there through social media.

“We’re very heartbroken to see this kind of violence erupt,” he said. “All Egyptians that I know of are extremely worried about the future of the country.”

Yacoub, a Christian, said he was encouraged last month when the military forced out Morsi, and he said many Westerners don’t know the extent to which Morsi and the Muslim Brotherhood were undermining democracy there.

“Their goal and purpose has been always to get power and keep power,” he said. “They used democracy as a tool to achieve their purposes, but they were kind of setting things up to become a new dictatorship of a different kind.”

Yacoub said he read reports of 40 churches as well as Christian schools across Egypt that were torched during Wednesday’s upheaval. He said that points to a coordinated effort.

“I hope that the circle of violence would end, that the West and the United States especially start to see things from a different perspective and realize the threat that the Muslim Brotherhood and their allies would pose on our country in the long run,” he said.

Graham said this summer’s backlash against the Muslim Brotherhood was real and deserved. “However, we must remain committed to certain guideposts as a nation including the rule of law and not the gun, choosing leaders through free and fair elections, and inclusive government which protects the rights of religious minorities.”

Graham said the only hope is for both sides to start talking and laying plans for a new constitution and election. “Short of this action, I fear the violence will continue to escalate,” he added.

In Egypt on Thursday, angry supporters of the ousted president stormed and torched two buildings housing the local government in Giza, the city next to Cairo that is home to the famed pyramids.

Associated Press reporters saw the buildings — a two-story colonial style villa and a four-story administrative building — set ablaze.

The Giza government offices are located on the Pyramids Road on the west bank of the River Nile.

State TV blamed supporters of Morsi for the fire. Its footage shows both structures burning with firefighters evacuating employees from the larger building.

Tamarod, the youth movement that organized the mass rallies preceding Morsi’s ouster on July 3, called for the creation of popular committees to protect government and private property.

Also, President Barack Obama on Thursday canceled joint U.S.-Egypt military exercises, saying America’s traditional cooperation with Egypt “cannot continue as usual” while violence and instability deepen in the strategically important nation.

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 Morsi supporters 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.”

The Associated Press contributed to this report.