Bloomberg News

Egypt Cabinet Offers to Resign as Mass Protests Planned

November 22, 2011

(Updates with analyst comment, details on protests starting in fourth paragraph.)

Nov. 22 (Bloomberg) -- Egyptians gathered in Tahrir Square for a fifth day amid calls for mass protests against military rule, after deadly clashes between security forces and demonstrators spurred the Cabinet to offer to quit.

Ministers put their resignations “at the disposal” of the ruling military council, government spokesman Mohamed Hegazy told reporters late yesterday in Cairo. The council has yet to respond, according to state television, which cited a military official. Culture Minister Emad Abu Ghazi quit yesterday.

Clashes in Cairo and other cities including Alexandria and Suez have left at least 25 people dead in the past week, in some of the deadliest violence since the uprising against Hosni Mubarak in January and February. The confrontations pose a major challenge to the ruling generals, and threaten to disrupt next week’s elections and the government’s efforts to obtain financing for an economy still struggling to recover.

“It is very difficult to hold elections with no security,” said Emad Gad, an analyst at the Al Ahram Center for Political and Strategic Studies. “Holding them under such circumstances could mean a low turnout, resulting in a parliament that is not representative.”

Postponing the vote would be a “dangerous” prospect, Shadi Hamid, director of research at the Brookings Doha Center in Qatar, said in a phone interview. “Without elections there’s no national body with popular legitimacy and that’s where all the problems now in Egypt stem from.”

Renewed Fighting

Fighting broke out for a fourth day as crowds swelled in central Cairo today. Hundreds have been injured since Nov. 19, Health Ministry spokesman Mohammed el-Sherbeeny said by phone.

Earlier today, some protesters in Tahrir Square, the center of the anti-Mubarak revolt, formed orderly lines and knelt in prayer while others waved Egyptian flags.

Thousands marched to the Cabinet building, carrying the coffin of one of those killed and chanting “The blood of the martyrs will not go in vain” and “Down with the field marshal,” referring to military council head Mohammed Hussein Tantawi. State television said Tantawi will address the nation today.

The benchmark EGX 30 Index lost 4.8 percent to 3,676.73 at the 2:30 p.m. close in Cairo, the lowest since March 2009. The yield on dollar bonds due April 2020 rose 14 basis points, or 0.14 percentage point, to 6.84 percent, the highest since March.

Protest Call

The Alliance of the Youth’s Revolution, one of the groups that led the anti-Mubarak uprising, and other organizations called for a million-person protest for “national salvation” today in Tahrir and other plazas. The group said in a statement that the rallies would demand the replacement of the government with a new transitional authority to run the country and take over the military council’s “political powers.” It also said presidential elections should be held by April.

“This is the second round of Egypt’s revolution. After their patience has worn thin, the Egyptians have decided to revolt against the military council,” said Gad, who is also a parliamentary candidate for a secular bloc. “He’s repeating Mubarak’s exact same mistakes,” he said of Tantawi.

Military Council

The military has indicated it may remain in power until 2013 to oversee the drafting of a new constitution and the election of a president, for which no date has been set.

Protesters on Nov. 18 demanded a faster handover and rejected draft constitutional guidelines that they say enshrine a political role for the military and shield it from civilian scrutiny.

“What is needed is for the military council to announce a date to hand over power to a civilian authority no later than mid-2012,” Muslim Brotherhood spokesman Mahmoud Ghozlan said in a telephone interview. The country’s biggest Islamist group may emerge as one of the largest blocs in the new parliament.

The Brotherhood is not taking part in today’s protests, underlining divisions among the different political groups. It said Nov. 20 that it won’t allow the vote to be postponed or canceled “whatever the price may be.” The Wafd party called for the vote to be postponed for two weeks “until security is restores,” according to the state news agency.

The Brotherhood called yesterday on the military council to immediately end violence against protesters and withdraw troops and vehicles from the areas where there are demonstrations.

No Election Delay

In a statement read on state television on Nov. 20, the military council said it is not seeking to prolong the transition to civilian rule and that it won’t allow anyone to derail the country’s “democratic transformation.”

The legislative vote will be held on time regardless of whether the Cabinet stays in office, the state-run Middle East News Agency cited Deputy Prime Minister Ali el-Selmi as saying late yesterday.

The U.S. said the conflict shouldn’t be used as a reason to delay voting. “A free, fair and transparent election” is the best way forward, State Department spokeswoman Victoria Nuland said in Washington.

Egypt’s economy grew 1.8 percent in the fiscal year that ended on June 30, its weakest performance in at least a decade. The government may ask the International Monetary Fund for the $3 billion loan it rejected this year, after domestic borrowing costs soared, Deputy Prime Minister Hazem El Beblawi said in a Nov. 18 interview.

Credibility Ended

The military council issued a long-awaited law yesterday against “corrupting political life,” with punishments including barring those found guilty from running for parliament and local councils for five years and banning them from government posts for the same period, the Cabinet said.

Activist and parliamentary candidate Khaled el-Sayed said the law was “only a sedative” and falls short of demands to purge government bodies of members of the now-dissolved former ruling party and ban them from running for election.

“The events of the last few days show that the military council’s credibility among the revolutionaries has ended,” Ammar Ali Hassan, an Egyptian political analyst, said in a telephone interview.

--With assistance from Ahmed A. Namatalla, Abdel Latif Wahba and Mahmoud Kassem in Cairo. Editors: Digby Lidstone, Heather Langan, Ben Holland.

To contact the reporter on this story: Mariam Fam in Cairo at mfam1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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