(Updates with interest rate increase in fourth paragraph, White House statement in ninth.)
Nov. 25 (Bloomberg) -- Egypt’s ruling military council asked former Prime Minister Kamal el-Ganzouri to form a new government as thousands of protesters occupied Cairo’s Tahrir Square overnight to demand the army cede power.
Field Marshal Mohamed Hussein Tantawi, head of the council, made the request, state television said late yesterday. El- Ganzouri said in a phone interview that he met with Tantawi and declined to comment further. The council said elections due to start on Nov. 28 won’t be postponed and the generals will stay in power until a presidential vote to be held by June.
The council, which took over after President Hosni Mubarak’s ouster in February, is seeking to form a new interim government in an attempt to defuse unrest that erupted Nov. 19 and has left at least 38 people dead. The violence, which began in Cairo and cities including Alexandria, threatens to derail the election and undermine attempts to secure financing for an economy still struggling to recover from this year’s revolt.
Standard & Poor’s cut Egypt’s credit rating yesterday, while the government raised less than half of its target sum at an auction of six-month and one-year treasury bills, and was forced to pay record yields above 14 percent on both securities. The central bank unexpectedly raised interest rates for the first time since 2008 to stem flight from the pound.
‘There Will Be Chaos’
“There will be chaos” if the army steps down now, council member Mamdouh Shahine told reporters yesterday. “For the military council to abandon power and running the country’s affairs would be a betrayal of trust, because it came after the approval of the people.”
Protest leaders have called for a million-person rally against military rule today. The Muslim Brotherhood, Egypt’s largest Islamic group, won’t take part, Mahmoud Ghozlan, a spokesman for the organization, said by telephone. The group is expected to form one of the largest blocs in parliament after the election.
The generals issued an apology for the violence and pledged to compensate the families of those who died and conduct “an immediate investigation” to punish those responsible.
The White House press office said in an e-mailed statement today that Egypt should investigate the circumstances of the past week’s violence, and proceed with elections and “the full transfer of power to a civilian government” as soon as possible.
‘We Don’t Trust It’
Shahine reiterated Tantawi’s pledge that the parliamentary elections, scheduled to begin Nov. 28, won’t be postponed. Tantawi also promised on Nov. 22 to hold a presidential election by the end of June to complete the transfer of power to civilians. The concessions have failed to quell the protesters’ demand for the military council to step down immediately.
“The military council must know that we don’t trust it or its choices,” the April 6 Youth Movement, one of the groups that organized the anti-Mubarak uprising, said in an e-mailed statement. “El-Ganzouri’s name wasn’t among those proposed by the people on the street.”
Central Cairo was mostly calm as night fell. Security forces and protesters reached an agreement to end fighting along Mohammed Mahmoud Street, where the worst violence was seen. The army erected barriers between the two sides on the street, one of the main thoroughfares leading from Tahrir Square.
‘Our Children Died’
Sahar Shebl, a 46-year-old accountant, arrived in Tahrir Square late yesterday after work to join the protest.
“We will continue to come back because our children died and took rubber bullets in their eyes here,” he said. “The police are still using the same old intimidation tactics and they are the ones causing the violence. Our country will not slide into chaos in the absence of the military. We know how to protect ourselves and we showed it in January.”
A survey published by the Brookings Institution and Zogby International on Nov. 21 found that 43 percent of Egyptians believe that the military rulers are seeking to slow or reverse the gains of the uprising against Mubarak. The study was conducted among 3,000 people in five Arab countries last month, and cited a margin of error of 1.8 percentage points.
‘Curse’ of Power
Holding power is a “curse, not a blessing,” yet most Egyptians retain “absolute confidence” in the army, council member Mukhtar El Moula, said at a press conference in Cairo yesterday. “It’s in Egypt’s best interests for elections to be held,” he said. “The judges are ready and security is ready.”
El Moula said he hoped a new government would be in place before elections.
After the military council took over power from Mubarak, it dissolved parliament and suspended the constitution, saying it aimed to hand power to a democratically elected government after elections.
Standard & Poor’s Ratings Service yesterday cut Egypt’s credit rating to B+, four steps below investment grade. It cited renewed violence amid a “highly polarized political landscape” that has weakened public finances and will lead to further declines in international reserves.
Egypt’s economy grew 1.8 percent in the fiscal year that ended on June 30, its weakest performance in at least a decade. Foreign-currency reserves have declined about $14 billion this year to $22.1 billion last month.
--With assistance by Abdel Latif Wahba and Mahmoud Kassem in Cairo, and Nadeem Hamid in Washington. Editors: Digby Lidstone, Heather Langan, Ben Holland, Karl Maier.
To contact the reporters on this story: Mariam Fam in Cairo at firstname.lastname@example.org; Ahmed A Namatalla in Cairo at email@example.com.
To contact the editor responsible for this story: Andrew J. Barden at firstname.lastname@example.org.