Bloomberg News

Egyptian Army Says Holding Power Is a ‘Curse’ It Can’t Escape

November 25, 2011

(See EXTRA and MET for more on Middle East unrest.)

Nov. 24 (Bloomberg) -- Egypt’s army said ceding power would mean abandoning the country, and urged activists to switch their focus to next week’s election after a fifth night of clashes between police and protesters demanding the generals step down.

Holding power is a “curse, not a blessing,” yet most Egyptians retain “absolute confidence” in the army, Mukhtar El Moula, a member of the ruling military council, said at a press conference in Cairo today. Voting will start on schedule on Nov. 28, with the army helping police to ensure security, and a new government should be in place by then, he said.

The violence in Cairo and other cities including Alexandria has left at least 38 people dead in the past week, state-run Nile News said today. It threatens to derail the parliamentary election and undermine government attempts to secure financing for an economy still struggling to recover from the uprising that ousted Hosni Mubarak in February.

Standard & Poor’s Ratings Service today 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. An auction of local debt today raised less than half the target amount while yields surged to record levels.

The army council’s chief, Field Marshal Mohammed Hussein Tantawi, promised on Nov. 22 to replace the current Cabinet and hold presidential elections by the end of June that will complete the transfer of power to civilians.

Life ‘Normal’

El Moula said today that the army hasn’t fired at the protesters who have occupied Cairo’s Tahrir Square for the past week, and instead acted to break up clashes between them and police. Outside Tahrir, life in Egypt is “normal,” he said.

Tear gas filled roads leading from Tahrir Square late yesterday. Red-eyed protesters, many wearing surgical masks to protect themselves from the tear gas, carried the wounded out of Mohammed Mahmoud street, one of the thoroughfares leading off the plaza that has been the focus of clashes.

Security forces and protesters reached an agreement to end fighting there, the state-run Middle East News Agency reported today. It wasn’t immediately clear whether the agreement would hold.

“Leave! Leave means go!” protesters in Tahrir chanted, referring to Tantawi. “Down with military rule!”

‘Betrayed’ By Army

“We want the transfer of power to a national salvation government,” said Omar Kamel, who was among the protesters to spend the night in the square. “We don’t want the military council in charge any more. People feel betrayed by an army they trusted.”

United Nations human rights chief Navi Pillay condemned the “clearly excessive use of force” by police. Pillay said she urged authorities to end the “apparent improper use of tear gas, rubber bullets and live ammunition.”

Health Ministry official Hisham Sheeha told state television that at least 350 people were injured yesterday, most suffering from gas inhalation, and about 3,000 had been injured since the start of the unrest.

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 percent.

Generals Apologize

Military council members Maj. Gen. Mohammed Al-Assar and Maj. Gen. Mahmoud Hijazi apologized on behalf of the council for the violence in Tahrir Square, the state-run Middle East News Agency reported yesterday. Interior Minister Mansour El-Essawi has suggested postponing the country’s first round of parliamentary elections, Al-Jazeera news channel said.

“The key to resolving the present crisis and minimizing risks of a repeat is to quickly transfer power from the military to credible civilian authorities, namely an interim government acceptable to the political parties and protest movement,” the Brussels-based International Crisis Group said in an e-mailed comment. “The new government should have the ability to review the transition’s timetable and process.”

Tantawi said he had accepted the resignation of the Cabinet of Prime Minister Essam Sharaf, which will stay in place until a new government is formed. He also said the military was willing to hand over power immediately, “if the people so want, through a referendum.”

Bond Yields Surge

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 within six months or when elections are held. Before yesterday’s announcement, no date had been set for presidential elections and a timetable for transition indicated the vote may not be held before 2013.

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.

A slump in Egypt’s benchmark dollar bonds in the past 10 days has sent yields about 1 percentage point higher. The debt traded to yield 6.92 percent at 12:50 p.m. local time, the highest since January. The government raised less than half of its target at a sale of treasury bills today, selling six-month bills to yield 14.4 percent and one-year bills at a record 14.932 percent.

--With assistance by Ahmed A. Namatalla and Mahmoud Kassem in Cairo. Editors: Ben Holland, Digby Lidstone.

To contact the reporters 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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