Mubarak Mubarak Mubarak for no more Mubarak:But What is Next

With the president gone there may be changes to the political system, or the ruling elite could just find a new public face a similar regime with a different leader?

Hosni Mubarak's dramatic departure marks the end of an era for Egypt and the Middle East. Thirty years of his rule has left a deep impression on his country's domestic affairs and external relations. Without him, much could change on many fronts — at home and across the region.

Egyptian politics, like all politics, are local, and what happens next depends crucially on the readiness of the military establishment to oversee what Barack Obama has called a genuine transition to democracy, in line with the thunderous demands of the now triumphant protestors massed in Cairo's Tahrir Square.

It was always likely that the army, the most powerful player in Egyptian politics since the 1952 revolution, would step in as the guardian of stability. The US, Israel and most other Arab regimes will most likely welcome that, keeping their qualms to themselves. So, for the moment, will many ordinary Egyptians – but only if it is the prelude to far-reaching change.

Rule by the military can only be temporary. Mubarak's exit, the dissolution of what is seen as an illegitimate parliament, constitutional reforms and abolition of the emergency laws are all non-negotiable. If those reforms are achieved, then Egypt will have witnessed a real revolution – beyond the removal of a stubborn 82-year-old president long past his sell-by date.

It seems clear from the events of recent days – especially the confusion and contradictory messages on Thursday — that the army is divided. If it moves solely to protect its own privileged position, and that of the big businessmen who have done so well out of their links with the regime – then the system will not open up, at least not without large-scale repression and bloodshed.

Mubarak's replacement by the armed forces will mean a resumption of the talks that began earlier this week on constitutional and other changes, though they were pronounced dead almost before they began.

With good will it should be possible to amend or rewrite the constitution to allow the election of a new parliament and president. It could, however, all still take months to agree, risking impatience in the streets and new unrest.

Egypt's extraordinary change matters first for Egypt's 82 million people. But what happens in the Arab world's most populous country matters for many millions of other Arabs, who also suffer from unemployment, inequality, corruption and unresponsive, unaccountable governments – and share the language in which it is being covered in media such as al-Jazeera and social networking sites that official censors cannot easily block.

Other authoritarian regimes, shocked first by the uprising in Tunisia and now in Egypt, have been trying to pre-empt trouble by promises of reform, sacking ministers, maintaining subsidies or raising wages to buy off critics and defuse tensions. The symptoms are visible from Yemen to Jordan, from Algeria to Syria.

Egypt's political future also matters enormously to the US – thus the importance of the policy pronouncements from Washington since the crisis began, shown again by Obama's renewed call on for an "orderly and genuine transition" to the post-Mubarak era.

In the 1960s and 1970s, Egypt was a Soviet client, but it changed sides in 1979 by signing a taboo-breaking peace treaty with Israel, after four wars that cost it thousands of lives.

First under Anwar Sadat, and then under Mubarak, the relationship with the US blossomed to one of high-level strategic co-operation, so much so that Egyptian forces took part in the liberation of Kuwait after the Iraqi invasion in 1990.

Egypt remains a vital asset in allowing US military overflights, as the guardian of the strategically vital Suez canal, and a loyal ally in the regional confrontation with Iran.

Mubarak has played a key role in supporting the western-backed Palestinian Authority and containing the Islamist movement Hamas in the Gaza Strip, not least because of its affinity with the banned Muslim Brotherhood – whose likely future role in a freer Egyptian political system is a key and much-discussed issue both at home and abroad.

The events of the last 18 days have forced Obama to shift away from stability to embracing if not promoting democracy – to the evident discomfort of other conservative Arab friends, especially the Saudis. Jordan and Yemen share those concerns – fearing that unconditional US support for them may now also wane.

Israel has also let it be known in no uncertain terms that it prefers stability as the best guarantor of the peace treaty and as a barrier to Isalmist power and hinted that an Iranian-type revolution may be unfolding on the banks of the Nile.

But any realistic appraisal would conclude that the Egyptian military and security establishment as currently constituted has no interest in undermining its strategic relationships with either Washington or Tel Aviv – the latter in particular deeply unpopular with the mass of Egyptians. Signs of that outlook changing over time will be watched very closely.

(source:guardian.co.uk)

Egypt Rise at Auction as Growth May Slow

Egypt, rocked by the worst political turmoil in three decades, paid the highest yield in more than two years on its six-month treasury bills today as it struggles to finance a budget deficit and rebuild its economy.

The Ministry of Finance raised 3.5 billion Egyptian pounds ($595 million) at the auction. The average yield rose 30 basis points to 11.78 percent, the highest since January 2009, from 11.5 percent at the sale on Feb. 7. The ministry said earlier today it had scrapped plans to raise 4.5 billion pounds in bonds next week and decided to increase its offering of treasury bills by the same amount.

“The auction fared reasonably well in the wake of the ongoing turmoil in Egypt,” said Dubai-based Rawad Hakme co- manager of fixed income allocation for the Middle East and North Africa at EFG-Hermes U.A.E. Ltd. “While funding cost clearly increased, it did so only marginally owing to the significant supply coming to the market.”

Unprecedented protests to unseat President Hosni Mubarak, in power since 1981, have led to the death of about 300 people, according to United Nations estimates. The finance ministry said the economy is likely to miss its growth target of about 6 percent in the current fiscal year ending in June and the budget deficit may “deviate” from its target of 7.9 percent of gross domestic product.

The ministry plans to sell a combined 6.5 billion pounds of 91-day bills and 266-day bills on Feb. 13, according to central bank data on Bloomberg. That brings the total sale today and early next week to 10 billion pounds. It had initially planned to sell 5.5 billion pounds in bills.

Currency Intervention

“Because of current events, we have canceled the Monday issuance of bonds,” Samy Khallaf, adviser to Finance Minister Samir Radwan for public debt management, said in an interview from Cairo today. He declined to elaborate.

Demonstrations aimed at ending Mubarak’s rule pushed the yields on local Treasury bills to the highest level in two years and weakened the currency. The central bank’s purchases of pounds this week has helped currency markets return to an “orderly” state, Deputy Central Bank Governor Hisham Ramez said yesterday.

The Egyptian pound strengthened from a six-year low this week after the central bank intervened to slow declines. The currency was little changed at 5.8805 against the U.S. dollar as of 4:55 p.m. in Cairo.

Rising Yields

The yield on the 5.75 percent dollar bond maturing in April 2020 advanced 9.6 basis points to 6.69 percent, the highest since Jan. 31, according to Bloomberg composite prices. The cost of insuring the nation’s sovereign debt rose for a second day, with credit-default swaps increasing 5 basis points to 360, according to CMA prices. Egypt’s stock exchange shut Jan. 27 after losing 16 percent that week as protests intensified.

Protests that began Jan. 25, inspired by an uprising that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14, have left about 300 people dead, according to United Nations estimates. Egypt’s foreign minister Ahmed Aboul Gheit said in comments to Al Arabiya television aired this morning that it will take four months to change the country’s constitution after the administration of U.S. President Barack Obama criticized Mubarak’s government for not sufficiently addressing the demands of protesters.

Opposition leaders, including Mohamed ElBaradei, the former head of the U.N. nuclear agency, want the constitution changed to ease rules that make it hard for independent candidates to run for president.

Raising Funds

Spending may push Egypt’s deficit into “double digits” in 2011 from 8.1 percent in the fiscal year that ended in June, Standard & Poor’s said on Feb. 1. Egypt’s transition government, led by Vice President Omar Suleiman, has promised higher wages for government workers and unemployment benefits to those who lost jobs in the past two weeks in an effort to placate protesters.

The finance ministry said the government’s “budget financing is unlikely to face bottlenecks” because banks have funds, according to a statement on its website. The government will need additional spending to “meet higher international food and energy prices, ad-hoc measures in light of the recent unrest, and accelerated wage increase,” the ministry said today.

Rebuilding Economy

The U.N. FAO Food Price index has jumped 37 percent since May and touched a record last month, the same increase as in the year to July 2008, when the rise in prices sparked protests in countries including Egypt.

“The government needs the money to rebuild the economy,” Mona Mansour, a director at the research department of CI Capital, an Egyptian investment bank, said today. Egypt will need to fund the planned 15 percent increase in wages and pensions announced by the finance minister, she said.

Inflation accelerated to an annual rate of 10.8 percent in January from 10.3 percent in the previous month, the state-run Central Agency for Public Mobilization and Statistics, said on its website today.

Tags:Economy of Egypt, 2011 Egyptian protests,  History of Egypt, Cairo,Hosni Mubarak , Zine El Abidine Ben Ali‎, Politics of Egypt, Egypt

(source:bloomberg.com)

Egypt's museums and monuments are deserted

CAIRO (Egypt Twitter) -- One of the world's great museums resembled a military camp on Thursday, with soldiers patrolling behind its wrought iron gates and armored vehicles parked nearby. Inside, workers with white coats and latex gloves delicately handled artifacts that were damaged in the chaos sweeping Egypt.

The country's priceless trove of antiquities has emerged mostly unscathed from the unrest so far, but tourism, a pillar of the Egyptian economy, has not. Tens of thousands of foreigners have fled Egypt, many on evacuation flights organized by their governments, draining a key source of employment and foreign currency.

Egypt's most famous tourist attraction, the Pyramids of Giza, reopened to tourists on Wednesday after a 12-day closure. But few came to visit. The heavily guarded and shuttered Egyptian Museum in Cairo is next to Tahrir Square, a protest encampment that draws hundreds of thousands of people on some days.

"We will open the museum after the strike is finished. I don't know when the strike is finished," said Antiquities Minister Zahi Hawass, referring to the upheaval. "I need things to go back to normal."

Egypt's conflict pits autocratic President Hosni Mubarak against protesters who want him out now. Anti-government demonstrators and Mubarak supporters battled in front of the Egyptian Museum's pink-walled facade last week, raising fears of widespread destruction of the most coveted artifacts from the age of the pharaohs.

In earlier unrest, the adjacent headquarters of the ruling party was set afire, and its blackened shell looms over the museum.

Some 70 objects at the Victorian-era Egyptian Museum, many of them small statues, were damaged after looters broke into the museum and smashed showcases in late January. On Thursday, several dozen items lay on tables in a conservation room, examined by experts with small tools and adhesive.

Some were funerary items of Yuya and Tuya, parents of a queen. Their tomb was found in the Valley of the Kings at Luxor in 1905, though that remarkable find was eclipsed by the discovery of Tutankhamun's well-preserved tomb by British archaeologist Howard Carter less than two decades later.

Hawass said "the only important piece" that was damaged was a statue of Tutankhamun, the boy king, on a panther. The figure of the standing king, one arm broken off, lay separate from that of the panther.

"The skilled hand of this man will return everything back," the minister, gesturing at a colleague. "This is the most damaged piece of the group."

Workers also planned to restore a walking stick of Tutankhamun that was stripped of its thin gold sheeting when it was thrown on the floor.

The Victorian-style building is a place of marvels, even if the lighting is poor and there are none of the interactive displays and other novelties of modern museums. Faded, typewritten cards perch in the corners of display cases, explaining the heritage in tiny print.

(source:washingtonpost.com)

Israel Braces for a New Egypt

Israelis are bracing for a more adversarial regime in Egypt, one they expect could lead their country to expand its army, fortify the two countries' desert frontier and possibly re-invade the Palestinian-ruled Gaza Strip.

Three decades after Israel settled into a "cold peace" with Egypt—breaking its encirclement by hostile Arab states but failing to win much popular sympathy from Egyptians—Israeli officials are reviewing the ways the U.S.-backed transition in Cairo could affect the Jewish state.

The most likely scenario, say people familiar with the review: A new leadership, swayed by Islamist support and popular sentiment against Israel, would downgrade diplomatic and commercial ties, casting doubt on the long-term survival of the two countries' 1979 peace treaty.

On Wednesday, Defense Minister Ehud Barak voiced Israel's apprehension at a meeting with Secretary of State Hillary Clinton, Defense Secretary Robert Gates and White House National Security Adviser Tom Donilon. An administration official said the three assured Mr. Barak of the United States' "unshakeable commitment to Israel's security."

Mr. Barak had requested the White House meeting after President Barack Obama initially pressed for Egyptian President Hosni Mubarak's quick exit from power, a step that left Israeli officials surprised and dismayed.

Senior Israeli officials have warned that the crumbling of Mr. Mubarak's rule has already diminished U.S. and Israeli strategic clout in the Middle East, in the face of regimes in Iran and Syria that support armed Islamist groups and now seek to draw Egypt into their camp. "It will become more difficult for Israel to control events and their outcomes" over the coming year, Maj. Gen. Amir Eshel, chief of planning for the Israeli armed forces' general staff, told a security conference in Israel this week.

Israel has reacted to Egypt's unrest by moving to shore up gas supplies and promising steps to bolster the Palestinian economy. It has quietly signaled support for a gradual transition backed by the army and controlled by Omar Suleiman, Egypt's vice president and longtime intelligence chief. Mr. Suleiman has close ties with Mr. Barak and other Israeli leaders.

Seeking to shore up Israel's security, Prime Minister Benjamin Netanyahu has permitted the temporary deployment of 800 Egyptian troops into the Sinai, a sparsely populated peninsula demilitarized under the peace treaty. The aim is to prevent smuggling of weapons to Gaza, the neighboring Palestinian enclave ruled by Hamas.

Mr. Netanyahu also ordered the army to speed construction of a 13-foot-tall, radar-monitored fence it began putting up in November to plug 124 miles of desert frontier with the Sinai, a border now easily infiltrated by nomadic Bedouin smugglers of drugs and migrant workers.

"Everything is porous," said Menachem Zafrir, a 54-year-old resident of the Nitzanei Sinai border outpost, where backyards look into Egypt.

"Until now it's just Sudanese [migrants], but it could be militants," he said, gesturing to the thin deployment of Egyptian guards on the other side of a border now marked by a chest-high cordon of sagging barbed wire. "Today the Egyptian army patrols over there. But if there is a mess, they will flee."

As their elders learned of a Bedouin attack last Friday on Egyptian positions just 30 miles away, children at Nitzanei Sinai played capture the flag outside the grocery store.

"It's bizarre that this is the quietest place in the country despite the fact that it's a border," said Robert Fischer, a Nitzanei Sinai resident who owns a transport company. If an unfriendly regime comes to power in Egypt, "they will need to evacuate us."

Israel's security concerns extend to the West Bank. Wary that an Islamist-influenced regime in Cairo might inspire a Hamas-led uprising of Palestinians there, Mr. Netanyahu last week promised to spur economic growth in the West Bank and Gaza.

But Israel's leader has resisted Western pressure to make compromises that would help revive talks on statehood for the Palestinians. Taking such a step, his critics say, would defuse criticism across the Arab world.

Israeli officials also have urged stepped-up development of recently discovered Israeli offshore gas reserves. That would hedge against any shutdown by Egypt of the natural-gas pipeline that powers one-fourth of Israel's electricity network.

On top of such steps, however, Israel would have to remake strategic and military planning if Egypt were to turn unfriendly, officials and analysts say.

Israel's apprehension stems mainly from the strength of the Muslim Brotherhood, Egypt's best-organized opposition force, and the Brotherhood's close ties to Hamas. But Israeli leaders are also unsettled by doubts about the peace treaty voiced by Mohamed ElBaradei, the leading secular opposition figure.

"It's impossible to make peace with a single man," Mr. ElBaradei told German news magazine Der Spiegel last week. "At the moment, [the Israelis] have a peace treaty with Mubarak, but not one with the Egyptian people."

The U.S.-brokered 1979 treaty signed by Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin gave up Israeli occupation of the Sinai in return for peace between neighbors who had waged four wars against each other. It also gave Egypt U.S. military aid that now exceeds $1 billion per year.

But while Israelis rushed to take advantage of tourism, trade and investment opportunities opened by the treaty, few Egyptians did so.

Israel's 1982 invasion of Lebanon embarrassed Egyptian leaders, already under fire in the Arab world for making peace with the enemy. Mr. Mubarak, who had taken over after Mr. Sadat's 1981 assassination, supported the treaty, but Israelis say his government has done little to encourage contact between the two peoples and has allowed Egyptian media to demonize the Jewish state.

Largely because the Israeli-Palestinian conflict festers, Egyptian businesses, labor unions and civic organizations with ties to the wider Arab world have shunned Israel, even as hotels welcome Israeli visitors.

"Israel sat on the Palestinians, built settlements on their land and put down two Palestinian uprisings, and the peace with Egypt lasted," said Janet Aviad, an Israeli peace activist who has visited Egypt five times. "But [the peace] couldn't warm up under those circumstances, no way."

Israeli officials say they believe the peace treaty would survive under an orderly transition in Egypt that preserves the powerful role of the U.S.-backed military and is led by Mr. Suleiman. According to a 2008 U.S. Embassy cable released this week by WikiLeaks, Mr. Suleiman has long been Israel's preferred successor to Mr. Mubarak. The cable said Mr. Barak's office and Mr. Suleiman's intelligence service were in daily contact over a telephone hotline.

Israeli officials are also pondering a worst-case scenario in which the Muslim Brotherhood dominates the next government, abrogates the treaty and ends the partial blockade that Egypt imposed on Gaza to help Israel isolate Hamas and choke off Gaza-bound weapons shipments.

A more likely outcome in Egypt, say Israelis familiar with the government's forecasting, is a ruling coalition that is sensitive to domestic public opinion and has minority Muslim Brotherhood representation. Such a coalition, they say, would likely maintain the peace treaty and gas exports for now but would also be likely to adopt a more critical tone toward Israeli policies and might become less accommodating to Israeli officials, entrepreneurs and other visitors.

More than 200,000 Israelis visit Egypt each year, drawn by Nile cruises, ancient monuments and the Sinai's pristine Red Sea beaches. Two-way trade is a small fraction of each country's imports and exports, however, so a reduction wouldn't cause significant economic harm to either side. It would, however, represent a symbolic setback to the relationship.

Far more damaging to Israel's economy would be the loss of the treaty's peace dividend.

Dan Schueftan, director of national security studies at Haifa University, said the rise of a less friendly regime in Egypt, even if it doesn't cancel the treaty, would create enough uncertainty that Israel would feel compelled to enlarge its army and raise defense spending. Mr. Netanyahu hinted as much when he called last week for "bolstering Israel's might."

"Egypt was the cornerstone of our security in the region, and when that stone is eroding, the whole Middle East changes in a profound way," Mr. Schueftan said. "Israel would have to operate in a completely different strategic environment with an army that has become very, very small compared to the threats that surround us."

Thanks to the treaty with Egypt, he said, Israel had reduced its defense expenditure from 23% of its gross national product in the mid-1970s to about 9% today. The relationship with Egypt also allowed Israel to end a costly military occupation of Gaza in 2005, as Egypt covered Gaza from the south.

Several former military and intelligence officials are arguing publicly that Israel must be prepared to reoccupy Gaza, or at least a wide swath of the enclave along its eight-mile border with Egypt. Other experts counsel caution, warning that such an operation would plunge Israel into years of fighting.

"There's no reason for us to make any decisions in the next few weeks or even more than that," said Giora Eiland, a former Israeli national security adviser. "We have to observe, and if the situation changes in a bad way, we will have time to shift whatever has to be shifted."

(source:wsj.com)

Egypt Military, Ruling Party: Mubarak to 'Meet Protesters' Demands

Egyptian military officials and members of the ruling party say that President Hosni Mubarak will "meet protesters' demands."

Egyptians have been demonstrating for 17 days, calling for the ouster of President Mubarak, who has been in power for nearly 30 years. They have been demanding he leave immediately.

The military's supreme council was meeting Thursday without the commander in chief, Mr. Mubarak.

The military announced its support of the "legitimate demands of the people'' on state television. A spokesman said the council was exploring what measures could be made to "safeguard" the nation and its people.

Cairo's Tahrir Square, a focal point of the protests, erupted into cheers as news spread towards dusk Thursday.

Doctors in white lab coats and lawyers in black robes flooded Cairo's Tahrir Square Thursday, linking striking workers with anti-government protesters.

In addition to the prolonged protests by thousands in the capital, the opposition has turned to labor actions across Egypt affecting tourism, textiles, railways and the government.

Meanwhile, Egypt's state prosecutor has launched a corruption investigation against three former government ministers and a member of parliament from Egypt's ruling National Democratic party,

Media reports Thursday say the investigation is targeting former Commerce Minister Rachid Mohammed Rachid, former Tourism Minister Zuhair Garana, former Housing Minister Ahmed Maghrabi and parliament member Ahmed Ezz.