Mubarak Fails to Quell Egypt Protests With Pledge to Step Down in September. The protests won't stop until the man pictured, Mohammed Badei says so.

February 01, 2011

Bloomberg

By Ahmed A. Namatalla, Nayla Razzouk and Massoud A. Derhally

Feb. 2 (Bloomberg) — Egyptian President Hosni Mubarak’s declaration he will step down later this year after almost 30 years of autocratic rule failed to appease protesters who want him to quit immediately, and prompted a call from President Barack Obama for the transition to “begin now.”

Mubarak said he’ll stay on to ensure “stability” and push through political and economic changes before leaving. The crowd of hundreds of thousands in Cairo’s Tahrir Square began chanting anti-Mubarak slogans in response to the president’s state- television address. “Your last day will be Friday,” some shouted, referring to the Muslim prayer day when more demonstrations are planned.

“He recognizes that the status quo is not sustainable,” Obama said in remarks on television from the White House after phoning Mubarak following the Egyptian leader’s speech.

The unprecedented protests, which followed a revolt in Tunisia that ousted President Zine El Abidine Ben Ali on Jan. 14, have left more than 100 people dead in Egypt and roiled international stock, bond and oil markets. Unrest has spread to Jordan, where King Abdullah sacked his prime minister yesterday, and other countries including Yemen and Algeria.

Egypt “faces a choice between chaos and stability,” Mubarak said in the address late yesterday, wearing a dark blue suit and black tie and standing next to the national flag. “My first responsibility now is to restore the security and stability of the nation to achieve a peaceful transition.”

U.S. Support

Obama said the U.S. would support Egyptians during the transition. “An orderly transition must be meaningful, must be peaceful, and it must begin now,” he said. Directing his comments at young demonstrators calling for democracy, Obama said: “We hear your voices.”

Concern that the most populous Arab nation may slide into chaos had earlier prompted Obama to dispatch former Ambassador Frank Wisner, who on Jan. 31 delivered a message to Mubarak that his time in office was coming to an end, an administration official said. Presidential elections are due in September.

Egypt’s dollar bonds advanced 0.2 percent yesterday before Mubarak’s announcement, the first increase in six days. The political upheaval sent the debt tumbling 12 percent in January, the most since at least 2001, according to JPMorgan Chase & Co. The cost of protecting against an Egypt default with credit- default swaps fell 70 basis points yesterday, the most ever, to 350, CMA prices show.

Oil Concerns Ease

Oil traded close to $91 a barrel in New York after falling from a two-year high as concern eased that the protests in Egypt will disrupt supplies through the Suez Canal. Futures declined 1.5 percent yesterday after canal officials said traffic is moving normally at the waterway which carries more than 2.2 million barrels of oil a day.

The opposition movement, which includes the Muslim Brotherhood and the former United Nations atomic agency chief Mohamed ElBaradei, accuses Mubarak of running a corrupt and repressive government. It has urged the president to quit immediately and hand power to a transitional government, and repeated the call after his address yesterday.

The way for Mubarak to restore stability is by resigning, ElBaradei told Al Arabiya television after his announcement. He rejected dialogue with Mubarak’s regime and said the president’s departure won’t create a power vacuum.

Mubarak, who had previously declined to say whether he would stand again, last week appointed Omar Suleiman, head of Egypt’s intelligence services, as vice president. He said yesterday he had never intended to seek another term.

Die in Egypt

“I lived in this country, and I fought for it, and I defended its land, its sovereignty and interests, and I will die on its soil,” Mubarak said.

Some analysts said they doubt that the Egyptian president will achieve his desire for a delayed and honorable end to his nearly 30-year rule.

Mubarak’s concession comes a week too late, said Marwan Muasher, former deputy prime minister of Jordan and now a senior vice president at the World Bank in Washington. “I think people smell blood and they’re not going to be satisfied with this,” he said in an interview.

Robert Satloff, executive director of the Washington Institute for Near East Policy in Washington, said Mubarak’s offer suggests he still has support from the military leaders, but that may not last in the face of continuing protests. “I don’t think he’s going to get eight more months to be president,” he said in an interview.

‘Burned Bridges’

“I expect the demonstrations to continue,” said Khaled Fahmy, professor of history at American University in Cairo, in a telephone interview. “He really hasn’t offered much. What I’ve seen is that he has burned bridges. There is no trust between him and the people.”

In Alexandria, the army clashed with protesters and fired shots after the Mubarak address, Al Jazeera television reported. Protesters hurled stones and sought to block an army tank, it said. In Cairo, armed men chanting pro-Mubarak slogans were seen near Tahrir early today as some protesters left the square.

“If the mere goal of sending Frank Wisner was to persuade Mubarak not to run for re-election, they’ve set the bar much too low,” said Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies, a Washington-based policy group.

Mubarak has “no credibility” to oversee a transition and the U.S. should do whatever it can to support a shift to democracy there, including withholding financial aid if necessary, said Senator Patrick Leahy of Vermont, the Democratic chairman of the panel that controls foreign assistance, in a statement in Washington.

U.S. Aid

Egypt received about $1.5 billion in U.S. assistance last year. It has been one of the biggest recipients of U.S. aid since 1979, after Egypt signed a U.S.-brokered peace treaty with Israel. Mubarak has backed efforts to encourage Arab acceptance of the Jewish state, oppose Iran’s nuclear program and isolate Hamas, the Islamist militant group that controls the Gaza Strip.

Senator John Kerry, the Massachusetts Democrat who chairs the U.S. Senate Foreign Relations Committee, said in a statement that Mubarak “should now work with the military and civil society to establish an interim caretaker government.”

As Mubarak fought to retain power, his authorities shut down Egypt’s stock market, after a 16 percent slump in the benchmark index last week, its banking system and most phone and Internet communication.

Expatriates Flee

Mubarak indicated the government would take steps to try to return the country to normal, including dispatching police to apprehend those responsible for arson and other illegal actions in the past week of turmoil.

Banks may reopen to the public on Feb. 3 or Feb. 6, Finance Minister Samir Radwan, appointed by Mubarak on Jan. 31 as he revamped the Cabinet to appease protests, told Al Arabiya television yesterday.

Companies including Heineken NV and BG Group Plc have halted operations in the country of 80 million, and expatriates fled aboard scheduled flights, charters and private jets. Tanks have guarded key government buildings as thousands have rallied daily in Cairo and other cities.

Egypt’s economy needs foreign investment, along with tourism revenue, to achieve the 7 percent economic growth rates that the government says is necessary to create jobs for an expanding workforce. It achieved that in the three years before the global economic crisis slowed growth, to about 6 percent last year according to government estimates.

Civil Rights

“Tourists are currently trying to leave Egypt en masse,” London-based risk consultant Maplecroft said in a report yesterday. The International Monetary Fund’s October prediction that the economy will grow 5.5 percent this year “is now overly optimistic. A dramatic or even moderate reduction in growth will make it more difficult for the government to create new jobs,” a key demand of protesters. Official figures put Egypt’s unemployment rate at about 9 percent.

Mubarak said yesterday he will change laws governing presidential term limits and the eligibility of candidates before the next election.

The speech “did not address the inheritance of power to family members, it did not address amending the constitution to guarantee civil rights, it did not address lifting restrictions on political parties,” said Ayman Nour, who challenged Mubarak in Egypt’s first multi-candidate presidential election in 2005, and is among the leaders of the current opposition movement. It “did not live up to the people’s demands.”

–With assistance from Mahmoud Kassem and Abdel Latif Wahba in Cairo, Zahra Hankir in Dubai, Julianna Goldman, Julie Davis, Nicole Gaouette, Viola Gienger and David Lerman in Washington, and Ben Sharples in Melbourne. Editors: Peter Hirschberg, John Brinsley.

To contact the reporters on this story: Ahmed A Namatalla in London at anamatalla@bloomberg.net; Nayla Razzouk in London at nrazzouk2@bloomberg.net; Massoud A Derhally in London at mderhally@bloomberg.net

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