Thursday, February 29, 2024

Key political risks to watch in Egypt


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CAIRO: Egypt’s military, in charge since an 18-day popular revolt ousted President Hosni Mubarak on February 11, says it wants to hand power to civilians as soon as possible and has set a timeline for a parliamentary election to start the process.

But protesters have become increasingly frustrated with the army, which provided Egypt’s rulers for six decades, as the transition process has dragged out. No date has yet been set for presidential voting.

Many Egyptians believe the army wants to keep a hand on the levers of power to protect its business interests, privileges and US military aid that has flowed in since Egypt made peace with Israel in 1979.

Here are some of the main political risks ahead:

The Supreme Council of the Armed Forces, which took control when Mubarak was driven out, has seemed eager to get out of day-to-day government.

But it has fuelled suspicions about its willingness to relinquish all the reins of power by failing to set a clear timeline to complete the transfer.

Parliamentary elections start on November 28 but the staggered vote means polling to the lower and upper houses will not be completed until March. Parliament will then choose an assembly to draw up the new constitution, which under the current plans must be in place before a presidential vote is held.

That means there may not be a presidential election until late 2012 or early 2013, leaving the army with presidential powers such as forming governments until then. A group of presidential hopefuls want an earlier vote.

The army was the only pillar of the ruling establishment to survive intact after Mubarak’s party collapsed. It controls a big chunk of the economy, between 10 and 30 per cent according to some analysts. It may seek a role as guardian of national security, providing a broad remit to intervene.

That could lead to tension with protesters and, in the longer term, civilian governments as it has in Turkey, whose military has ousted four governments since 1960 although the power of Turkish generals has now been curbed.

Demonstrators have turned up the heat on the army. A common chant has been ”The people want to topple the Field Marshal,” a reference to the head of the army council, Mohamed Hussein Tantawi, who was Mubarak’s defence minister for two decades. As it seeks to deflect criticism from the street, the army has expanded its anti-corruption drive and reshuffled the cabinet three times, adding to political uncertainty.

One reason the army may be keen to get out of day-to-day government is to avoid taking the blame for the tough decisions needed to revive confidence in the battered economy. Those policies will deflate the wild expectations of many about a rapid improvement in living standards with Mubarak’s downfall.

The budget deficit has ballooned since tourists packed up and foreign investors fled, shaking two pillars of the economy.

The previous finance minister negotiated a 3.2 billion dollar loan package with the International Monetary Fund, but after agreeing a deal with few strings attached, Egypt turned it down in part because the army said it did not want to raise debt.

The government revised its budget to rein in the forecast deficit to 8.6 per cent of gross domestic product from 11 per cent, but economists say that may be optimistic.

Egypt has depended heavily on local banks to meet funding needs. Banks are liquid but pressures are showing in higher yields demanded at treasury bill auctions, reaching levels last seen in the global financial crisis of 2008. Traders say Egypt needs external funds to avoid a further rise. (UNI)


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