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Egypt Braces for More Violence as Mubarak Refuses to Quit


Today’s Friday prayers threaten to bring more violence to Egypt after pro-government mobs turned on foreign journalists and human rights advocates yesterday, and President Hosni Mubarak refused to quit.

U.S. Vice President Joe Biden called Vice President Omar Suleiman yesterday to stress Egypt’s government is “responsible for ensuring that peaceful demonstrations don’t lead to violence and intimidation,” the White House said. Tensions escalated a week ago when the Muslim Brotherhood, the largest opposition group, joined calls for protests after Friday prayers.

“Friday is going to be a bloody, difficult day and it may mark the turning point to see whether this uprising is going to continue or whether the regime will sort of be able to wear it down,” Michael Hudson, director of the Middle East Institute at the National University of Singapore, told Bloomberg Television.

Suleiman offered concessions in a televised address late yesterday, including a promise Mubarak’s son Gamalwon’t run for president. The Obama administration is in talks with Egyptian officials on a proposal for Mubarak to step down and give power to a transitional regime led by Suleiman, the New York Times said, citing unidentified U.S. officials and Arab diplomats.

The New York Times said a proposed transitional government would invite opposition members including the banned Muslim Brotherhood to help change the electoral system.

Economic Cost

“The key thing is whether there’ll be an orderly transition, political transition, in Egypt so there can be some coherence in economic policy,” Thomas Byrne, senior vice president at Moody’s Investors Service, said in a Bloomberg Television interview in Singapore. Egypt’s unrest is costing the economy $310 million a day, according to Credit Agricole CIB estimates.

Persian Gulf shares fell, oil prices rose and Fitch Ratings also lowered its sovereign rating on Egyptian debt yesterday by one step to BB. Moody’s cut Egypt’s grade on Jan. 31 to an equivalent Ba2, two levels below investment grade.

After bloody clashes in Cairo’s central Tahrir Square triggered by government supporters, opposition leaders including the Muslim Brotherhood rejected Suleiman’s call for talks before the demand for Mubarak’s immediate departure is met.

“I say to the young people, we thank you for what you did, you are the flame that ignited reform,” Suleiman said in yesterday’s address. “The state has heeded all the demands that were made, please give a chance to the state to carry out its duty.” Suleiman also reportedly made a private offer giving Mubarak a largely figurehead role through a political transition.

Hanging On

The 82-year-old Egyptian president, who has held power for almost 30 years, stood his ground in an interview with ABC News. He said that while he was “fed up with being president,” he feared “there will be chaos” with the Muslim Brotherhood coming to power if he abruptly quits. He added that he told President Barack Obama the U.S. doesn’t “understand the Egyptian culture and what would happen if I step down now.”

Egyptian government officials sought to blame part of the turmoil on foreigners, having earlier pointed to domestic Islamic groups such as the Muslim Brotherhood and Hamas. Meantime, State Department spokesman Philip J. Crowley said yesterday the U.S. has evidence that “elements close to” Egypt’s government or ruling party, and not foreigners, played a role in violent counter-demonstrations in Cairo.

The political turmoil that has engulfed the Middle East spread to Yemen, where thousands of demonstrators gathered yesterday in the capital and police used tear gas in the port city of Aden.

Getting Out

Foreigners continued to abandon Egypt. International companies including Heineken NA have halted operations in the country and evacuated expatriate staff since the protests began. BG Group Plc said it had suspended infill drilling activities, though its offshore production & LNG operations continue unaffected by the unrest.

The turmoil may cut 2011 Egypt’s economic growth to 3.7 percent from a previous forecast 5.3 percent, Credit Agricole CIB said in an e-mailed report yesterday. Suleiman said the economy lost at least $1 billion in the first nine days as 1 million tourists fled the country.

Yields on Egypt’s dollar bonds maturing in 2020 fell 2 basis points to 6.59 percent yesterday. Egypt’s stock market, closed since Jan. 27 after a 16 percent plunge in the benchmark index last week, is provisionally due to resume trading Feb. 7, a day after banks are scheduled to reopen.

Confidence in Liquidity

Reopening the financial system won’t create problems because the country’s lenders are “very liquid,” Deputy Central Bank Governor Hisham Ramez said in a telephone interview from Cairo yesterday. He said government debt auctions will resume next week and the Finance Ministry will announce a schedule. Two planned sales were canceled this week.

The New York-based Committee to Protect Journalists said it had reports of local and foreign journalists being detained in Cairo by security police. “We have multiple reports of dozens being arrested yesterday and we are looking to confirm these reports,” Gypsy Guillen Kaiser, spokeswoman for the group, said in a telephone interview. “This is very serious.”

Mubarak supporters stormed hotels in the capital searching for journalists, Al Jazeera and Al Arabiya television channels reported yesterday. Many members of the foreign press have been staying in hotels near Tahrir Square, a focal point for nine consecutive days of protests aimed at forcing Mubarak to resign.

Reporters at Risk

Employees of Time Warner Inc.’s CNN and Canada’s state- owned Radio Canada are among those who reported being assaulted. Amnesty International said one of its members was detained in Cairo in a raid on the Hisham Mubarak Law Center.

“These attacks seem to have been acts of revenge against the international media for relaying” the message of the protesters, Jean-François Julliard, secretary-general of Reporters Without Borders, a rights group, said in a statement.

A possible route to a compromise may have opened with a private offer to some opposition leaders. Suleiman, who is also a general, said Mubarak would surrender to him all authority to manage the political transition but remain president through elections due in September, according to Amr Hamzawy, a political scientist who works for the Carnegie Middle East Center in Beirut, who is in Cairo with the opposition.

“This is a face-saving solution, which is to my mind widely accepted in Egypt among many people,” said Hamzawy, who spoke by telephone to a conference in Washington held by the Carnegie Endowment for International Peace.

Muslim Brotherhood

Leaders of the Muslim Brotherhood said they were not prepared to negotiate with the government since it had instigated the violence.

“We are not ready to talk because of the current situation and what is happening in Tahrir Square, where citizens are being hurt and shot,” Mohamed Saad el-Katatni, member of the Guidance Council, the group’s top executive body, said by telephone from Cairo. “Enough of this regime. Enough of Hosni Mubarak.”

El-Katatni said he didn’t know if today would see a repeat of the mass gatherings after Friday prayers on Jan. 28, when protesters in Cairo and other major cities fought with security forces. “We don’t call on the youths to protest, but we will sure take part if there are protests,” he said.

John McCain, the senior Republican on the Senate Armed Services Committee, said it’s “almost inevitable” that Mubarak will go, and violence will escalate if he doesn’t. “The army has to play the lead role,” McCain said in a Bloomberg Television interview yesterday.

German Chancellor Angela Merkel and the leaders of the other five largest Western European countries called for a “quick and orderly transition” in a joint statement, echoing a similar call by U.S. President Barack Obama. None of those leaders has openly said that Mubarak should step down earlier than his announced date of September.