Obama Tells Mubarak Egypt's Transition to New Government `Must Begin Now'

President Barack Obama said Egypt’s transition to a new government “must begin now,” suggesting President Hosni Mubarak’s plan to remain in office for eight more months may not quell the protests in Cairo’s streets.

Obama spoke to Mubarak for 30 minutes after the Egyptian president announced he wouldn’t seek another term in elections scheduled for September. Obama then went before television cameras at the White House to say Mubarak “recognizes that the status quo is not sustainable and change must take place.”

“What is clear,” Obama said he told Mubarak, “is my belief that an orderly transition must be meaningful, it must be peaceful, and it must begin now.”

While Obama publicly and privately continues to pressure Mubarak to move on the transition to new leadership, the president’s actions may tie him to the next steps Mubarak takes, said Aaron David Miller, a former Mideast peace negotiator and State Department official.

Mubarak’s decision to remain in office until the next election to ensure “stability” was rejected by opposition leaders and protesters who crowded in Cairo’s Tahrir Square yesterday.

Obama “is now identified with a solution to the crisis that falls far short of what the people on the street seem to want,” Miller said.

While Obama still can’t outright call for Mubarak to step down, he needs to say Mubarak’s statement is “not enough,” said Edward Walker, a former U.S. ambassador to Egypt and Israel who is now an adjunct scholar at the Middle East Institute in Washington.

‘Lose Everybody’

“If we just declare victory now, they’ll lose everybody in the Middle East,” Walker said.

Mubarak’s announcement that he won’t seek re-election followed direct pressure from the U.S. administration.

Obama dispatched former diplomat Frank Wisner to Egypt, where he conveyed the U.S. message that Mubarak’s time in office is coming to an end to the Egyptian leader on Jan. 31, said an administration official, speaking on condition of anonymity because the discussions were private.

Whether Mubarak, 82, who has been in office three decades, has moved far enough to satisfy the opposition is still in question, the official said.

Edward Djerejian, a former U.S. ambassador to Israel and Syria, said Mubarak’s decision won’t stop the anti-government demonstrators.

Military’s Support

“Nevertheless, I do not believe he could have made the decision to stay in office until new elections without support from the Egyptian military,” he said in an e-mail. “If the street protests continue and become violent, the military may change their stance. We just have to wait and see.”

The U.S. also is making contact with the opposition and keeping lines of communication open to Egypt’s military and intelligence communities.

The U.S. ambassador in Egypt, Margaret Scobey, opened discussions with Mohamed ElBaradei, the former head of the United Nations atomic energy agency, who has emerged as a leading representative of the anti-Mubarak movement. The talks were “part of our public outreach to convey support for orderly transition” in Egypt, State Department spokesman Philip J. Crowley wrote in a message on Twitter earlier today.

The broadest contact point may be through the military and intelligence communities, Walker said.

“Those are the people who have serious longstanding relationships with the people who are still in charge of stable institutions inside of Egypt that don’t appear to be threatened,” he said.

Revamped Staff

The crisis in Egypt is the first critical test for Obama’s revamped White House staff, with Tom Donilon at the helm of the National Security Council.

Obama named Donilon, 55, who worked in the administrations of former presidents Jimmy Carter and Bill Clinton, as national security adviser in October. While he served as chief of staff to former Secretary of State Warren Christopher, Donilon has had to work against criticism that he lacks military experience. Donilon saw Afghanistan for the first time in March last year when he accompanied Obama on a six-hour trip there.

Still, the former executive vice president for law and policy at government-chartered mortgage finance company Fannie Mae, brings to the post expertise in managing processes, which is the role he’s playing in the administration’s Egypt response.

Security Team

Donilon has been organizing the involvement of the principal members of Obama’s national security team, including Secretary of State Hillary Clinton, Defense Secretary Robert Gates and Central Intelligence Agency Director Leon Panetta. Deputy National Security adviser Denis McDonough is running the meetings on the deputy level, an administration official said.

Vice president Joe Biden is also playing a prominent role, staying in contact with regional leaders, including a call yesterday to Bahrain’s King Hamad bin Isa Al Khalifa.

Obama’s economic advisers also are watching to see whether the turmoil in Egypt has broader implications. Unrest that either closed Egypt’s Suez Canal or spread into oil-producing regions in Saudi Arabia or the Persian Gulf would threaten the recovery in the U.S. and around the world.

Still, after fears of the crisis’s impact on the economy drove down stock markets last week, investors’ anxieties eased yesterday. The MSCI All-Country World Index of equities climbed 1.6 percent including dividends. The Dow Jones Industrial Average closed above 12,000 for the first time since June 2008. Yields on 10-year U.S. Treasuries increased seven basis points to 3.44 percent.

To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net Julianna Goldman in Washington at Jgoldman6@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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