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Mubarak Cedes Power to Egyptian Military as Protests Finish 30-Year Reign

Hosni Mubarak ceded power to the Egyptian military as a popular revolt swept away the leader of the Arab world’s most populous state, throwing into question the future course of a key U.S. ally in the Middle East.

After 30 years of autocratic rule by Mubarak, the only leader most Egyptians have known, the country began a new day under a military council that promises to lead Egypt through a democratic transformation. What happens next was left unclear, including the timing for constitutional reforms and elections.

“We are not going to leave until all our demands are met,” said Hany Mikael, 26, a clothes producer and one of thousands of Egyptians who remained in Cairo’s Tahrir Square today after a night of celebrations. “We are waiting now for the army’s statement on their next step with a clear timeline on how they will form the transitional government and how they will meet the rest of our demands like canceling parliament, removing the emergency law, and ensuring the independence of the judiciary.”

A spokesman for the Supreme Council of the Armed Forces said the ruling body will not be a replacement for a legitimate government. The council is headed by Field Marshal Mohammed Hussein Tantawi, who has been defense minister. There has been no immediate mention of a role for Vice President Omar Suleiman, Mubarak’s longtime adviser and head of intelligence.

Military Council

The military council announced today it aimed to see a democratic, elected government established and that it would maintain the current cabinet for the time being. The country is committed to all international treaties signed by previous governments, an army spokesman said on state television.

A nighttime curfew, which has been in place since Jan. 28, will be shortened to between midnight and 6 a.m., state television reported earlier. Security forces have arrested 10,147 out of a total of 23,060 prisoners who escaped across the nation during the unrest, state-run Nile News reported today, citing the Interior Ministry.

Yesterday Egyptians celebrated through the night in Cairo and other cities after an announcement that the 82-year-old president had resigned, bowing to the demands of protesters who had occupied the center of the capital for 18 days. In downtown’s Mubarak subway station, revelers crossed out his name, replacing it with “Martyrs’ Station.”

‘Moral Force’

“The people of Egypt have spoken, their voices have been heard and Egypt will never be the same,” U.S. President Barack Obama said at the White House after a meeting late yesterday with his national security team. The “moral force of non- violence” helped Egyptians bend the “arc of history” to achieve their goals, he said.

Stocks rose, reversing an early drop, and oil fell to a 10- week low in New York yesterday following the news from Egypt. An exchange-traded fund tracking Egyptian equities rallied 5.1 percent and the cost of credit-default swaps on the nation’s debt fell 16 basis points to 322, according to CMA.

Egypt under Mubarak was a U.S. ally in the Middle East and one of the main beneficiaries of American aid. Tantawi has spoken with his U.S. counterpart, Defense Secretary Robert Gates, at least five times since the protests began, according to the Pentagon.

“America has switched sides,” said Karim Mezran, professor of international relations at the Johns Hopkins University campus in Bologna, Italy. “Obama has made it clear they won’t stand by dictators.”

Mubarak Leaves

The handover of power was announced by Suleiman in a statement on state television late yesterday. He said Mubarak had “instructed the Supreme Council of the Armed Forces to take over the affairs of the country.” Mubarak left Cairo for the Egyptian Sinai resort town of Sharm El-Sheikh, state television reported earlier.

“We’re thrilled,” said Waleed Rashed, a co-founder of Six of April Youth, a youth activist group that helped organize the first protest on Jan. 25. “There are a lot of things still to be worked out, but we trust the army to supervise the transitional period. We hope things will be better. If they are not, we now know the way.”

Mubarak’s resignation opens a new phase in a crisis that was sparked by the ouster of Tunisian President Zine El Abidine Ben Ali on Jan. 14 and is rippling through a region that holds more than 50 percent of the world’s oil reserves.

Market Reaction

Oil fell after the Egyptian leader stepped down, reducing concern that crude shipments from the Middle East will be disrupted. Crude for March delivery declined $1.15 to $85.58 a barrel on the New York Mercantile Exchange, the lowest settlement since Nov. 30. Futures fell 3.9 percent this week and are up 14 percent from a year ago.

Egypt’s economy may need a stimulus package to help create jobs, Finance Minister Samir Radwan said today.

“There is a need for a stimulus package that is very closely related to employment,” Radwan said in a telephone interview from Cairo. The government will run the daily affairs of the country until further instructions from the military council, he said.

The stock exchange will open on Feb. 16, Hisham Turk, the bourse’s communications manager, said in a telephone interview today. The bourse’s last day of operation was Jan. 27.

Opposition Demands

The army council, at its highest state of alert since the 1973 war with Israel, is likely to face calls for quick actions from the thousands of young protesters who have crammed into Tahrir Square and used Facebook and Twitter to organize themselves. Google Inc. executive Wael Ghonim, a figurehead of the protests, yesterday read out a list of demands that included abolishing all restrictions on forming political parties and giving voting rights to Egyptians abroad.

Elections may bolster the Muslim Brotherhood, the country’s main opposition group, and other parties shut out of power. The Brotherhood is banned from politics in Egypt, and members have had to run for office as independents in parliamentary elections.

The Brotherhood said today it supported the army’s role in the peaceful transfer of power to a civilian government. The group called for an end to the state of emergency, for parliament to be dissolved and for “free and fair elections under judicial supervision,” it said in an e-mailed statement today.

Military Career

Mubarak, a former air force general who as president was commander of the largest military in the Arab world, was the nation’s longest-serving ruler in more than 150 years. His government was the linchpin of U.S. policy in the Middle East for three decades. He kept peace with Israel, with which Egypt had formal peace for only two years when he took office, supported U.S. counterterrorism efforts, backed sanctions on Iran over its nuclear program and helped broker Palestinian- Israeli talks.

Arab governments have given mixed reactions to events in Egypt. King Abdullah of Saudi Arabia told Obama in a phone call on Jan. 29 that Mubarak should be allowed to stay to oversee a transition of power, the London-based Times reported.

In Jordan, where the king replaced the cabinet after weeks of demonstrations, the government issued a statement on Petra, saying it was “following very closely the historic developments” in Egypt. Hundreds of Jordanians gathered outside the Egyptian embassy in Amman late yesterday to celebrate, chanting: “Arab revolt, from Morocco to Bahrain.”

Algerian protesters and police clashed in Algiers today after authorities moved to arrest some of the demonstrators. Earlier, authorities detained 100 people during a peaceful sit- in in the capital inspired by pro-democracy protests in Egypt and Tunisia, Mustapha Bouchachi, head of the League for the Defense of Human Rights, said.

“This is evidence that the authorities don’t accept peaceful demonstrations,” Bouchachi said in an interview at the protest in Algiers. “2011 will be a year for change. This is the first attempt.”

To contact the reporters on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net; Maram Mazen in Khartoum at mmazen@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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