Egypt Cabinet Offers to Resign Amid Clashes

Egypt’s government put its resignation “at the disposal” of the ruling military council as security forces clashed with protesters, the cabinet’s spokesman, Mohamed Hegazy, told reporters today in Cairo.

Information Minister Ossama Heikal and state television, which cited a military official, said the military council had not yet responded. Earlier, Al Jazeera television, without identifying sources, said that the military council had accepted the government’s resignation.

Clashes erupted in Cairo for a third day after fighting between security forces and demonstrators protesting military rule left at least 22 people dead, a week before Egypt’s first parliamentary elections since the ouster of Hosni Mubarak.

Protesters were driven back by tear gas in Tahrir Square, the center of the uprising that toppled Mubarak in February, some waving Egyptian flags and others hurling stones at riot police, in scenes televised from the site. Besides those killed, hundreds were injured in the fighting that started on Nov. 19, Health Ministry spokesman Mohammed el-Sherbeeny said today by telephone.

The events in the square recalled the clashes between police and demonstrators during the anti-Mubarak uprising and have threatened to disrupt elections scheduled to start on Nov. 28 as tensions rise between activists and the ruling military council. Egypt’s government is trying to secure financing to support an economy still struggling to recover from the revolt.

Tahrir Square Protests

This afternoon, demonstrators staged a march through Tahrir Square, chanting “The people want to topple the field marshal,” referring to Mohammed Hussein Tantawi, the head of the military council that took power from Mubarak. Television footage showed protesters carrying away at least one person who appeared to be wounded or dead.

The elections will go ahead as planned, state television reported yesterday, citing Mohsen el-Fangary, a member of the governing military council.

“If the military council fired the Cabinet, restored security and announced a road map for the transitional period with a time frame, calm will return to the street and people will be assured that their revolution was not stolen,” Emad Gad, an analyst at the Al Ahram Center for Political and Strategic Studies in Cairo, said by telephone late yesterday. “There needs to be a political solution.”

Gad is a candidate for parliament with the Egyptian Bloc, an alliance of secular parties.

Minister Resigns

Egypt’s credit-default risk surged to the highest level in more than two years. Five-year credit-default swaps rose 55 basis points to 525 at 2:10 p.m. in Cairo, the highest since March 2009, according to data provider CMA.

Egyptian Minister of Culture Emad Abu Ghazi resigned, state television reported today. His resignation was in protest of the security forces’ response to the demonstrations, Al Arabiya television said.

Protests also broke out yesterday in the port cities of Alexandria, Suez and Port Said, Al Jazeera said. In the southern city of Qena, people pelted the main police headquarters with stones, Al Arabiya reported.

In a statement read on state television yesterday, the military council said it is not seeking to prolong the transition to civilian rule and that it won’t allow anyone to derail the country’s “democratic transformation.”

The parliamentary elections are the first step in that process, the council said. It called on all groups to avoid violence.

Muslim Brotherhood

The Muslim Brotherhood, whose political party is expected to win one of the largest blocs of seats in parliament, called today on the military council to immediately end violence against protesters and withdraw troops and vehicles from the squares where there are demonstrations.

In an e-mailed statement, the group urged the council to dismiss the government after the end of parliamentary elections and to refer “all who ordered or carried out killings and attacks on protesters” to be investigated. It reiterated its earlier calls for a timetable that ensures handing power to elected civilians no later than mid-2012.

Yesterday, the group said it won’t allow the elections to be postponed or canceled, “whatever the price may be.”

“We are torn between two desires, a desire to go back to normality to form a strong government that would lead Egypt and get us out of this turmoil, and the fact that the Muslim Brotherhood is bullying all democratic forces and liberal forces by trying to enforce their presence,” Egyptian billionaire Naguib Sawiris said today on Bloomberg Television’s “The Pulse.”

Transitional Government

The council has indicated it may remain in power until 2013, to oversee the drafting of a new constitution and the election of a president. No date has been announced for presidential elections.

Fighting flared in Tahrir Square before nightfall yesterday as security forces entered the plaza and fired tear-gas canisters to evict protesters. Security forces managed to disperse the demonstrators briefly before people made their way back into the plaza.

Protesters led by Islamists on Nov. 18 demanded speeding up the power handover to a civilian government and rejected proposed government-sponsored constitutional guidelines with articles that they say enshrine a political role from the military and shield it from civilian scrutiny.

Arab Spring

Political turmoil in Middle Eastern and North African countries, which also toppled leaders in Tunisia and Libya this year, has led to crackdowns on anti-government demonstrations and hurt regional economies.

Egypt’s economy grew 1.8 percent in the fiscal year that ended on June 30, its weakest performance in at least a decade.

Egypt may ask the International Monetary Fund for the $3 billion loan it rejected this year, after domestic borrowing costs soared, Deputy Prime Minister Hazem El Beblawi said in a Nov. 18 interview.

The country yesterday sold 2 billion pounds ($334 million) of the 3.5 billion pounds it sought in nine-month treasury bills at an average yield of 14.705 percent, the highest since Bloomberg started tracking the data in 2006.

“The few foreigners that are still invested in Egyptian debt are likely to leave,” Moustafa Assal, Cairo-based head of fixed income at Beltone Financial Holding, said by telephone. “The increase in yields isn’t enough to compensate for the instability. Confidence is very weak in the state.”

To contact the reporter on this story: Mariam Fam in Cairo at mfam1@bloomberg.net

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

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