Egypt Forms New Government as Election Moves Into Second Phase

Egypt’s ruling generals swore in a new Cabinet and gave the prime minister greater powers as Islamist groups headed for control of the first parliament since the toppling of former President Hosni Mubarak.

The Muslim Brotherhood’s Freedom and Justice Party secured the largest share, 37 percent, of ballots cast for party lists in the first round of voting, which covers Cairo and eight other provinces. It also gained 36 of the 56 seats awarded to individual candidates in the first phase, official results show. Ballots cast for lists determine two-thirds of the 498 elected seats in the assembly, while the rest are determined by votes for individuals.

Due to the complexity of the electoral system, the makeup of parliament won’t become clear until final results are announced in January. Nor will the balance of power between the assembly, the Cabinet and the ruling military council.

While the army yesterday granted Prime Minister Kamal el- Ganzouri presidential powers, it said these exclude oversight of the military and judiciary. It has also said it will remain the ultimate authority in Egypt until a president is elected next year.

“This transfer of powers is 100 percent cosmetic,” said Ziad A. Moussa, a senior analyst at Al Ahram Center for Political and Strategic Studies. “The military council is trying to say that it’s not interested in remaining in power but the actual content of that power transfer is not as powerful as it seems to be.”

New Cabinet

The military council swore in El-Ganzouri, who also served as premier under Mubarak, and other members of the new Cabinet yesterday. Momtaz el-Saeed was named finance minister, Mohamed Ibrahim Youssef interior minister and the foreign-affairs portfolio remains with Mohamed Amr, state television reported.

Demonstrators have been camped in Tahrir Square and other parts of Cairo for more than two weeks to demand the army cede power to a civilian government. The group of secular parties most closely linked with the Tahrir protesters, the Egyptian Bloc, came third with about 13 percent of votes for party lists in the first round.

The Nour party, which represents Salafi Islamists, came second. The strong performance by Egypt’s religiously oriented groups follows victories by Islamist parties this year in Morocco and Tunisia, where the wave of Middle Eastern uprisings began a year ago.

Voting for the second round of Egypt’s elections, which covers Giza, Suez, Ismailia and six other governorates, begins on Dec. 14. The third round begins on Jan. 3 and final results are due 10 days later. Presidential elections will be held by the end of June, the army has said.

Brotherhood Alliances

“The final results will dictate the Muslim Brotherhood’s choices of alliances and whether they will resort to the Salafis or see them as a liability and turn instead to the moderate, democratic forces,” said Nabil Abdel Fattah, director of the Al-Ahram Center for Social and Historic Studies.

Whatever government emerges in the coming months must tackle an economy that grew at the slowest pace in at least a decade as a result of the unrest that forced Mubarak out in February and deterred tourism and investment. Gross domestic product expanded 1.8 percent in the fiscal year through June, and Egypt has spent almost half its foreign currency reserves in the past 11 months.

The previous administration had agreed in principle to request a $3 billion International Monetary Fund loan that it rejected earlier this year after domestic borrowing costs soared. El-Saeed, who replaces Hazem El-Beblawi as finance minister, said on Dec. 3 that it’s “too early” to predict the fate of the loan.

To contact the reporters on this story: Ola Galal in cairo at ogalal@bloomberg.net; 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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