Egyptians Warn of Danger to Democracy After Court Ruling
The Muslim Brotherhood said Egypt’s transition to democracy faces its biggest threat after a court decision dissolving parliament, while activists labeled the ruling a military power grab and called for protests.
Criticism of yesterday’s constitutional court verdict intensified as Egypt prepares to elect a successor to ousted President Hosni Mubarak. A two-day runoff starting tomorrow pits the Brotherhood’s Mohamed Mursi against Ahmed Shafik, a prime minister under Mubarak, whose participation was ensured when the court overturned a ban on former officials taking top jobs.
The dissolution of parliament unravels gains by the Brotherhood, which controlled almost half the assembly’s seats. The group said on its website that the situation is “more dangerous than the last days of Mubarak’s rule.” A win for Shafik, a former air force commander, would mean “all the achievements of the democratic revolution will be erased.”
The turmoil has overshadowed a vote that was due to complete Egypt’s democratization almost 16 months after the start of the revolt, and offer an opportunity to revive its struggling economy. Fitch Ratings today cut Egypt’s foreign- currency debt by one step to B+, four levels below investment grade, citing “increased uncertainties surrounding the political transition following yesterday’s ruling.”
Egypt’s bonds extended losses today and credit risk jumped the most in almost a month after yesterday’s ruling. Activists who led last year’s uprising accused the generals of clinging to power and plan rallies later today.
Mursi and Shafik qualified for the runoff as the two leading candidates in last month’s first round of voting, winning 26 percent and 25 percent respectively. Final results are expected on June 21. The army council that has run the country since Mubarak’s fall says it will hand over power by the end of this month after the vote.
The court decisions, along with new rules allowing the army to arrest civilians, are an attempt by the military council “to stay in power longer to secure their interests,” said Ingy Hamdi, one of the leaders of the April 6 youth movement.
The rulings come at a time when Egypt lacks a constitution, with secular and Islamist politicians disputing the makeup of the panel that will write it, while the parliament and military- appointed government have repeatedly clashed. Those conflicts have stymied hopes of concluding a $3.2 billion International Monetary Fund loan.
Egypt needs the money after tourism and investment were hit by the political unrest. The central bank has spent more than half its currency reserves since the start of last year as it seeks to bolster up the pound.
Yields on benchmark 10-year dollar bonds climbed to 6.91 percent today, extending their two-day increase to 23 basis points. Five-year credit default swaps rose 22 basis points to 648, according to CMA, which is owned by GME Group Inc. and compiles data from the privately negotiated market.
The court rulings are the “culmination of a steady and methodical sabotage effort” by the ruling military, and may make it impossible to achieve the broad political support for an economic program that the IMF is seeking as a condition for loans, Bank of America Merrill Lynch economist Jean-Michel Saliba wrote in an e-mailed report.
The court rulings created confusion outside Egypt too. Secretary of State Hillary Clinton said yesterday that the U.S. is discussing the implications with Egypt and still expects “a full transfer of power to a democratically elected civilian government.”
Shafik, who has run on a law and order and secularist platform, is seen as the army’s favored candidate. Mursi’s candidacy has been attacked by secularists as an attempt by the Brotherhood to monopolize power after its victory in parliamentary elections.
The court verdicts amount to “a soft military coup,” Ashraf el-Sherif, an American University in Cairo political scientist, said by phone. “The plan is to end up with a president who is allied with the military while there’s no parliament and no constitution. This means pure military rule.”
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