Egyptian Military Issues 48-Hour Ultimatum to End Crisis

July 1 (Bloomberg) -- Bloomberg Contributing Editor Richard Falkenrath discusses the crisis in Egypt with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Egypt’s army gave President Mohamed Mursi 48 hours to end a political impasse that culminated in mass protests demanding his ouster, raising the specter of military intervention if unrest continues.

The armed forces warned that the deadline was a “last chance” for everyone and that if “the demands of the people are not met” by then, it would put forth its own “roadmap” for the future, according to a statement read on state television. Crowds in central Cairo later cheered as military helicopters dangled Egyptian flags beneath them and buzzed over Tahrir Square, the epicenter of the 2011 uprising that toppled Hosni Mubarak.

“The military is back in Egyptian politics in a very serious, direct way,” Shadi Hamid, director of research at the Brookings Doha Center, said by phone. “We’re going to have to see whether or not this constitutes a real military coup and what they do in particular about Mursi’s presidency.”

The statement signals a growing impatience with a regime that has polarized an Egyptian society increasingly traumatized by a crumbling economy. While Mursi’s supporters say he was democratically elected last year, hundreds of thousands thronged into Tahrir Square and elsewhere last night accusing him of putting the interests of the Muslim Brotherhood from which he hails before the rest of society.

Photographer: Khaled Desouki/AFP via Getty Images

Egyptians hold a plaque of the Muslim Brotherhood emblem which was removed from the party's burnt headquarters in the Moqattam district of Cairo on July 1, 2013 after it was set ablaze by opposition demonstrators overnight. Close

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Photographer: Khaled Desouki/AFP via Getty Images

Egyptians hold a plaque of the Muslim Brotherhood emblem which was removed from the party's burnt headquarters in the Moqattam district of Cairo on July 1, 2013 after it was set ablaze by opposition demonstrators overnight.

Overthrow

Today, protesters stormed the headquarters of the Muslim Brotherhood, setting its first floor ablaze, the latest episode in a cycle of violence that the health ministry estimates has left at least 14 people dead in various provinces since yesterday.

The army statement, which claimed that the military doesn’t want to take part in politics, comes eight days after Defense Minister Abdelfatah Al-Seesi gave politicians one week to find a solution.

“That week has passed without any initiative or action,” the armed forces said in today’s statement. “Wasting more time won’t achieve anything but more division and conflict.”

Today’s military statement “simply means the army is siding with the people and against the Muslim Brotherhood, and reaffirms that the military will just protect us and is not interested in governing,” said Islam Hammam, a member of the central committee of Tamarud, or Rebel, movement which says it amassed 22 million signatures against Mursi. “The statement leaves no options for Mursi but to quit. It’s too late for him to make concessions; the people will not accept that,” he said.

Photographer: Khaled Desouki/AFP via Getty Images

A picture taken on June 30, 2013 shows laser lights directed by protesters onto a military helicopter flying over the presidential palace in Cairo, as thousands of demonstrators gathered calling for the ouster of Egyptian President Mohamed Mursi. Close

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Photographer: Khaled Desouki/AFP via Getty Images

A picture taken on June 30, 2013 shows laser lights directed by protesters onto a military helicopter flying over the presidential palace in Cairo, as thousands of demonstrators gathered calling for the ouster of Egyptian President Mohamed Mursi.

Blacklash Risk

Pushing Mursi out risks provoking a backlash from his Islamist backers.

“We swear to God, coups of any kind will not pass except over our” dead bodies, Mohamed El-Beltagy, an official with the Muslim Brotherhood’s Freedom and Justice Party, told a rally of Mursi supporters tonight without mentioning the military statement. The Brotherhood plans marches across the country tonight, he told the crowd in Cairo’s Nasr City district.

A military council that ruled the country after Mubarak’s ouster and before Mursi’s election was widely criticized by many youth activists who accused it of mismanaging the transition.

Mursi last year became the first democratically elected civilian president in a country that had been ruled by leaders who hailed from the military since the 1952 overthrow of the monarchy.

Egypt’s president has spent his first year mired in power struggles with a justice system his supporters say is biased against Islamists and a broad coalition of opponents who say he usurped the 2011 uprising that pushed Mubarak from power.

While the army today said the will of the people must be respected, Mursi’s backers say that was already expressed a year ago when he won 52 percent of the vote in presidential elections.

Will of the People

There are still “those groups that choose to resort to violence as a means of political expression,” Brotherhood spokesman Gehad El-Haddad said by phone today before the military statement. “We back the legitimate choice of the people and we will stand firm against any group that is trying to” twist the will of the people, he said.

Egypt’s financial markets have reflected the ferment. The benchmark EGX 30 stocks index slumped 13 percent in June. The country’s default risk soared to a record 888 basis points last week, putting Egypt among the riskiest 10 credits in the world, according to data compiled by Bloomberg.

Public Anger

If Mursi resigns, the “transition to a permanent government will be even longer than it has been,” Raza Agha, chief Middle East and Africa economist at VTB Capital in London, said in an e-mailed note. A decision to stay “could continue increasing the risks of confrontation,” he said.

A deepening economic crisis has fueled the public anger against Mursi, with unemployment rising beyond 13 percent and foreign reserves dropping by more than half since the uprising against Mubarak, and fuel shortages sparking long lines at gas stations.

“The army made us all happy today, I’m relieved, I was very worried about the future of my kids and now I feel much safer,” said Farid Medhat, 36, who came to Tahrir Square with his wife and two kids. “Everything has deteriorated just in one year, no electricity, no water, no security, nothing.”

Tamarud warned of a civil-disobedience campaign should the president not agree by July 2 to its demand for early elections.

“If you really wanted the Brotherhood and the opposition to sit down, you need at least several weeks,” Hamid of Brookings said. “It’s fair to say the deadline won’t be met,” he said, referring to the military’s ultimatum.

To contact the reporters on this story: Mariam Fam in Cairo at mfam1@bloomberg.net; Tarek El-Tablawy in Cairo at teltablawy@bloomberg.net

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

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