Violence Flares in Egypt as Mursi Backers Vow Defiance

July 5 (Bloomberg) -- Egyptian billionaire Naguib Sawiris discusses the outlook for Egypt following the ouster of President Mohamed Mursi. He speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Market Makers." (Source: Bloomberg)

At least 25 people died and hundreds were hurt as security forces clashed around Egypt with Islamist supporters of deposed President Mohamed Mursi who vowed to stay on the streets to defy what they called a military coup.

Twelve people were killed and 300 were injured in Alexandria, the state-run Middle East News Agency reported. Three people were killed and 20 injured outside the Republican Guards headquarters in Cairo yesterday, Mohamed Sultan, the deputy head of Egypt’s ambulance service, said by phone. Pro-Mursi demonstrators at the Cairo confrontation said security forces fired on them.

Four people died in Cairo’s Maspero district, where television pictures showed troops moving in to disperse clashes between opponents and supporters of Mursi late last night. There were also four deaths in the Sinai peninsula, one in Giza and one in Assiut in southern Egypt, Sultan said.

The Muslim Brotherhood’s supreme guide, Mohammed Badie, spoke at a pro-Mursi rally in Nasr City in the capital yesterday evening, dismissing state-run media reports that he’d been arrested. Military helicopters flew overhead. It was the first major trial of strength for the military-appointed interim government since Mursi, Egypt’s first democratically elected civilian president, was deposed July 3 after four days of nationwide protests.

‘Critical Moment’

“With our bare chests, we’re stronger than bullets,” Badie told the flag-waving crowd, numbering tens of thousands, as the sun set. “People of Egypt: You’re at a critical moment in your revolution. Are you with the military coup?” He chanted repeatedly that “our president is Mohamed Mursi.”

Egyptian security forces arrested Khairat el-Shater, the Brotherhood’s deputy supreme guide, Yasser Abdel-Maqsoud, an official with the security forces, said by telephone.

Amid the unrest, Fitch Ratings downgraded Egypt’s long-term credit rating to B-, six levels below investment grade, from B with a negative outlook. It cited “high uncertainty over how the risks resulting from the military coup evolve over the short term and the eventual pathway to a peaceful political transition.”

The new president, Adly Mansour, 67, promoted just days earlier to chief justice of the Supreme Constitutional Court, issued an order dissolving the Islamist-dominated upper house of parliament, MENA said.

Shotgun Pellets

Masaad Abu El Ela, 38, a mechanical engineer, said he was wounded in the leg by two shotgun pellets after he was fired on by a military police officer outside the Republican Guards headquarters. Supporters of the ousted president gathered because “the Republican Guards are responsible for Mursi, and we want to know where he is,” he said after being treated in a Nasr City hospital.

Army spokesman Ahmed Mohamed Ali said by phone last night that the military was investigating the clash.

Violence in the capital was mirrored elsewhere yesterday, with 25 people wounded in clashes and hospitalized in Damanhour in the northern Al-Beheira province, and hundreds of pro-Mursi supporters storming the Luxor governorate office, according to MENA and the state-run Ahram Gate website. Another 20 were hurt in an attempt to storm the North Sinai governorate office, MENA said.

“Egyptians need to live free, and by free choice; the thousands out there can’t leave until the president is handed over to them,” Essam El-Erian, the deputy head of the Brotherhood’s Freedom and Justice Party, told Al-Jazeera television at the Nasr City rally. “Military law must come to an end by the strong, solid will of the people. We can’t go back to a military regime.”

Across Nile

As Mursi’s supporters rallied in Nasr City, a rival demonstration by opponents of the ousted president was taking place in Tahrir Square in the center of Cairo. Separately, thousands of Mursi’s backers marched across a bridge over the Nile toward the state television building, not far from the square. Television pictures showed groups from both camps hurling stones at each other in central Cairo and troops and military vehicles being deployed.

“The army has given instructions to soldiers to only use tear gas and fire warning shots into the air” around the country, Ali said. “We hope the violence is contained. The army will continue ensuring the safety of protesters, without siding with any party.”

Oil Prices

West Texas Intermediate crude oil climbed to a 14-month high on concern the unrest in Egypt will escalate and speculation a strengthening U.S. economy will boost demand. Futures rose as much as 2.4 percent in New York to $103.68 a barrel, the highest since May 3, 2012.

Egypt closed the Rafah border crossing with Gaza due to the “unstable security situation” in the Sinai, MENA cited a spokesman in Gaza for the frontier post as saying yesterday. It later cited an Egyptian security official as saying the crossing would re-open today.

“We call on all Egyptian leaders to condemn the use of force and to prevent further violence among their supporters,” U.S. State Department spokeswoman Jen Psaki said in a statement. “The Egyptian people must come together to resolve their differences peacefully, without recourse to violence or the use of force.”

U.K. Foreign Secretary William Hague said on Twitter that he was “very concerned by reports of deaths in Cairo. Hope calm heads will prevail, vital to avoid escalation.”

Military Ultimatum

Standing in front of a group of opposition and religious figures late on July 3, Defense Minister Abdelfatah al-Seesi said Mursi “failed to meet and conform with the demands” of the people. That forced the military to act after a 48-hour ultimatum had passed, which they did in consultations “without excluding anyone,” he said.

Egypt’s armed forces said in a statement on their Facebook page that the nation’s people have a right to protest and express their views, while cautioning that the misuse of those rights could threaten “civil peace.”

“You’re going to have a bumpy ride because the Army acted with a lot of popular support, but the Brotherhood still probably enjoys the support of between 10 million and 20 million Egyptians,” Jon Alterman, a former State Department official for Middle East affairs, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. If the Brotherhood drops out of politics, “that’s actually a problem,” he said.

Egypt’s economy is in worse shape than it was during Mubarak’s last days in office. With growth near the weakest in two decades, unemployment stands at a record 13.2 percent. A bid for a $4.8 billion International Monetary Fund loan has yet to be accepted. Instead, the country has been relying on deposits and other aid, predominantly from Qatar.

To contact the reporters on this story: Ahmed A. Namatalla in Cairo at anamatalla@bloomberg.net; Salma El Wardany in Cairo at selwardany@bloomberg.net; Caroline Alexander in London at calexander1@bloomberg.net

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

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