Islamist Mohamed Mursi Elected Egyptian President

Egyptian President Mohamed Mursi
Newly-elected President Mohamed Mursi delivers a speech in Cairo on Sunday. Source: Egypt State TV via The Associated Press

The Muslim Brotherhood’s Mohamed Mursi was elected Egypt’s first Islamist civilian president, capping an acrimonious race that divided a nation whose economy is reeling and where the military has curbed his authority.

Mursi, 60, defeated Ahmed Shafik, who served as Hosni Mubarak’s last premier, election commission head Farouk Sultan said in a televised press conference. Mursi won 13.2 million votes or 51.7 percent, beating Shafik who garnered 12.3 million votes or almost 48.3 percent, Sultan said.

The announcement drew an uproar of cheers from tens of thousands gathered in Cairo’s Tahrir Square where supporters of the Brotherhood had been rallying for the past week against the ruling military council. In the Hamas-ruled Gaza Strip, backers of that Islamist movement fired celebratory shots in the air and hundreds waved the Egyptian flag.

“The Brotherhood wants to have a stronger presidency, and they are going to use their popular mandate and their democratic legitimacy now to aggressively push against” the ruling military council, said Shadi Hamid, director of research at the Brookings Doha Center. “That’s a key struggle to watch.”

Second Choice

Mursi was only nominated by the Brotherhood after it became apparent that its first choice, chief strategist Khairat el-Shater, was going to be disqualified because of an electoral technicality. Mursi and Shafik both claimed victory immediately after the June 16 and 17 runoff vote, sparking a week of tension in a country that has seen little stability since Mubarak’s ouster in February 2011.

Before the announcement, the military council boosted its authority at the expense of the presidency after a court ordered the dissolution of the Islamist-dominated parliament. A decree granted the military legislative powers and the ability to play a role in shaping a new constitution. The military defended its moves as being in the interests of national security.

“The Egyptian people want a real president and not a figurehead,” Muslim Brotherhood spokesman Mahmoud Ghozlan said in a telephone interview after the announcement. “The Egyptian people and the Muslim Brotherhood are keen on restoring the president’s authorities and thus are out there on the streets for the decree to be canceled.”

Ahead of the release of the results, officials boosted security across the country as tens of thousands of Mursi’s supporters gathered in Tahrir Square, the epicenter of last year’s uprising. Some businesses let their employees leave early amid worries that the outcome would trigger unrest. Official results were originally due to be released on June 21 before being postponed amid fraud allegations from the two candidates.

Military Confrontation

The military’s moves raised the possibility of a power struggle between the army and the Brotherhood after Mursi’s victory. Tensions marring the country’s transition have scared away foreign investors and tourists and hampered efforts to secure a $3.2 billion loan from the International Monetary Fund.

Israel’s government said it “appreciates the democratic process in Egypt and respects the results” of the election. “Israel looks forward to continuing cooperation with the Egyptian government on the basis of the peace treaty between the two countries, which is a joint interest of both peoples,” the office of Prime Minister Benjamin Netanyahu said today in a text message to journalists.

In Gaza, Hamas leader Mahmoud Zahar said “the loser in this battle is Israel.”

Power Struggle

Mursi’s win is unlikely to settle the longer-range challenge of the Brotherhood’s power struggle with the military and how that will play out in the country’s push to stabilize its economy and its political situation.

“There are still a lot of unknowns for the market, which will be looking for direction from the street, the presidency and progress by the constitutional committee,” Wael Ziada, head of research at Cairo-based EFG-Hermes Holding SAE, said by phone. “A lot will depend on public acceptance of the dissolution of parliament and the constitutional declaration after Mursi’s win.”

Mursi, a U.S.-trained engineer, inherits an economy that has struggled to recover since the revolt last year, as tourists and investors stayed away.

Bond Yields

The yield on Egypt’s 5.75 percent dollar bonds due in 2020 soared the most last week since they were sold in April 2010. The rate jumped 97 basis points to 7.87 percent in the week that ended June 22, according to prices compiled by Bloomberg. That included a 52 basis-point surge on the last day of the week.

The Arab country’s five-year credit default risk jumped 68 basis points last week to 723, the highest level since December 2008, according to CMA, which is owned by CME Group Inc. and compiles prices from the privately negotiated market. Egypt is among the 10 riskiest credits in the world.

“The new president arrives in a total institutional vacuum and in a seat essentially devoid of powers,” said Philippe Dauba-Pantanacce, Dubai-based senior economist at Standard Chartered Plc. “There is no constitution to define the presidential attributions, allocate and distinguish the executive from the legislative powers.”

The generals say they are committed to transferring rule to the new civilian president by the end of the month. Their critics charge they have tightened their grip in what amounts to a coup and will not cede meaningful power.

Mursi cast himself as the “revolutionary” candidate in the runoffs against Shafik, a former air force pilot and civil aviation minister, who ran on a law and order platform. He also tried to allay fears by some Christians and secular Muslims who say they were concerned that the Brotherhood may monopolize power or curb freedoms.

“The country is split into two,” said Teymour El-Derini, Cairo-based director of Middle East and North Africa sales trading at Naeem Brokerage. “The new president has to make everyone happy. There won’t be much patience.”

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