June 25 (Bloomberg) -- Egypt’s Islamist President-elect Mohamed Mursi began work on pulling together a team of advisors, as the military-appointed Cabinet resigned to make way for a new government.
The Muslim Brotherhood’s candidate, who was declared the winner of an acrimonious runoff against Hosni Mubarak’s last premier yesterday, arrived at the presidential palace complex in Cairo’s Heliopolis district, escorted by police and the Republican Guard, the state-run Ahram Gate reported, citing unidentified security officials.
The 60-year-old U.S.-trained engineer inherits an office whose powers were curbed last week by the ruling generals. He pledged in his first speech as leader yesterday to be a president for “all Egyptians.” Egypt needs unity “so that this great and patient people could reap the fruits of its sacrifices,” Mursi said, as millions took to the streets to celebrate his win over Ahmed Shafik.
After more than 16 months of unrest, Mursi’s ascension to the office with none of the violence many feared could erupt gave a boost to Egypt’s financial markets. Still, economic growth has slumped and a $3.2 billion International Monetary Fund loan has yet to be approved, stalling hopes for additional donor aid from abroad.
The benchmark EGX 30 Index closed 7.6 percent higher today in Cairo, its biggest jump since February 2008, while yields on the country’s benchmark 5.75 percent dollar bond plunged 66 basis points, or 0.66 of a percentage point to 7.21 -- the biggest drop since February last year, when Mubarak was ousted.
By contrast, Egypt’s credit rating was placed on “creditwatch negative” at Standard & Poor’s today for a possible downgrade, with the rating company citing the possibility of a power struggle between the military and the Brotherhood. The country is ranked B at Standard & Poor’s, five levels below investment grade.
“We now believe that a protracted, and possibly volatile, transition from the authoritarian regime deposed in January 2011 is more likely,” the rating company said in a statement.
Mursi’s task in the coming days is to form a government that will both please his Islamist supporters and appease others such as the revolutionary youth groups who threw their support behind him in a bid to block Shafik.
Among the names being floated for the premiership is that of Nobel laureate Mohamed ElBaradei, said Mohamed el-Beltagy, a senior official with the Brotherhood’s Freedom and Justice Party. The group has “no objections” to ElBaradei, who headed the U.N.’s nuclear watchdog agency and emerged as a leading figure in the uprising against Mubarak, ElBeltagy said by phone, adding that he was an “accomplished nationalist figure.”
El-Beltagy said talks were taking place to form a national unity government, as outlined by Mursi on June 22. Mursi was also due to meet leaders of the Nour Party, El-Sayed Mustafa Khalifa, the head of the Salafi party’s bloc in the parliament said. The FJP and Nour made up about 70 percent of the assembly before it was disbanded before the election.
The military-appointed interim Cabinet, which repeatedly clashed with parliament, resigned today, Information Minister Ahmed Anis told reporters. Ministers will continue to work until Mursi forms a new government.
The president-elect also met with Field Marshal Mohamed Hussein Tantawi, head of the country’s ruling military council, which has pledged to hand over power by the end of June.
Within hours of the polls closing on June 17, the ruling generals boosted their authority at the expense of the presidency, assuming legislative powers while also giving themselves a potential role in the constitution-writing process. Their decree also limited the president’s executive powers -- moves that enraged the Brotherhood and activists who referred to it as a “coup.”
While Mursi’s win “marks the end of an era and some likely stability in the short-term, the political transition period and power struggle are still not yet over,” Jean-Michel Saliba, an economist with Bank of America Merrill Lynch, said in a note. It is unclear how much room for maneuver the military will grant Mursi, “particularly when it comes to sovereign portfolios” such as defense, finance and foreign affairs, he said.
Mursi must also deal with the court-ordered dissolution of parliament, a step that preceded the military’s declaration of new powers and was seen as “illegitimate” by the Brotherhood.
The president-elect may put the issue to a referendum if it is confirmed by the Supreme Administrative Court, Sobhi Saleh, a senior official with the Brotherhood’s political party, said today, according to the state-run Middle East News Agency.
He may have to keep the support of youth groups, such as the April 6 movement, which threw their weight behind his candidacy even as they voiced concerns about the Brotherhood’s overall objectives.
Ahmed Maher, co-founder of April 6, said Mursi must fulfil campaign promises including naming vice presidents from a range of backgrounds. Mursi has said his deputies may include a woman and a Christian.
“If the Islamist movement succeeded in achieving a democratic transformation, this will be a historic transformation not just for Egypt, but for all the region,” said Ashraf el-Sherif, a political scientist at the American University in Cairo. “If, instead, we end up with an authoritarian system with a partnership between the generals and the Islamists, then this will have very negative implications on all of the Arab Spring and on the democratic transformation in the region.”
-- With assistance from Ahmed El-Sayed in Cairo. Editors: Digby Lidstone, Louis Meixler.
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