July 9 (Bloomberg) -- Egypt’s newly elected President Mohamed Mursi issued a decree to reinstate parliament, seeking to assert his power after the military dissolved the legislature.
The decree also calls for parliamentary elections to be held within 60 days of the approval of a new constitution in a public referendum, the official Middle East News Agency reported yesterday. The charter has yet to be drafted. The generals, who had ruled the country until Mursi’s election last month, convened an emergency meeting last night after the decree, the agency said.
Mursi’s move comes after the military council last month decided to retain legislative powers after the high court ruled that the law governing voting for the Islamist-controlled parliament was unconstitutional. The power struggle between the president, an Islamist politician, and the generals has deepened divisions in a country struggling to recover from the chaos that followed last year’s uprising that toppled Hosni Mubarak.
“The decision will raise tension in the political arena, especially between the Supreme Council of the Armed Forces and the Muslim Brotherhood,” Nabil Abdel-Fattah, a political analyst at the Ahram Center for Political and Strategic Studies, said by phone. “By reinstating parliament, the president is challenging the rule of law and the judiciary.”
The constitutional court will hold an emergency meeting today, Al Jazeera reported. Meanwhile, Parliament Speaker Saad El-Katatni, a leader of the Brotherhood’s political arm, the Freedom and Justice Party, said the assembly would reconvene “within hours,” according to the website Ahramonline. The Freedom and Justice Party, the group headed by Mursi until his election last month, said its supporters would rally in Tahrir Square, where the Egyptian uprising began, to support the parliament, the state-run Ahram Gate reported.
The Freedom and Justice Party won almost half of the seats in the legislature in elections this year. Together with the Salafi Nour Party, Islamists controlled more than two-thirds of the assembly.
Mursi’s decision fulfills one of his election campaign promises.
“What we’re seeing is yet another round inside the country about how to restructure power in a major way,” said Brian Katulis, a senior fellow at the Center for American Progress in Washington. “I don’t know what Mursi’s legal authority is to reinstate the parliament, but the military has had a great deal of autonomy and that will likely decline over time.”
The escalation in the power struggle may prompt investors to sell Egyptian shares today, trimming an 18 percent rally in the benchmark EGX 30 Index since Mursi was declared winner on June 24.
“Although reinstating parliament has been one of Mursi’s campaign promises, it will definitely weigh on sentiment as it could mark the spark of the anticipated clash with” the military, said Wafik Dawood, director of the institutional sales desk at Cairo-based Mega Investments Securities.
Economists at HSBC Holdings Plc, Bank of America Merrill Lynch and Standard Chartered Plc had predicted that the power struggle may delay a $3.2 billion loan agreement with the International Monetary Fund needed to unlock external financing to lower record government borrowing costs and help foreign reserves recover from the worst decline in seven years.
Net international reserves were little changed in June at $15.5 billion after an increase in gold holdings made up for a drop in foreign currencies, according to central bank data released yesterday.
The military’s reaction to the decree may depend on how much it knew beforehand, Shadi Hamid, director of research at the Brookings Doha Center, said by phone.
“It could have potentially been something that was negotiated ahead of time, at least in its broad outlines,” Hamid said, adding that if the move wasn’t “pre-arranged” it could lead to confrontation between the president and the Supreme Council of the Armed Forces. “If it was a power-play on the part of Mursi then it is going to lead to unprecedented tensions because it’s a direct challenge to the legitimacy of both SCAF and the judiciary.”
At the same time, said Hamid, “this could actually be something of a compromise because SCAF gets a little bit of what it wants, the Brotherhood gets some of what it wants. There still would be new elections held.”
Mursi will meet with U.S. President Barack Obama in New York during the September meeting of the United Nations General Assembly, according to an American administration official who spoke on condition of anonymity. The Egyptian leader met yesterday in Cairo with Deputy Secretary of State William Burns, who conveyed the invitation, the official said.
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