Wednesday, 12 December 2012

Multiple Protests Rock Egypt

Anti-Morsi protesters chant anti-government slogans at Tahrir Square in Cairo, December 11, 2012.
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Edward Yeranian












Egypt to hold referendum in two stages due to shortage of judges

Ahmad al-Zind, Egypt Judges Club chairman, said his judicial body has decided to reject overseeing Dec. 15 constitutional referendum. (Al Arabiya)
Ahmad al-Zind, Egypt Judges Club chairman, said his judicial body has decided to reject overseeing Dec. 15 constitutional referendum. (Al Arabiya)
Egypt announced early on Wednesday that the upcoming constitutional referendum will be held in two stages, Dec. 15 and Dec. 22 due to a shortage of judges needed to oversee the process, Al Arabiya TV reported.

The decision came hours after the country’s Judges Club decided to boycott the process, refusing to oversee the planned plebiscite.

The club’s decision came after another a rival body -- the Egyptian Administrative State Council’s Judges Club – announced it would oversee the plebiscite.

Ahmad al-Zind, Egypt Judges Club chairman, said, judges from both campaigns seek to protect the country’s national interests despite their differences.

“We accept judge’s stances either way,” Zind said, “People from here can learn democracy.”

Zaghloul al-Burshi, head of the higher council responsible for overseeing the referendum, had told Al Arabiya in an interview on Monday that the committee has between 7,000 to 9,000 judges, which he said was “more than enough” to oversee the referendum.

Meanwhile, an Egyptian administrative court declared on Tuesday that it is beyond its specialty to consider cases against the constitutional declaration and President Mohammed Mursi’s call for the constitutional referendum.

Army calls for unity

Meanwhile, Egypt’s powerful army called for President Mursi and the secular opposition to meet to resolve a deepening crisis over a constitutional referendum as the rival camps organized mass protests Tuesday, AFP reported.

General Abdel Fattah al-Sissi, the country’s armed forces chief and defense minister, made the appeal “for the sake of Egypt” to all political groups and movements to meet on Wednesday at a Cairo military sports complex, according to a statement posted on the military’s official Facebook page.

It came as tens of thousands of protesters filled Cairo streets to demonstrate for and against the referendum called for Saturday on a draft constitution backed by Morsi and his Islamist allies.

Despite fears the rival rallies could mix, sparking clashes like those seen outside the presidential palace last week when seven people were killed, there were no immediate reports of any violence at Tuesday’s demonstrations.

Troops nevertheless had orders from the president to use police powers to protect “vital state institutions” if needed.

Outside the palace, thousands of opposition protesters tore down a metal and concrete barricade to denounce the Saturday referendum, forcing hundreds of soldiers back.

But they made no move to storm the palace itself, and stood around in festive spirits chanting anti-Mursi slogans.

“We are here to say: ‘Down with the illegitimate constitution’... If the referendum happens we will have to vote. But hopefully it won’t,” said one protester, Ahmed Badawy, 29.

At a much bigger Islamist counter-demonstration a few kilometres (miles) away gathering tens of thousands of referendum supporters, the mood was equally calm but determined.

“It’s the last battle for Islam against the secularists who want to ruin Egypt,” said Ahmed Alaa, who was bussed in from the north of the country.

IMF $4.8 billion loan to Egypt postponed, PM calls for ‘social dialogue’

Egypt’s Prime Minister Hesham Qandil defended President Mohammed Mursi’s recent decision not to increase taxes and called for a “social dialogue” on the tax measures next week. (Al Arabiya)
Egypt’s Prime Minister Hesham Qandil defended President Mohammed Mursi’s recent decision not to increase taxes and called for a “social dialogue” on the tax measures next week. (Al Arabiya)
Egypt’s political turmoil has prompted the delay of a $4.8 billion International Monetary Fund (IMF) loan to the country’s Islamist-led government, further complicating the country’s economic prospects.

Egypt’s Prime Minister Hesham Qandil defended President Mohammed Mursi’s recent decision not to increase taxes and called for a “social dialogue” on the tax measures.
The IMF board was scheduled to meet to discuss approving the loan on Dec. 19 after a preliminary agreement was reached during a visit by an IMF team to Cairo last month. The IMF had said Egypt must keep policy steady for the loan to go through.

"In light of the unfolding developments on the ground, the Egyptian authorities have asked to postpone their request for a Stand-By Arrangement with the IMF," a Fund spokeswoman told Reuters in a statement.

"The Fund remains in close contact with the authorities, and stands ready to continue supporting Egypt during the ongoing transition and to consult with the authorities on the resumption of discussions regarding the Stand-By Arrangement," the spokeswoman said.

"He said the delay would give officials time to explain an economic reform package after media criticism prompted the government to postpone measures that were part of the program.

In a televised speech on Tuesday, Prime Minister Qandil, who criticized the media’s “erroneous” reporting over Mursi’s tax scrap said a “social dialogue” meeting will take place next week to explain the government’s tax project.

There are two pillars that will decide the upcoming project, according to the minister. These pillars, he said, are “never to affect those with limited income” and “achieve social justice.”

He emphasized that prices of basic goods such as bread, gas, sugar and tea will not see any hikes.

Two days ahead of mass rallies to protest a draft constitution the president had put for vote on Dec. 15, Mursi scrapped measures to raise sales taxes on a wide range of consumer goods such as cigarettes, soft drinks, oil, beer, cement and fertilizer, mobile calls and water.

Mursi’s tax raise decision in a time of political turmoil stunned even the closest of his allies.

Some critics said that the suspicion of the tax hike could lead to the cancellation of the $4.8 billion IMF loan Egypt is waiting for.

They also criticized the government for not consulting with business associations such as the Federation of Chamber of Commerce and Egyptian Tax Association that have expertise about the issue.

The Freedom and Justice party, the political arm of Mursi’s Muslim Brotherhood movement said in its “permanent position” was to reject any economic policies that would increase the burden on low-income groups.

Political crisis behind Egypt’s request to delay IMF loan: experts


Egypt’s President Mohammed Mursi meets with IMF Managing Director Christine Lagarde at the Presidential Palace in Cairo. (Reuters)
Egypt’s President Mohammed Mursi meets with IMF Managing Director Christine Lagarde at the Presidential Palace in Cairo. (Reuters)
The delay of Egypt’s long awaited IMF financing package is a serious blow to the country’s post-revolution transition and will add further uncertainty to an economy on the brink, experts have warned.

The on-going political crisis is seen as the main reason behind the government’s request to delay the loan.
Egypt’s economic prospects are far from sound after its tumultuous two year transition. The budget deficit widened to nearly LE 70 billion ($11.4 billion) in the last quarter, foreign exchange reserves dropped to $15.4 billion in November and the Egyptian pound is trading at 8 year lows versus the U.S. dollar.

Economists say the loan is crucial to staving off a balance of payments crisis and plugging the deficit which reached 11 percent in the financial year ending in June. The standby agreement, approved on a ‘staff-level’ in Cairo last month, would provide nearly $5bn in financing from the fund itself and unlock more than $14 in external financing from other donors such as the United States, the European Union and international financing institutions.

Experts described the delay as a “serious but not yet terminal” blow to the economy’s post-revolution transition and said it was clear the decision to postpone negotiations was driven by the deepening constitutional crisis that has gripped the country over the past few weeks.

“It is clear the government’s number one priority is resolving the crisis,” Neil Shearing of research consultancy Capital Economics said. “For the IMF’s part it is unlikely to want to lend in current circumstances.”

Shearing said that after government’s attempt to defuse the crisis failed to mollify the opposition “it was only a matter of time before discussions with the IMF fell by the wayside.”
Over the past two years Egypt has resorted to draining its foreign currency reserves to prop up the Egyptian pound and prevent currency devaluation. As a result, the country was now running out of money and in urgent need of external financing.

“Egypt is treading a thin line,” Shearing said. “Foreign exchange reserves are now at dangerously low levels and without the backstop of an IMF deal there is a growing risk of a disorderly adjustment in the pound,” he said.

Alia Moubayed of Barclays Capital said the main reason Egypt requested a delay of the loan is “the realization that given the significant divisions across the political spectrum, rushing in an agreement without ensuring it is properly discussed may lead to failure in implementation down the line.”

Moubayed said it was wise to delay the loan given the extreme polarization and that fallout could be limited “if significant efforts are exerted by the government to bring other political parties on board.”

The fund has stipulated broad-based domestic support for Egypt’s economic program as a pre-requisite to financing.

Moubayed acknowledged it would be a challenge to convince political opponents of the urgency of needed reforms but said consensus was necessary.

However, should the delay reveal a lack of commitment to reforms or inability to implement them, then “a negative scenario may unravel very quickly,” she said.

After nearly three weeks of political unrest over the country’s constitution and president Mursi’s controversial decree, the Finance Minister Mumtaz Al Saeed said on Tuesday that the government had agreed with the IMF to delay a $4.8 billion loan for a month to allow for dialogue on the government’s economic program.

"Of course the delay will have some economic impact but we are discussing necessary measures (to address that) during the coming period," Al Saeed told Reuters. "I am optimistic.. everything will be well, God willing," he said by telephone.

The announcement came one day after a dramatic u-turn by President Mursi over a proposed tax hike and followed an earlier statement from the prime minister, Hisham Kandil, refuting ‘erroneous’ reports on the tax rise and calling for “social dialogue” on tax reforms and the government’s economic plan.
The IMF’s board was set to ratify the agreement at a meeting in Washington on Dec.19. The fund issued a statement saying that “in light of the unfolding developments on the ground, the Egyptian authorities have asked to postpone their request for a stand-by arrangement with the IMF.”

The statement went on to say that the IMF would remain in close contact with the authorities and would consult with them on the resumption of discussions for the loan.

Over the past few weeks, economists have warned about a possible delay in IMF approval following the unrest triggered by the president’s controversial decree.

Wael Ziada, head of research at investment bank EFG-Hermes, said the delay was a reflection of the current political instability and would have a negative effect on the investment climate and stock market. He said political developments would be the main determinant of what happens next.

“Right now you have a political environment that is not conducive to making the right economic decisions,” Ziada said.

He pointed to the government’s attempt to kick off its economic plan with a tax increase only for the decision to be swiftly retracted by the president hours later.

“It is very difficult with the political congestion and the significant polarization to pass taxes or economic measures of that nature,” he said. The success of tough economic policies depended in large part on the timing of their implementation, he added.

Successful implementation of the government’s economic plan is a key requirement to secure IMF financing and the latest u-turn highlights the difficulty of winning support for unpopular economic reforms, particularly at a time of deep division.

Angus Blair of the Cairo-based think tank Signet Institute said the decision to ask the IMF to delay the loan was ‘a reflection of politics rather than finance.’ He said he believed there was a considerable amount of goodwill in Washington and in Europe to help Egypt through its transition.

In the wake of the latest crisis, the IMF said “consideration of the agreement by the IMF Executive Board will require that there is no major change in the economic outlook and implementation plans.”

The IMF also said it would require assurances from other donors - such as the United States and the European Union - that their share of financing will also be forthcoming. Some members of the European parliament have called for a suspension of economic aid to Egypt following the president’s decree.

Egypt’s economic plan, which has been presented to the IMF, centres around deficit reduction and features two key components: cutting government spending by reducing subsidies on fuel and electricity and increasing revenue through raising taxes on income, capital gains, goods and services.

Egypt’s trajectory towards IMF approval also hinges on implementing key “prior actions:” removal of subsidies on high class 95 octane fuel, which came into effect last month; expansion of the tax base through progressive income taxes, approved in November; and adoption of a more flexible exchange rate for the currency, which, according to the text of the government’s economic plan, the central bank is pursuing, albeit with the added proviso of “avoiding sharp fluctuations in exchange rates.”

Shearing of Capital Economics said it was extremely difficult to forecast how the situation might develop but that if the political environment stabilized, the risk of economic crisis would ease and external assistance would be likely, particularly given Egypt’s key role in the region.

“I can’t see the IMF, the U.S., or Saudi Arabia letting Egypt go through a really messy painful economic crisis at this juncture, I think they will cobble something together,” he said.

Morsi approves army's unity talks as rival protests grow


Morsi approves army's unity talks as rival protests grow
© AFP

Egyptian President Mohammed Morsi will attend Wednesday’s national unity talks proposed by the military, officials confirmed on Tuesday, as rival protests for and against the government’s new constitution continued to grow.

By FRANCE 24 (text)
 
Egyptian President Mohammed Morsi approved an army call for holding national unity talks on Wednesday in a bid to end a political crisis, officials confirmed on Tuesday.
Refa’a Al-Tahtawy, Morsi’s presidential chief of staff, confirmed the decision in an interview with Al Jazeera television after it was announced by an army spokesperson on Morsi’s official Facebook page. The talks are due to take place on Wednesday.
The talks were put forward by Defence Minister and Army Chief Abdel Fattah al-Sissi on Tuesday as rival groups of protesters supporting and denouncing Morsi continued to grow in the streets of Cairo. The minister called for “a meeting of national unity for the love of Egypt to bring together partners of the country in the presence of the president of the republic.”
The move came hours after Egypt’s finance minister announced a one-month delay to a vital $4.8 billion International Monetary Fund loan to the country.
Egyptians from all fields, including politicians, artists and athletes were invited to take part in the talks, three days ahead of a referendum on the government’s disputed draft constitution.
Egypt’s main opposition coalition said it would meet on Wednesday morning to decide whether to attend the talks, a leading politician in the National Salvation Front, Hamdeen Sabahy, told Reuters news agency on Tuesday.
“The Egyptian army is a great army and highly valued among all Egyptians. We respect it and its efforts but if this invitation does not have a clear agenda then we are afraid it will be a public relations exercise and we don’t see any value in attending,” he said.
Bitter divide
The invitation is the second instance this week to signal the military’s return to the political fray after handing over power in June to Islamist Morsi, Egypt’s first civilian president. Earlier this week, the military, which sees itself as the guarantor of Egypt’s interests and secular traditions, warned of disastrous consequences if the crisis over the country’s draft constitution is not resolved.
On one side of the divide, there is President Mohammed Morsi, his Muslim Brotherhood and the ultraorthodox Salafis, while on the other there is a collection of liberals, leftists and Christians who claim the draft charter restricts freedoms and gives Islamists vast influence over the running of the country. As night fell in Cairo on Tuesday, rival protests swelled as thousands of people from both camps gathered in the capital, many of them arriving by bus from other regions.
In the Nasr City district, a Muslim Brotherhood stronghold, tens of thousands of the president’s backers rallied in front of a neighborhood mosque. “You can expect a lively scene here tonight,” FRANCE 24’s Chris Moore reported from the scene. “But supporters here have told us that they have no intention of going to the presidential palace, avoiding a repeat of those violent scenes that we saw last week”.
Just a few kilometers away, tens of thousands of opposition supporters rallied outside the palace, pushing their demands that Morsi scrap the referendum on the charter. A metal and concrete barricade that had been set up to protect the presidential palace was breached by hundreds of surging anti-Morsi protesters earlier in the day, forcing soldiers to retreat from the building.
The army has orders from Morsi to use temporary police powers to protect state institutions, following clashes in the capital last week that left seven people dead and hundreds hurt.
(FRANCE 24 with wires)