Factbox: Analysts' reaction to Egypt crisis

(Reuters) - Egyptian President Hosni Mubarak's deputy began talks on sweeping reforms with the opposition on Monday.

Mubarak also appointed a new interior minister as part of a revamped cabinet designed to defuse the most serious challenge to his rule in three decades.

Following are analysts' comments:

ON OPENING TALKS:

FAWAZ GERGES, PROFESSOR OF MIDDLE EASTERN POLITICS AND INTERNATIONAL RELATIONS AT THE LONDON SCHOOL OF ECONOMICS

"At this point (Vice President Omar) Suleiman represents the army, not Mubarak. And so with the statement about opening talks, the army is trying to investigate if the opposition is willing to engage with Gen Suleiman (to bring about a peaceful resolution)."

FAYSAL ITANI, DEPUTY HEAD OF THE MIDDLE EAST AND NORTH AFRICA FORECASTING AT EXCLUSIVE ANALYSIS:

"It won't work. These are stalling tactics. I don't think Mubarak quite realizes the gravity of the situation.

"If this deadlock goes on much longer there could be a further breakdown of order and the military won't be able to control the situation in any way, so there needs to be a resolution very soon.

"The protesters know the military is going to be put into an impossible situation (if this deadlock goes on)."

OMAR ASHOUR, LECTURER IN ARAB POLITICS AT BRITAIN'S EXETER UNIVERSITY:

"It's too little too late. He's trying to treat a malignant cancer with an aspirin. They (Mubarak's inner circle) are still in their own world."

"They first tried to treat the uprising as a security problem, not a political problem. They've now finally started to address political issues, but it's not going far enough."

HASSAN NAFAA, PROFESSOR OF POLITICAL SCIENCE AT CAIRO UNIVERSITY:

"The statement has come too late and is a maneuver to keep president Mubarak in power. The main issue is when Mubarak will leave and not what Mubarak will do with the political forces."

"The dialogue with the political forces should have come before appointing the prime minister to appoint a prime minister selected by those political forces and ensure implementation of their demands."

HAIM MALKA, A SENIOR FELLOW A THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES THINK TANK IN WASHINGTON:

"The new vice president is closely aligned with President Mubarak, and it's unlikely that opposition groups will be satisfied by the offer of dialogue unless the government is prepared to negotiate specific steps to address opposition demands. It remains unclear which political forces Suleiman will engage with and what concrete concessions the government is prepared to offer."

ON THE NEW CABINET AND GENERAL OUTLOOK:

ZAINEB AL-ASSAM, HEAD OF MIDDLE EAST AND NORTH AFRICA FORECASTING:

"This new cabinet is too little too late. I think Mubarak will probably be gone well before 30 days is up.

"There are some figures in the cabinet who are deeply unpopular -- an example is General Wagdy, a former head of prisons. That's going to add to the protests. Mubarak will be seen by the army as a liability.

"In the event of Mubarak's resignation, the Muslim Brotherhood are well organized and would do well in any open electoral process. While the more moderate political wing of the Muslim Brotherhood will contain the more extreme elements in the group, they are close to Hamas and so increased war risks with Israel and increased terrorism risks in Israel (if border control lapses) are very likely.

"In a year, Egypt would likely look more like Turkey and represent a moderately positive investment and risk climate. Even so, many existing contracts will be revised and challenged. There is likely to be some re-nationalization in the manufacturing and industrial sector.

"In terms of contagion risk, Yemen, Sudan, Jordan and Syria all look vulnerable. However, the greatest risk in terms of both probability and severity is in Saudi Arabia. A successor regime in Saudi Arabia would change the commercial as well as geopolitical environment across the region.

DAVE HARTWELL, MIDDLE EAST ANALYST AT IHS JANE'S:

The opposition have two problems. They are united by the fact they want Mubarak to go and they want free and fair elections but they are not united on anything else. Second, they have no identifiable leader, even ElBaradei has not been completely accepted by all factions. The difference from the past however is that Mubarak probably won't be able to buy off any opposition members."

SAID HIRSH, MIDDLE EAST ECONOMIST AT CAPITAL ECONOMICS IN LONDON:

"The Muslim Brotherhood knows the reaction globally will be negative if they take center stage in the protests, though I am sure they are active behind the scenes. Their role will become clearer if the government collapses.

IMPACT ON ECONOMY AND MARKETS ONCE THEY REOPEN:

"Foreign capital is already flowing out. The risk is what happens to local capital now and how will banks be affected. The banks are heavily exposed. The risk is for major loan defaults from companies. The Central Bank can probably impose some restrictions on retail investors (withdrawing deposits from banks).

"The other question is about worker remittances, given the turmoil, will Egyptians working abroad keep sending money home? the remittances help to balance their current account, the goods and services are usually in deficit.

"The currency should depreciate but I don't see any collapse. In terms of how they can manage the depreciation they have enough reserves and should be able to manage, as long as local capital doesn't start leaving as well.

MALCOLM GRAY, PORTFOLIO MANAGER OF INVESTEC AFRICA OPPORTUNITIES FUND AND INVESTEC FRONTIER INVESTMENT TEAM IN A NOTE:

"The likelihood of radical change has now increased. The events of the last few days have come as a shock, and investor sentiment has been severely dented. Our expectation is for an aggressive short-term sell-off in Egyptian listed assets when markets open in the coming days.

"We note that an aggressive sell-off may well prove a very attractive long-term buying opportunity. However this should be balanced with the consideration that the end result of the political instability is uncertain, and there is no guarantee of a continuation of the very successful economic policies of the last few years.

(Compiled by World Desk and Markets Desks)