U.S. backs transition, warns of attempts to derail
CAIRO (Reuters) - The United States said on Saturday it backed Egypt's drive for orderly reforms but warned of attempts to derail the process, as thousands continued to demonstrate for President Hosni Mubarak's resignation.
Mubarak has reshuffled his government, and the leadership of his party resigned on Saturday, but the 82-year-old president insists he will stay in power until September polls.
Fearing instability in the largest Arab nation where Islamists are the most organized opposition, the United States, Egypt's key ally and aid donor, is emphasizing gradual change.
U.S. Secretary of State Hillary Clinton threw her weight behind the reform effort launched by Mubarak's handpicked vice president, Omar Suleiman, saying the government's fragile dialogue with the opposition must be given time to unfold.
"There are forces at work in any society, and particularly one that is facing these kinds of challenges, that will try to derail or overtake the process to pursue their own specific agenda," Clinton told a security conference in Munich.
She did not name the forces, but Washington has expressed concern about any involvement of militant Islamist elements.
"Which is why I think it's important to support the transition process announced by the Egyptian Government, actually headed by now Vice President Omar Suleiman."
The State Department scrambled to distance itself from comments made by U.S. special envoy Frank Wisner who told a Munich conference Mubarak should stay on in power, saying his comments were entirely his own views, not those of the U.S. administration.
But Clinton also spoke of supporting Egypt's government to ensure an orderly handover of power.
"President Mubarak has announced he will not stand for reelection nor will his son ... He has given a clear message to his government to lead and support this process of transition," Clinton told the same Munich conference of world leaders.
"That is what the government has said it is trying to do, that is what we are supporting, and hope to see it move as orderly but as expeditiously as possible under the circumstances," she said.
With some protesters insisting they want not just Mubarak but also his allies out straight away, moves to keep the 82-year-old president in office are unlikely to go down well.
An Egyptian army commander was shouted down when he tried to persuade thousands of demonstrators at Tahrir Square to stop a protest that has stalled economic life in the capital.
"You all have the right to express yourselves but please save what is left of Egypt. Look around you," Hassan al-Roweny said through a loud speaker and standing on a podium.
The crowd responded with shouts that Mubarak should resign. Roweny then left, saying: "I will not speak amid such chants."
Egypt's economy is already suffering. Growth, which was running at 6 percent, will be hit, said Central Bank Governor Farouk el-Okdah. There will also be movement in the Egyptian pound, he said, but the bank has enough reserves to cope.
Exports fell six percent in January because of the mass protests and curfew, Trade Minister Samiha Fawzi Ibrahim said.
Many shops have been closed during 12 days of protests and banks have been shut, making it hard for Egyptians to stock up on basic goods. Some prices have been pushed up.
The Egyptian government appears to trying to emphasize the threat to stability and the economy posed by the protests, and toughen it out, hoping the demonstrations will fade away.
Friday's protest by hundreds of thousands in Cairo failed to become the "Day of Departure" for Mubarak they had hoped for, so the demonstrators now also have to find a way to maintain momentum if they are to achieve their goal.
Protesters were not impressed with the resignations of the Mubarak's party chief, including that of his son Gamal.
"These are not gains for the protesters, this is a trick by the regime. This is not fulfilling our demands. These are red herrings," said Bilal Fathi, 22.
Leading Muslim Brotherhood member Mohammed Habib said: "It's an attempt to improve the image of the party but it does not dispense with the real aim of the revolution: bringing down the regime, starting with the resignation of President Mubarak."
"It is an attempt to choke the revolution and gain time."
Earlier, Mubarak met some of the new ministers, the state news agency said, in a clear rebuff to the hundreds of thousands of anti-government protesters who rallied at Tahrir Square in central Cairo for a 12th day.
Meanwhile, Vice President Omar Suleiman met prominent independent and mainstream opposition figures, state television said, to try to work out how to ensure free and fair future presidential elections while sticking to the constitution.
The proposal being promoted by a group of Egyptians calling itself the "The Council of Wise Men" involves Suleiman assuming presidential powers for an interim period pending elections.
But some opposition figures argue that would mean the next presidential election would be held under the same unfair conditions as in previous years. They want to first form a new parliament to change the constitution to pave the way for a presidential vote that is democratic.
Mubarak said on Thursday that Egypt would descend into chaos if he gave in to protesters' demands and quit immediately.
He has styled himself as a bulwark against Islamist militancy and essential to maintaining a peace treaty Egypt signed with Israel in 1979.
As if to underscore that, saboteurs blew up a gas pipeline in northern Egypt overnight, disrupting flows to Israel and also to Jordan, where protesters angered by economic hardship have been demanding a more democratic political system.
Islamist websites had called for attacks on the pipeline.
NO EASY COMPROMISE
The United Nations estimates 300 people have died in the unrest and the health minister has said around 5,000 people have been wounded since January 25, while a Credit Agricole report said the crisis was costing Egypt about $310 million a day.
With the unrest crippling the economy in the Arab world's most populous nation, some Egyptians want a return to normal.
But a bourse official said on Saturday the stock market would not reopen on Monday as originally planned, without giving a new date. Banks are due to reopen on Sunday.
(Reporting by Edmund Blair, Samia Nakhoul, Patrick Werr, Dina Zayed, Marwa Awad, Shaimaa Fayed, Alexander Dziadosz, Yasmine Saleh, Sherine El Madany, Yannis Behrakis, Jonathan Wright, Andrew Hammond, Tom Perry and Alison Williams in Cairo, writing by Jonathan Hemming, editing by Ralph Boulton)