* Deep divide in Egypt will complicate Mursi's rule
* Crisis erodes both sides' faith in nascent democracy
* Will hamper Brotherhood search for liberal allies in vote
By Tom Perry and Edmund Blair
CAIRO, Dec 7 The crisis unleashed by President
Mohamed Mursi's bid to wrap up Egypt's transition on his own
terms has eroded his nation's faith in their nascent democracy
and will complicate the already unenviable task of government.
His effort to drive through a constitution against the
wishes of major sections of society, including a Christian
minority, has damaged prospects for building consensus needed to
tackle challenges ahead, such as fixing a broken economy.
Having promised to be a president for all, Mursi stands
accused of putting the interests of his group, the Muslim
Brotherhood, ahead of others who say their aspirations are not
reflected in the draft to be put to a Dec. 15 referendum.
On the other side, suspicions harboured by Islamists towards
their secular-minded opponents have only deepened as a result of
the turmoil ignited by Mursi's effort to fast-track the final
stage of the transition from Hosni Mubarak's rule.
With the more extreme among them opposed to the very notion
of democracy, the Islamists say their rivals are not respecting
the rules of the game that put them in the driving seat by
winning free and fair elections.
People anxious to see Egypt recover from two years of
turbulence fear bad blood could persist and squash hopes for
cooperation needed to help Mursi rule smoothly and deliver
"If they succeed in the referendum, they will see that as a
step forward, but not without cost," said a Western diplomat.
Though Mursi won international praise for mediating a truce
in Gaza, the violence on his own streets worries the West and
particularly the United States, which has given Cairo billions
of dollars in military and other aid since Egypt made peace with
Israel in 1979. U.S. President Barack Obama told Mursi on
Thursday of his "deep concern" about casualties during protests.
A victim of the polarisation could be the Brotherhood's
plans to forge electoral alliances with liberals in forthcoming
parliamentary polls. The head of the Brotherhood's Freedom and
Justice Party told Reuters this week he saw such alliances as
preferable to an ideological tie-up with other Islamists.
The divisions are now playing out in the streets. Seven
people were killed and hundreds wounded this week in clashes
between Islamists and their rivals. A call by Mursi for dialogue
was rebuffed by activists who are to protest again on Friday.
"We said that this state of polarisation, if it was not
dealt with properly, would reach this point, and it has," said
Ayman Al-Sayyad, who quit his post as a Mursi adviser on
Wednesday following an eruption of violence.
"This was the scene that we were trying to avoid," he added
in an interview with al-Hayat television.
The inclusive image Mursi had tried to build around his
administration was one of the first victims of the crisis that
mushroomed following a Nov. 22 decree that expanded his powers
and protected his decisions from judicial review.
A Christian and a woman were among the first to resign from
his staff, as surprised by the decree as most Egyptians. Despite
an early bout of violence, Mursi showed no sign of wavering and
appeared to brush off his critics.
"I see things more than they do," he told Time.
With speculation swirling around how he took the decision,
Egyptians long suspicious of the Brotherhood have concluded
Mursi is running the country at the group's command.
In response, the Islamists complain that many of Mursi's
attempts at outreach were rebuffed early on. Their view of the
opposition has grown dimmer through the crisis. Brotherhood
members have started to dismiss opponents as "feloul", meaning
"remnants" - a pejorative implying loyalty to Mubarak.
"The really unfortunate side effect of the last two weeks is
the political atmosphere has become really toxic. I fear that
could endure long past the current crisis," said Elijah Zarwan,
a fellow with the European Council on Foreign Relations.
"The next government is going to have to move very quickly
to address many problems and it will need cooperation. In the
current atmosphere, it is hard to imagine others cooperating."
Such cooperation will be at a premium for introducing
policies aimed at reining in a crushing budget deficit and
staving off a balance of payments crisis. Egypt's economy has
lost $70 billion to $80 billion of economic output since Mubarak
was ousted, in one economist's estimate.
Top of the economic to-do list are measures to cut back on
fuel subsidies - one of the biggest drains on state finances.
Tweaks to such support are bound to be unpopular in a nation
where both rich and poor have grown used to cheap petrol.
"He has inherited an economy that is weak and needs serious
surgery, so he is going to have to make controversial decisions
over the next year or so," said Simon Kitchen, strategist at
EFG-Hermes, an Egyptian investment bank.
"Ideally you want to do that in an environment where you
have some sort of political consensus," he said.
"THEY BURNED THEIR BRIDGES"
Some subsidy reform and other steps to cut waste are part of
a programme agreed in principle with the International Monetary
Fund for $4.8 billion loan designed to support the budget.
The IMF board meets on Dec. 19 to discuss approval of the
loan, which would be seen by investors as a seal of approval for
the government's reform programme.
Besides the economy, Mursi needs wider backing to tackle
other problems including a judiciary which his opponents agree
needs overhaul. But even when he sacked the unpopular,
Mubarak-era prosecutor general, Mursi was criticised for showing
an autocratic streak in the way he went about it.
In the new system of government outlined in the draft
constitution, Egypt's next parliament will have a say over the
shape of government. A parliamentary election would go ahead
some two months later if the constitution is approved in the
With that in mind, the Freedom and Justice Party is already
eyeing alliances to fight the parliamentary election.
FJP leader Saad al-Katatni said in an interview his
preference was for an alliance with liberals, not the hardline
Islamists whose backing has helped Mursi through the crisis.
"Our preferred option is that the alliance not be ideological so
that we don't have a split in the nation," he said.
The Brotherhood had kept the nascent hardline Salafi parties
at arm's length as they emerged after Mubarak's political
demise. That trend has gradually been reversed as the
Brotherhood has looked to fellow Islamists for support.
"They burned their bridges with the secular camp and relied
heavily on the Salafi camp. We don't feel that is where they
naturally want to be right now," said the Western diplomat,
speaking on condition of anonymity.
Sentiment from liberal parties suggests the Brotherhood will
struggle to convince liberals that it is a trustworthy partner.
"I don't think the man realizes the degree of rebellion and
rage the people have," said Ahmed Said, head of the liberal Free
Egyptians Party, referring to Mursi. "The country is totally
divided and polarised. You have two nations now."