* Generals fire warning shot at bickering politicians
* Wall of mistrust between Mursi and opposition
* Army will not return to political stage - for now
* Charged climate threatens IMF reforms
By Samia Nakhoul
CAIRO, Jan 30 With violence sweeping Egypt's
cities and the economy lurching deeper into crisis, each passing
day is adding new bricks to a wall of mistrust between the
Islamist-led government of President Mohamed Mursi and a
fractured secular opposition.
Two years after the revolution that toppled Hosni Mubarak,
Egypt, the epicentre of the upheavals reshaping the Arab world,
is once again dicing with its future.
Writing on Twitter this week as protesters clashed with
police in the Suez Canal city of Port Said, Ahmed Said of the
liberal opposition Free Egyptians Party asked: "Will the army
intervene on the side of the Egyptian people or not?"
General Abdel Fattah al-Sisi, the army chief and defence
minister, duly warned on Tuesday that chaos in the streets and
political deadlock could lead to "the collapse of the state".
For now at least, this looks more like a shot across the
bows of Egypt's bickering politicians than a bid for power, most
observers believe. Senior officers told Reuters the army's main
concern was to safeguard national security and contain the
violence that has enveloped major cities, including three along
the strategically and economically important Suez Canal.
The instability has provoked unease in Western capitals,
where officials worry about the direction of a powerful regional
player that has a peace deal with Israel. The United States,
which gives Egypt $1.3 billion in military aid each year, called
on Egyptian leaders to make clear violence was not acceptable.
The violence is rooted in popular rage at the failure of
Mursi to deliver security, stability, jobs and food and enmeshed
with polarised and poorly focused political agendas.
Since the 2011 revolution, the Islamist Muslim Brotherhood,
which Mubarak spent his 30-year rule suppressing, has won two
referendums, two parliamentary elections and a presidential
vote. But, as the renewed turmoil of the past week demonstrates,
Egyptians have still to reach anything like consensus on who
should govern them, and under what rules.
Power ebbs and flows between a presidency that is beholden
to the Brotherhood, a poorly coordinated opposition coalition
and the army, the pillar of the old order.
Meanwhile, the Islamist-dominated parliament, dissolved last
year by the constitutional court, is in abeyance pending new
elections and almost nothing has been done to rebuild crucial
institutions such as the police and the judiciary.
Mursi added fuel to the flames late last year by taking over
legislative powers until a new parliament is elected and rushing
through an Islamist-tinged constitution, endorsed in a
referendum where the Brotherhood outmanoeuvred an opposition
that could not decide whether to boycott or contest the vote.
ARMY'S CENTRAL ROLE
The opposition spurned Mursi's offer of dialogue this week,
calling instead for a national unity government and a rewriting
of the constitution - in effect, for Mursi to step aside.
"I think the lack of trust is so deep-seated that even if
the Brotherhood made good faith gestures I don't know if the
opposition could believe them or take them at face value," said
Shadi Hamid, director of research at the Brookings Doha Center.
"I think in some ways the well is so poisoned we are talking
about a very rough transition (ahead) ... There isn't any way to
undo the damage that has been done," he added.
The impasse has led to fears in some quarters that the army
could step in. Arguing against such a move is the fact that the
Brotherhood-backed constitution enshrines the military's
political influence and economic interests, meaning army
commanders have little to gain by taking over the day to day
running of Egypt.
If discontent against Mursi broadens into another popular
uprising, the army's leadership would find itself centre stage.
"It all depends on how quickly civilians can get organised,"
said analyst Safwat Zayaat.
Shortly after his election in June, Mursi managed to
sideline the military council that effectively took over after
Mubarak. Yet the army had a role this week in convincing the
president to impose a month-long state of emergency on three
Suez Canal cities, Zayaat said, through the National Defence
Council on which commanders sit alongside civilian leaders.
Military analysts say that after six decades in power the
U.S-aligned generals now heading the army have no wish to see
their image tarnished by a new putsch, especially since whoever
rules Egypt will soon have to take unpopular economic decisions.
NO SIGN OF STABILITY
A desperately-needed $4.8 billion loan from the IMF is not
yet in place, mainly because the aid package would involve cuts
to subsidies that eat up a quarter of the budget, further
stoking food and fuel-price inflation.
On the streets, there is no sign of the stability the
country badly needs to attract investment, tempt back the
tourists who provide around a quarter of all jobs, and create
opportunities for its overwhelmingly young population.
Simon Kitchen, strategist for investment bank EFG-Hermes,
said the post-revolution government inherited a weak economy
with a high deficit and big fuel subsidy bill, and that the
political standoff between Mursi and the opposition was
preventing them from implementing difficult decisions.
"The country is being kept afloat by deposits from
Qatar, but the funds are a stop-gap measure to stop the bleeding
rather than get money flowing into the country," Kitchen said.
"What the private sector wants to see is not just an IMF
agreement but the government demonstrating it has a clear and
consistent policy and then operating effectively, transparently
and predictably for six to 12 months. Only then will you see a
turnaround in the private sector."
Hamid at Brookings doubts a new consensus to restore
stability and unlock economic reform is possible in such a
"I think the big thing is going to be the IMF loan to try to
stabilise the economic situation. The even bigger thing is the
parliamentary elections. It would be a disaster if the
opposition boycotts because that would mean the normalisation of
street politics over institutional politics."
MURSI SITTING TIGHT
Like most observers, Hamid doubts the protesters will be
able to force out a democratically elected president who has
only been in power for seven months and has inherited a country
that lived under 30 years of autocracy and mismanagement.
"Knowing Mursi, even knowing him personally, he won't resign
under any circumstance and the Brotherhood will never allow
"I also don't think it sets a good precedent for elected
leaders to resign in the face of popular pressure. That kind of
precedent will be detrimental to the institutionalisation of
politics", Hamid said.
Opposition conditions for re-entering the political process,
furthermore, including holding an early presidential vote and
rewriting the constitution, were not realistic, he said.
"You cannot really undo what has already happened. There can
be re-negotiations over some controversial articles (of the
constitution) but what they are proposing is to start over."
The mistrust goes deeper than demands by the opposition.
Mursi and his Brotherhood affiliates believe the liberal
opposition is out to destroy them. They see this as an
existential battle and that the opposition is acting outside the
democratic rules of the game.
Yet if government and opposition cannot reach a consensus,
they could take Egypt over the brink from which the army has
just warned them to step back.
As the power struggle unfolds, in Tahrir Square, cradle of
the revolution, most of the crowd camping are young, unemployed
Egyptians who are angry and disillusioned.
Mohammed al-Masry, 27, a sailor, who hasn't been able to
find a regular job said: "We want to change the regime. We want
to change Mursi ... Prices of food are increasing, unemployment
is increasing and so is state violence against protesters."
"Mursi has done nothing except serve the Muslim Brotherhood.
He is the president of the Ikhwan (Brothers) and not the
president of Egypt," said Ahmed Ibrahim, 19.
Film director Abdullah al-Shamshari, 28, added: "Mursi
should break free from the Muslim Brotherhood grip and act as
the president of all Egyptians. He is torn between the
Brotherhood which lifted him into power and the ordinary people
who have legitimate demands."