Aug 14 2012
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The bold move has taken virtually all analysts by surprise and what has been even more stunning is the lack of a blowback from the armed forces.
SCAF and Muslim Brotherhood have been fighting to gain an upper hand after the removal of Hosni Mubarak last year, and to date SCAF appeared to be dictating terms and were able to constitutionally restrict the powers of the new president.
But Morsi has asserted his presidential authority, by rescinding that decision and showing the top brass the door.
"Decisions show a full exercise of power, signalling that deep reform is in place, said Mona Mansoor, analyst at Cairo-based CI Capital Research. "Cancelling the constitutional declaration, that prevented the President from exercising his full power, together with the restructuring of the military establishment, should break up a number of political deadlocks."
The security sweep was triggered by an attack by Islamic militants in north Sinai, which left 16 Egyptian soldiers dead.
But Mr. Morsi is keen on striking a balance and does not appear to be looking for scapegoats for the Sinai debacle. He awarded medals to both Mr. Tantawi and Mr. Enan and has appointed them his advisors, suggesting that none of the key generals will likely face the fate of Hosni Mubarak.
The President's decision at least resolves a huge demand of the revolutionary forces that had inspired and concocted Egypt's transformation into a democracy. The army's meddling in politics and its attempts to manage the outcome was viewed with great suspicion by many Egyptians who felt that while Mr. Mubarak's era may be over, parts of the old regime were still well-entrenched.
"The exit of the SCAF as a key political power was a primary demand of the
Revolution," said Ms. Mansoor. "Stripping the Supreme Council of Armed Forces (SCAF) of its political power should put an end to prolonged tension with the President and the Muslim Brotherhood, and further confirms the shift towards civil democratic rule - a primary demand of the January 25 Revolution. The appointment of SCAF members in ministerial positions is viewed as a smooth exit to their tenure, and with no obvious signs of resentment from SCAF, a sense of consensus building has been achieved."
Mr. Morsi is also trying to appease those that believe that the Muslim Brotherhood is consolidating its power and turning the country into a full-fledged Islamic state.
His vice-president pick is Mohammed Mekki, a reformist judge without any political affiliations, although Al Ahram newspaper notes that Mr. Mekki is aligned with the Brotherhood, although he is not a party member. He fought judicial reforms against Mr. Mubarak and opposed the 2005 parliamentary elections which were widely viewed by many as rigged.
The move is seen as shrewd given that Mr. Morsi needs a strong judicial mind on his side to manage issues with the judiciary.
Mr Morsi also surprised many by handpicking the unknown independent Hisham Qandil who had earned his stripes as the minister of irrigation and water resources in the governments of Essam Sharaf and Kamal El-Ganzouri.
LACK OF ARMED RESISTANCE
By replacing the army top brass with much younger officers, Mr. Morsi appears to have played on the prestige and aspirations of the military men.
Abdul Fatah Khalil Al-Sisi, the new commander-in-chief of the Armed Forces and Minister of Defence, was the youngest member of SCAF and head of military intelligence.
"He was known for his criticism of brutality against the protesters in the Egyptian Revolution," notes CI Capital in a note. "El Sissy was the first military official to admit to the media the conducting of 'virginity tests' by the military on female protestors last year."
Till now, Mr. Morsi seems to have stumped his rivals and consolidated power on multiple fronts - and that is a double-edged sword.
"Morsi picks up supreme power in the interim, but the army is pretty much intact in case he goes power mad (ie reluctantly accepting President for life position)," says Emad Mostaque, analyst at Religaire Capital Markets.
"Tantawi et al cannot stage a comeback as next level of control in the army has no incentive to give up their positions and promotions and mass of army beneath them will not feel strongly enough to do so as power structures have been maintained and it would involve severe action against a civil leader that had previously been accepted."
With the political deadlock lifted, Mr. Morsi has some breathing room to focus on the economy. Almost on cue, Qatar - which wields tremendous influence with the Muslim Brotherhood, promised USD2-billion to help the Egyptian economy; Libya has also reportedly offered to help with a USD2-billion deposit and the United States USD550-million.
Expect the Egyptian pound to remain largely stable in 2012 thanks to the above mentioned external support.
"Future EGP stability will rely on obtaining additional external support, led by an IMF deal, as we expect a delayed structural improvement in the balance of payments," EFG-Hermes said in a July report. "We foresee a 5% gradual weakening of the EGP in 2013 on the top of the 4.1% weakening since the revolution, leaving us as before at the conservative side of consensus."
CI Capital's Ms. Mansoor believes Mr. Morsi's sweep should mean an improvement in the investment climate. But the president still has to manage the country's yawning fiscal deficit, lower foreign reserves and poor economic growth.
"Major risks remain, including: the current military-led operation in Sinai, power shortages, upcoming parliamentary elections, the upcoming Constituent Assembly ruling, and the presidential council's executive capacity," said Ms. Mansoor.
ALSO READ: Qandil Who?
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