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International News Title: Egypt's Opposition Rejects Mubarak Talks, Urges Supporters to Hold Ground Feb. 3 (Bloomberg) -- Egypt’s largest opposition group rejected talks with President Hosni Mubarak after at least six protesters were killed in Cairo’s Tahrir Square overnight, and vowed to stay at the scene of the fighting until he steps down. The violence was “under the direct supervision” of the government and the protesters plan to “hold our ground,” Mohamed El-Beltagy, a senior leader of the Muslim Brotherhood, said in a phone interview in Cairo. “After yesterday’s events, we refuse to negotiate with this regime.” Beltagy is on the 10- member opposition committee that includes former United Nations nuclear chief Mohamed ElBaradei, who has also ruled out talks. Prime Minister Ahmed Shafik told reporters today that some Mubarak supporters instigated the clashes in the square and that those responsible will be prosecuted. He heads a new Cabinet appointed by Mubarak in the past week as the president sought to placate protesters. In a further Mubarak concession, Vice President Omar Suleiman announced that the president’s politician son, Gamal, won’t try to succeed him. The political turmoil that has engulfed the Middle East spread to Yemen, where thousands of demonstrators gathered today in the capital and police used tear gas in the port city of Aden. European leaders called for a quick transition toward democracy in Egypt, the most populous Arab country and a key ally of the U.S. and Israel. Persian Gulf shares fell, oil prices rose and Fitch lowered its rating on Egyptian debt. The unrest continued in downtown Cairo as dusk approached. Army Is Key “The most important player is the army right now,” Kate Nevens, an analyst in the Middle East and North Africa program at the Chatham House research institute in London, said today. “Things have really taken a turn for the worse. The army definitely sees itself as the protector of the state and its people rather than the regime,” and may be prepared to side against the pro-Mubarak supporters, she said. Heavy gunfire rang out around Tahrir Square, Al Arabiya television said. The army set up a barrier after more than 800 people were hurt in yesterday’s clashes at the square, the focus of protests that began Jan. 25. Mubarak loyalists rode horses and camels into the area late yesterday, swinging whips and clubs, and both sides hurled rocks, bottles and concrete chunks. ‘Crimes Against Humanity’ Egypt’s Arab Center for the Independence of the Judiciary said it may ask the International Criminal Court to look into yesterday’s attacks on demonstrators. “There were attacks on peaceful demonstrators committed by Egyptian regime-backed groups using armed weapons, batons and Molotov cocktails in Tahrir Square,” Nasser Amin, the group’s president, said by telephone in Cairo. “There is a possibility of considering those acts crimes against humanity under international law.” Dubai’s benchmark share index dropped 0.9 percent at the close of trading, and the cost of insuring Egyptian debt rose 9 basis points to 386, according to CMA prices for credit-default swaps. Crude oil has climbed 3.7 percent in New York trading since Jan. 24, to $91.15 a barrel. By comparison, Iran’s 1979 revolution sent the price of Saudi Arabia’s Arab light crude to about $34 a barrel at the end of 1980 from $14 two years earlier, according to data compiled by Bloomberg. “All eyes in the oil market are on the riots and protests in Egypt right now,” said Robert Montefusco, senior broker at Sucden Financial in London. “That’s keeping prices strong, though there hasn’t been any disruption to supplies.” Trading May Resume Egypt’s stock market, closed since Jan. 27 after a 16 percent plunge in the benchmark index last week, is provisionally due to resume trading Feb. 7, a day after banks are scheduled to reopen. The bourse said it may impose restrictions to prevent price fluctuations, and curtail trading sessions. The opposition has rejected the president’s response to the crisis, which included the appointment of Suleiman, the intelligence chief, as his first-ever vice president. Mubarak also said he ordered the Cabinet to loosen curbs that make it hard for the Muslim Brotherhood and other opposition candidates to run for office. Mubarak hasn’t spoken publicly since the Feb. 1 televised address in which he announced that he won’t seek re-election in September and warned that the country must choose between “chaos and stability.” Suleiman yesterday told demonstrators to go home so that order may be restored and transition talks can progress. Disparate Factions The protest movement, whose disparate factions range from secular activists who organize support online to the religiously oriented Brotherhood, needs to coalesce around a concrete program to break the stalemate, and “it has to happen very soon,” said Christopher Davidson, who teaches Middle East politics at Durham University in the U.K. The anti-government demonstrators “have to get a published timetable with a basic manifesto to give the world an idea of what is coming next: a gentle authoritarian government with a transition towards democracy,” he said. “The protesters are right to think they could outlast the regime, because they can, but at the same time, a lot of instability and violence could be spared by some very simple acts.” The New York-based Committee to Protect Journalists said it had reports of local and foreign journalists being detained in Cairo by security police. “We have multiple reports of dozens being arrested today and we are looking to confirm these reports,” Gypsy Guillen Kaiser, spokeswoman for the group, said in a telephone interview. “This is very serious.” Government Texts Vodafone Group Plc said it had been ordered to send mobile- phone text messages on behalf of the government since the start of protests. Egyptian authorities can instruct local mobile- network operators to send messages under emergency powers provisions, Vodafone said today in a statement. The messages weren’t written by the mobile-phone operator, it said, without providing details of the transmissions. One of the Arabic-language messages was received by a Cairo subscriber yesterday at 12:41 p.m. local time, amid the clashes. “Youth of Egypt, beware rumors and listen to the sound of reason -- Egypt is above all, so preserve it,” the government said in the message. The evening before, at 10:35, the government sent a message via Vodaphone, saying, “The armed forces asks Egypt’s honest and loyal men to confront the traitors and criminals and protect our people and honor and our precious Egypt.” John McCain, the senior Republican on the Senate Armed Services Committee, said it’s “almost inevitable” that Mubarak will go, and violence will escalate if he doesn’t. “The army has to play the lead role,” McCain said in a Bloomberg Television interview today. He ‘Won’t Flee’ Mubarak, though, is a military man himself who “will not flee the battlefield,” said Naguib Sawiris, Egyptian billionaire and chief executive officer of Orascom Telecom Holding SAE, in another Bloomberg TV interview. A better solution would be for Mubarak to dissolve parliament, form “a unity government” with the opposition and “hold free elections under international supervision within six months,” he said. German Chancellor Angela Merkel and the leaders of the other five largest Western European countries called for a “quick and orderly transition” in a joint statement, echoing a similar call by U.S. President Barack Obama. None of those leaders has openly said that Mubarak should step down earlier than his announced date of September. Obama said today that he prays for peace in Egypt and for the fulfillment of the “rights and aspirations of Egyptians.” Tunisian President The regional unrest began in Tunisia, where President Zine El Abidine Ben Ali was ousted and forced to flee last month after two decades in power. Yemeni President Ali Abdullah Saleh said yesterday he won’t seek to extend his term ends in 2013. Jordan’s King Abdullah sacked his government this week, and police and protesters have clashed in Algeria. Shafik warned that further unrest in Egypt may damage the economy, which relies on tourism and foreign investment. Growth has slowed since the global economic crisis to less than the 7 percent that the government says is necessary to reduce unemployment. Egypt’s “unemployment, underemployment and informal work have remained among the highest in the world,” and have “triggered this historic outpouring of popular demands,” International Labour Organization Director-General Juan Somavia said today in an e-mailed statement. Company Evacuations International companies including Heineken NA and BG Group Plc have halted operations in the country and evacuated expatriate staff since the protests began. Tour operators including TUI Travel Plc, Europe’s largest, have canceled trips to Egypt. TUI said today that lost business plus the cost of repatriating customers may cut second-quarter profit by as much as 30 million pounds ($49 million). Reopening the financial system won’t create problems because the country’s lenders are “very liquid,” Deputy Central Bank Governor Hisham Ramez said in a telephone interview from Cairo today. He said government debt auctions will resume next week and the Finance Ministry will announce a schedule. Two planned sales were canceled this week. Fitch Ratings today cut Egypt’s bonds to BB, two steps below investment grade, from BB+, matching similar moves by other ratings companies. The central bank may increase rates to avoid an outflow of bank deposits and capital, Standard & Poor’s said yesterday. Yields on Egypt’s dollar bonds maturing in 2020 fell 2 basis points to 6.59 percent today. Suez Canal The Suez Canal, linking the Mediterranean with the Red Sea, is functioning normally, Shafik said today. Concern that oil supplies through the canal may be disrupted has helped push crude prices higher this week. “At present, the canal remains open and, despite reports of isolated incidents, the ports are largely functioning as normal,” Lloyd’s Market Association said today in an e-mailed statement. “Unless the situation changes drastically, and there is extensive disruption over an extended period, the current situation is unlikely to have a major impact for insurances.” While Suez is a key artery carrying some 8 percent of global sea trade, it’s Egypt’s role in the Middle East peace process that has made it central to U.S. policy in the region since 1979, when Egypt signed a U.S.-brokered peace treaty with Israel. Since then it has been one of the biggest recipients of American aid, receiving about $1.5 billion last year. Most of the aid has been earmarked for Mubarak’s security forces. Mubarak has backed efforts to encourage Arab acceptance of Israel, oppose Iran’s nuclear program and isolate Hamas, the Islamic militant group that controls the Gaza Strip. The president has sought to play up fears that Islamists in Egypt may change those policies if they come to power, helping ensure continued U.S. backing, Durham University’s Davidson said. He predicted the strategy won’t work for much longer. “The people on the streets have middle class values, they are not scary radicals,” he said. “This is hardly 1979 Iran.”
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