(Adds Obama in fifth, sixth paragraphs. See EXTRA for news on unrest in Egypt.)
Feb. 2 (Bloomberg) -- Egyptian President Hosni Mubarak said he will step down after elections for a new leader, a concession rejected by opposition leaders and protesters who refuse to wait months for an end to his regime.
Mubarak said he’ll stay on to ensure “stability” and push through political and economic changes before his departure. The Cairo crowd began chanting anti-Mubarak slogans even before the president’s state television broadcast was finished.
“Your last day will be Friday,” some shouted, referring to the Muslim prayer day when further demonstrations are planned.
Egypt “faces a choice between chaos and stability,” Mubarak said in the address late yesterday, wearing a dark blue suit and black tie and standing next to the national flag. “My first responsibility now is to restore the security and stability of the nation to achieve a peaceful transition.”
U.S. President Barack Obama said he telephoned Mubarak after his speech. “He recognizes that the status quo is not sustainable” Obama said in remarks on television from the White House.
“An orderly transition must be meaningful, must be peaceful, and it must begin now,” Obama said, pledging the U.S. would support the Egyptian people during the transition. Directing his comments at young Egyptian, Obama said: “We hear your voice.”
The protests, and concerns that the most populous Arab nation may slide into chaos, earlier prompted Obama to dispatch former ambassador Frank Wisner, who on Jan. 31 delivered to Mubarak a message that his time in office was coming to an end, an administration official said.
The unprecedented protests, which followed a revolt in Tunisia that ousted President Zine El Abidine Ben Ali on Jan. 14, have left more than 100 people dead in Egypt and roiled international stock, bond and oil markets. Unrest has spread to Jordan, where King Abdullah sacked his prime minister yesterday, and other countries including Yemen and Algeria.
Mubarak, who had previously declined to say whether he would stand again, last week appointed Omar Suleiman, head of Egypt’s intelligence services, as vice president. He said yesterday he had never intended to seek another term.
“I lived in this country, and I fought for it, and I defended its land, its sovereignty and interests, and I will die on its soil,” he said.
“I expect the demonstrations to continue,” said Khaled Fahmy, professor of history at American University in Cairo, in a telephone interview. “He really hasn’t offered much. What I’ve seen is that he has burned bridges. There is no trust between him and the people.”
In Alexandria, the army clashed with protesters and fired shots after the Mubarak address, Al Jazeera television reported. Protesters hurled stones and sought to block an army tank, it said. Armed men chanting pro-Mubarak slogans were seen near Tahrir early today as some protesters left the square.
The opposition movement, which includes the Muslim Brotherhood and the former United Nations atomic agency chief Mohamed ElBaradei, accuses Mubarak of running a corrupt and repressive government. It has urged the president to quit immediately and hand power to a transitional government, and repeated the call after his address yesterday.
The way for Mubarak to restore stability is by resigning, ElBaradei told Al Arabiya television after his announcement. He rejected dialogue with Mubarak’s regime and said the president’s departure won’t create a power vacuum.
Egypt received about $1.5 billion in U.S. assistance last year. It has been one of the biggest recipients of U.S. aid since 1979, when Egypt signed a peace treaty with Israel brokered by the U.S. Mubarak has backed efforts to encourage Arab acceptance of the Jewish state, oppose Iran’s nuclear program and isolate Hamas, the Islamist militant group that controls the Gaza Strip.
“If the mere goal of sending Frank Wisner was to persuade Mubarak not to run for reelection, they’ve set the bar much too low,” said Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies, a Washington-based policy group.
Mubarak has “no credibility” to oversee a transition and the U.S. should do whatever it can to support a shift to democracy there, including withholding financial aid if necessary, said Senator Patrick Leahy of Vermont, the Democratic chairman of the panel that controls foreign assistance, in a statement in Washington.
Senator John Kerry, chairman of the U.S. Senate Foreign Relations Committee, said he was uncertain whether Mubarak’s actions are enough to quell the popular uprising.
“It remains to be seen whether this is enough to satisfy the demands of the Egyptian people for change,” Kerry, a Massachusetts Democrat, said in a statement yesterday in Washington.
Bourse, Internet Shut
As Mubarak fought to retain power, his authorities shut down Egypt’s stock market, after a 16 percent slump in the benchmark index last week, its banking system and most phone and Internet communication.
Banks may reopen to the public on Feb. 3 or Feb. 6,, Finance Minister Samir Radwan, appointed by Mubarak on Jan. 31 as he revamped the Cabinet to appease protests, told Al Arabiya television yesterday.
Egypt’s dollar bonds advanced 0.2 percent yesterday before Mubarak’s announcement, the first increase in six days. The political upheaval sent the debt tumbling 12 percent in January, the most since at least 2001, according to JPMorgan Chase & Co. The cost of protecting against an Egypt default with credit- default swaps fell 70 basis points yesterday, the most ever, to 350, CMA prices show.
Companies including Heineken NV and BG Group Plc have halted operations in the country of 80 million, and expatriates fled aboard scheduled flights, charters and private jets. Tanks guarded key government buildings as thousands rallied daily in Cairo and other cities.
Egypt’s economy needs foreign investment, along with tourism revenue, to achieve the 7 percent economic growth rates that the government says is necessary to create jobs for an expanding workforce. It achieved that in the three years before the global economic crisis slowed growth, to about 6 percent last year according to government estimates.
“Tourists are currently trying to leave Egypt en masse,” London-based risk consultant Maplecroft said in a report yesterday. The International Monetary Fund’s October prediction that the economy will grow 5.5 percent this year “is now overly optimistic. A dramatic or even moderate reduction in growth will make it more difficult for the government to create new jobs,” a key demand of protesters. Official figures put Egypt’s unemployment rate at about 9 percent.
Crude prices have jumped about 6 percent since Jan. 27 on concern the turmoil in Egypt may disrupt supplies. The Suez Canal in the country’s north carries about 8 percent of global maritime trade. Oil futures pared gains, dropping 1.5 percent at 5 p.m. in New York yesterday, after canal officials said traffic was moving normally through the artery for more than 2.2 million barrels of oil a day.
Secretary of State Hillary Clinton said Jan. 30 that Mubarak must “respond to the legitimate requests for participation by protesters” by holding “free and fair elections.”
Mubarak said yesterday he will change laws governing presidential term limits and the eligibility of candidates before the next election.
The speech “did not address the inheritance of power to family members, it did not address amending the constitution to guarantee civil rights, it did not address lifting restrictions on political parties,” said Ayman Nour, who challenged Mubarak in Egypt’s first multi-candidate presidential election in 2005, and is among the leaders of the current opposition movement. It “did not live up to the people’s demands.”
--With assistance from Mahmoud Kassem and Abdel Latif Wahba in Cairo, Zahra Hankir in Dubai and Julianna Goldman, Julie Davis, Nicole Gaouette and Terry Atlas in Washington. Editors: Terry Atlas, Steven Komarow
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