In Speech to Nation, Egypt President Warns Against New Unrest

Mohammed Morsi blames protests and violence for causing further damage to an economy already in crisis, says Egypt 'will never be bankrupt and will not kneel.'

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Egypt's Islamist president warned against any unrest that could harm the drive to repair the country's battered economy in his first address before the newly convened upper house of parliament on Saturday, urging the opposition to work with his government.

In the nationally televised speech, Mohammed Morsi said the nation's entire efforts should be focused on "production, work, seriousness and effort," now that a new constitution came into effect this week, blaming protests and violence the last month for causing further damage to an economy already in crisis since the fall of autocrat Hosni Mubarak.

Citing the economy, Morsi pressed the opposition to drop its refusals to deal with his government, repeating his invitation for it to join a national dialogue he has been holding - and adding a warning that appeared directed at the opposition not to turn to protests that might cause unrest.

All sides must "realize the needs of the moment" and work only through "mature democracy while avoiding violence," he told the 270-member Shura Council. "We condemn and reject all forms of violence by individuals, groups, institutions and even from the nation and its government. This is completely rejected."

Last month, the largely secular and liberal opposition launched a wave of protests against decrees by Morsi grabbing new powers - since revoked - and against the draft constitution that his Islamist allies rammed through to finalization and put to a referendum, completed a week ago. In response, Islamists also launched mass rallies, and the two sides erupted into violence several times. The worst violence came in clashes outside the presidential palace in Cairo that killed 10 people, and though it was sparked when Islamists attacked a sit-in, Morsi's allies have depicted the opposition as to blame.

Opponents fear that Morsi and the Muslim Brotherhood, from which he hails, are monopolizing rule and that the new constitution will consecrate their power. The charter allows for a stronger implementation of Islamic law, or Shariah, than in the past and provisions that could limit many civil rights and freedoms of minorities. The charter was passed by 64 percent in the referendum, though turnout was only around 33 percent.

Under the new constitution, the upper house of parliament, which normally has few powers, is now serving as the law-making body until a new legislating lower house is chosen in national elections expected within a few months. The upper house, called the Shura Council, has an overwhelming Islamist majority, mainly from Morsi's Brotherhood and the allied ultraconservative Salafis.

Morsi has depicted the national dialogue that he launched earlier this month as a compromise giving all factions a voice. The dialogue is supposed to draw up key legislation to put before parliament, including a law organizing the parliamentary elections, and decide other issues. The opposition has dismissed the dialogue initiative as disingenuous, and so far mainly Islamists are participating, along with a few small liberal parties.

Ahmed Maher, head of the activist April 6 Movement that helped engineer last year's uprising against Mubarak, said Morsi's speech offered nothing new beyond his acknowledgement of Egypt's economic woes. He also said he would not enter into talks again with the president until the Brotherhood "gives up some of their arrogance and stubbornness."

"I sat with the president four times before. There are never any clear results from the conversations," Maher said, adding that the opposition wants changes to the new constitution and a Cabinet led by a new prime minister with a clear plan.

In his speech, Morsi repeatedly said it was time to return to "production" and "work." While he listed some new economic projects such as developing the Suez Canal area and Sinai, he did not give details on an overall economic program, including how the government will tackle a crippling deficit or carry out expected changes in taxes or reductions of subsidies.

Morsi acknowledged in his nearly hour-long speech the country's dwindling foreign currency reserves, which stood at around $36 billion in 2010 before the uprising and now hover around $15 billion, bolstered by large Qatari deposits.

His government has requested a $4.8 billion loan from the International Monetary Fund to bridge the burgeoning budget deficit. But talks have been put off for the moment after the government this month backed off plans to raise taxes on a number of products, fearing a larger backlash amid the political protests. Potential cuts in subsidies on food and fuel and plans to raise taxes are major concerns in a country where some 40 percent of the 85 million population live near or below the poverty line of surviving on $2 a day.

Standard & Poor downgraded Egypt's long-term credit rating one level this week to B-, six steps below investment grade.

"The reason (for the lower ranking) is the lack of political stability in the recent past," Morsi said. He denounced those he said were spreading rumors that undermine the economy. "Those who talk about bankruptcy, they are the ones who are are bankrupt. Egypt will never be bankrupt and will not kneel, God willing," he said to a round of applause.

And he appeared to chide the opposition for not working with him, saying all sides must past through the crisis together. "We all know the interests of the nation. Would any of us be happy if the nation goes bankrupt? I don't doubt anyone's intentions. But can anyone here be happy if the nation is exposed to economic weakness?"

In attendance at the session were leading national figures such as Egypt's new Coptic pope, Tawdros II, seated next to the country's top mainstream cleric, grand sheik Ahmed al-Tayeb of Cairo's Al-Azhar, Sunni Islam's foremost seat of learning. The former head of the ultraconservative Salafi Nour Party and the head of the Muslim Brotherhood party were also seated front-row along with former interim prime ministers, the country's defense minister and other members of Cabinet.

Egyptian President Mohamed Mursi delivers a speech to the Shura Council, or upper house of parliament, in Cairo in this handout taken December 29, 2012.Credit: Reuters

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