Conflicted Egypt could face economic crunch


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CAIRO -- The official approval of Egypt's disputed, Islamist-backed constitution Tuesday held out little hope of stabilizing the country after two years of turmoil, and Islamist President Mohammed Morsi may now face a more immediate crisis with the economy falling deeper into distress.

In a clear sign of anxiety over the economy, the turbulence of the past month and expected austerity measures ahead have some Egyptians hoarding dollars for fear the currency is about to take a significant turn for the weaker.

The battle over the constitution left Egypt deeply polarized at a time when the government is increasingly cash-strapped. Supporters of the charter campaigned for it on the grounds that it will lead to stability, improve the grip of Mr. Morsi and his allies on state institutions, restore investor confidence, and bring back tourists.

"In times of change, politics are the driver of the economy and not the other way around," said Mourad Aly, a media adviser for the political arm of the fundamentalist Muslim Brotherhood, the backbone of Mr. Morsi's presidency and the main group that backed the constitution.

But there are already multiple fights on the horizon.

The U.S. State Department bluntly told Mr. Morsi it was now time to make compromises, acknowledging deep concerns over the constitution.

"President Morsi, as the democratically elected leader of Egypt, has a special responsibility to move forward in a way that recognizes the urgent need to bridge divisions, build trust, and broaden support for the political process," said Patrick Ventrell, acting deputy spokesman. "We hope those Egyptians disappointed by the result will seek more and deeper engagement."

He said Egypt "needs a strong, inclusive government to meet its many challenges."

After a spate of resignations of senior aides and advisers during the constitutional crisis, Mr. Morsi appeared to have lost another member of his government late Tuesday night when his communications minister posted on his Twitter account that he was resigning.

Mr. Morsi signed a decree Tuesday night that put the new constitution into effect after the election commission announced the official results of the referendum held over the past two weekends. It said the constitution has passed with a 63.8 percent "yes." Turnout of 32.9 percent of Egypt's nearly 52 million registered voters was lower than most other elections since the uprising nearly two years ago that ousted authoritarian leader Hosni Mubarak.

Mr. Morsi is expected to call for a new election of parliament's lawmaking lower house within two months.

In the meantime, the traditionally toothless upper house, the Shura Council, will hold legislative power. But the chamber is overwhelmingly Islamist-dominated, so any laws it passes could spark a backlash from the opposition. Many fear a legal crackdown on independent media, highly critical of Islamists.

In a bid to reach out to opposition, the leader of the Muslim Brotherhood said he hoped the charter will be a "good omen" for Egyptians.

"Let's all begin to build the renaissance of our country with free will, good intentions and strong determination, men, women, Muslims and Christians," Mohammed Badie said on his Twitter account.

But the opposition said the passing of the document is not the end of the political dispute. Critics fear the constitution will usher in Islamic law in Egypt and restrict personal freedoms.

"This is not a constitution that will last for a long time," said Khaled Dawoud, a spokesman for the main opposition group, the National Salvation Front, vowing to fight for more freedoms, social and economic rights.

There were signs Tuesday that some Egyptians were starting to hoard dollars for fear that the local currency could weaken significantly.

The run on the dollar was fueled in part by a decree issued by Mr. Morsi late Monday banning people from leaving Egypt with more than $10,000 or its equivalent in other currencies.

Some currency exchanges in the upscale Cairo neighborhood of Zamalek ran out of dollars by midday and offered only euros -- a rare occurrence. Some banks, too, said they had run out of cash dollars.

"I asked around in many exchange places and can't find dollars anywhere," said Cairo resident Mahmoud Kamel after unsuccessfully visiting one exchange office. "I want to exchange money because I'm afraid the Egyptian pound will not have any value soon."

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