Egypt protesters say army guarantees fall short

CAIRO (Reuters) - Egypt's powerful army gave guarantees on Friday that President Hosni Mubarak's promised reforms would be carried out, but protesters insisted he quit now and cranked up the pressure by massing outside his palace.

The assurances were seen as an army push to defuse a popular uprising unprecedented in modern Egypt and a signal it wanted demonstrators off the streets after 18 days of turmoil that has disrupted the economy and unnerved the Middle East.

"This is not our demand," one protester said, after relaying the contents of the army statement to the Tahrir (Liberation) Square protest. "We have one demand, that Mubarak step down."

Hundreds of protesters gathered outside the presidential palace, demanding Mubarak resign immediately, and the army did not try to remove them, a Reuters witness said. Razor wire and six tanks and armoured vehicles separated them from the palace.

Further protesters enraged at Mubarak's refusal to quit pledged to march from central Tahrir Square to the palace as part of their biggest protest yet, raising fears of confrontation between troops and demonstrators.

"Revolution, revolution, until victory! Revolution all over Egypt," the protesters chanted.

An increasingly bitter stand-off in the uprising has raised fears of uncontrolled violence in the most populous Arab nation, a key U.S. ally in an oil-producing region where the chance of chaos spreading to other repressive states troubles the West.

The army statement noted that Mubarak had handed powers to govern the country of 80 million people to his deputy the previous day -- perhaps signalling that this should satisfy demonstrators, reformists and opposition figures.

But it was not immediately clear if the army and Vice President Omar Suleiman, Mubarak's 74-year-old intelligence chief and a former military man, were acting entirely in concert.

SUEZ, ALEXANDRIA AND NILE DELTA

Hundreds of thousands of protesters turned out across Egypt, including in the industrial city of Suez, earlier the scene of some of the fiercest violence in the crisis, and the second city of Alexandria, as well as in Tanta and other Nile Delta centres.

In "Communique No. 2" the army said it "confirms the lifting of the state of emergency as soon as the current circumstances end," a pledge that would remove a law imposed after Mubarak became president following Anwar Sadat's assassination in 1981 and that protesters say has long been used to stifle dissent.

The army also promised to guarantee free and fair elections and other concessions made by Mubarak to protesters that would have been unthinkable before January 25, when the revolt began. Around 300 people may have been killed since then.

Protesters were angered on Thursday night, having thronged Tahrir Square for a resignation speech only to hear Mubarak in an address say he planned to hand over powers to a deputy.

Mubarak said the transfer was in line with the constitution which left him in ultimate charge, and able to return, dismaying a protest movement bent on ending his authoritarian tenure.

Troops have promised to protect the right to demonstrate but a lengthening showdown over Mubarak's 30-year rule could test that resolve, with many Egyptians keen to end the economic disruption and the army keen to show it can re-instil order.

"The armed forces are there to protect the demonstrators and to protect the country but the powers have been handed over, not to the military, but to the vice president," Finance Minister Samir Radwan said in an interview with Reuters, after concern the military could decide to resolve the crisis with a coup.

"Nobody likes a military rule, that is for sure. Our military have so far shown that they are the safety valve of this country," he said before the army statement.

Already some mid-ranking officers posted near Tahrir Square have put down their guns and gone over to the demonstrators and a familiar protest chant is: "The army and people are as one."

Hundreds of thousands of anti-Mubarak protesters chanted noisily in Tahrir Square on Friday while troops in tanks and armoured vehicles stood by in what organisers said was their movement's biggest display of indignation so far.

PALACE PROTEST PERMITTED

"Down, down Hosni Mubarak!" chanted protesters who were permitted to approach the presidential palace in the suburb of Heliopolis for the first time. A sign delivering the same message was put on razor wire blocking one of the entrances.

Ahmed Farouk, 27, a member of one of the youth movements behind the protests, said the demonstrators would "take over the palace. We'll have masses of Egyptians after prayer to take it over. The army has been neutral and did not harm any of us."

"We will march to the palace and oust Mubarak, and we know the world is on our side," said Nurhaan Ismael, a protester, 34.

"The army is relaxed at the moment. They put barbed wire all around (the roads to the palace) but they know the will of the people will topple anything," Ismael told Reuters.

The military briefly seemed close to a decisive move when its top brass met on Thursday in Mubarak's absence and pledged to protect the nation in Communique No. 2. Some believed this was the first stage of an army coup. But no action followed.

Hours later, Mubarak told the nation he would stay on until a September election, but had ceded powers to Suleiman.

Rallies in Cairo and other cities turned from euphoric at the prospect of Mubarak resigning to despair at his lengthy statement explaining his constitutional role and to fury that he had not stepped down as expected but just stepped aside.

Suleiman promised a "road map" to democratic elections in September in which Mubarak would not stand.

"DE FACTO PRESIDENT"

Egypt's ambassador to Washington said it was clear that Suleiman was now "de facto president." But Egyptian analysts said Mubarak still held the reins of powers and could retrieve presidential powers from Suleiman at any time.

The army, from politically plugged-in generals to poor conscripts and junior officers, is key to what happens next.

"This poses a real dilemma for the army," said Rosemary Hollis at London's City University. "Are they going to allow the demonstrators to escalate their demonstrations so that they push the point that Mubarak has got to go, and that means the army definitely does split with Mubarak? The demonstrators are very disappointed and there will be violence."

"I think total chaos reigns within the regime. It is like the Titanic. The rats are leaving the sinking ship," Mohamed ElBaradei, a Nobel peace prize winner and former U.N. diplomat who runs a liberal political movement, told the Austrian paper Die Presse in an interview published on Friday.

U.S. President Barack Obama sounded less than satisfied by Mubarak's latest concessions, saying he must explain changes he was making and do more to offer a path towards democracy.

Washington's approach has been based on Egypt's strategic importance: a rare Arab state no longer hostile to Israel, the guardian of the Suez Canal linking Europe and Asia and a major force against militant Islam in the Middle East.

(Reporting by Samia Nakhoul, Edmund Blair, Marwa Awad, Yasmine Saleh, Dina Zayed, Shaimaa Fayed, Alexander Dziadosz, Sherine El Madany, Patrick Werr, Alistair Lyon, Tom Perry, Andrew Hammond, Jonathan Wright, Alison Williams in Cairo; Arshad Mohammed and Ross Colvin in Washington; writing by Peter Millership; editing by Mark Heinrich)