CAIRO (Reuters) - Egyptian President Hosni Mubarak appointed a new interior minister on Monday as part of a revamped cabinet designed to defuse the most serious challenge to his rule in three decades.
Following are analysts' comments:
ZAINEB AL-ASSAM, HEAD OF MIDDLE EAST AND NORTH AFRICA FORECASTING
"This new cabinet is too little too late. I think Mubarak will probably be gone well before 30 days is up.
"There are some figures in the cabinet who are deeply unpopular -- an example is General Wagdy, a former head of prisons. That's going to add to the protests. Mubarak will be seen by the army as a liability.
"The most likely scenario in the next seven days will be an escalation in protests, with a million strong protest planned for 1 February. If Mubarak appears to be staying then protests will continue after then, also initiated by a lack of basic foodstuffs such as flour.
"In the event of Mubarak's resignation, the Muslim Brotherhood are well organised and would do well in any open electoral process. While the more moderate political wing of the Muslim Brotherhood will contain the more extreme elements in the group, they are close to Hamas and so increased war risks with Israel and increased terrorism risks in Israel (if border control lapses) are very likely.
"In a year, Egypt would likely look more like Turkey and represent a moderately positive investment and risk climate. Even so, many existing contracts will be revised and challenged. There is likely to be some re-nationalisation in the manufacturing and industrial sector.
"In terms of contagion risk, Yemen, Sudan, Jordan and Syria all look vulnerable. However, the greatest risk in terms of both probability and severity is in Saudi Arabia. A successor regime in Saudi Arabia would change the commercial as well as geopolitical environment across the region.
DAVE HARTWELL, MIDDLE EAST ANALYST AT IHS JANE'S
"The headline grabbers were the change of PM and the new VP announced on Saturday. The new cabinet is a technocratic one just like the previous one.
The appointment (of the VP) was important because firstly, it eliminates the possibility of (Mubarak's son) Gamal taking over. Second, the speculation is these changes are being forced on Mubarak by the army and the conclusion is the army is now wielding influence behind the scenes.
Is this enough to get people off the streets? No. The situation has moved beyond that now.
Mubarak is in a weak position, the population is against him and probably the army too is looking for ways to stabilise the country. I think he will survive for now but he will go in the medium term and won't run in the presidential election. The military will want to do (the transition of power) in as troublefree a manner as possible.
However, even if you get a new reform-minded president, what you will have is a parliament dominated by the (Hosni Mubarak's) NDP. So you may even see parliamentary elections brought forward.
The opposition have two problems. They are united by the fact they want Mubarak to go and they want free and fair elections but they are not united on anything else. Second, they have no identifiable leader, even ElBaradei has not been completely accepted by all factions. The difference from the past however is that Mubarak probably won't be able to buy off any opposition members."
SAID HIRSH, MIDDLE EAST ECONOMIST AT CAPITAL ECONOMICS IN LONDON
"Currently the president is bowing to international pressure and buying some time to show he is making some changes. It's too early to say if this will be successful as protests are gathering pace.
"I don't think the president will be there for much longer that's why we are seeing these changes, with the appointment of a vice president etc. Omar Suleiman is an ally of the West and for him to take over as vice president clearly shows the pressure to get him to manage an orderly transition.
"My view is there is too much at stake for Western powers to have total chaos in Egypt, as opposed to Tunisia. The military will still back some kind of orderly transition.
"The Muslim Brotherhood knows the reaction globaly will be negative if they take centre stage in the protests, though I am sure they are active behind the scenes. Their role will become clearer if the government collapses.
IMPACT ON ECONOMY AND MARKETS ONCE THEY REOPEN
"It will have a major impact. For instance the stock exchange is dominated by a few companies many of which are led by people allied to the rulers. Some of them are believed to have left Egypt already.
"From a fiscal situation, the government will have to spend more to create jobs.
"Foreign capital is already flowing out. The risk is what happens to local capital now and how will banks be affected. The banks are heavily exposed. The risk is for major loan defaults from companies. The Central Bank can probably impose some restrictions on retail investors (withdrawing deposits from banks).
"The other question is about worker remittances, given the turmoil, will Egyptians working abroad keep sending money home? the remittances help to balance their current account, the goods and services are usually in deficit.
"The currency should depreciate but I don't see any collapse. In terms of how they can manage the depreciation they have enough reserves and should be able to manage, as long as local capital doesn't start leaving as well.
LUIS COSTA, EMERGING MARKETS STRATEGIST, CITI
"...We so far see weak prospects of a short-term consensus between opposition (led by the Muslim Brotherhood) and the government, when it comes to the establishment of a transitional government.
MURAT TOPRAK, EMERGING FX STRATEGIST AT HSBC
"Egypt is an additional factor which is weighing on global sentiment, I do not think it is a main driver. There are some question marks about this crisis spreading towards other countries in the Middle East like Jordan or Lebanon. It probably also affects Israel but if you talk about GCC markets, the risk is contained.
"In our view the likelihood of any instability in the GCC is very limited. The political and economic situation is very different. The reason behind the protests in Egypt is more about the economic situation."
MALCOLM GRAY, PORTFOLIO MANAGER OF INVESTEC AFRICA OPPORTUNITIES FUND AND INVESTEC FRONTIER INVESTMENT TEAM IN A NOTE
"...The likelihood of radical change has now increased. The events of the last few days have come as a shock, and investor sentiment has been severely dented. Our expectation is for an aggressive short-term sell-off in Egyptian listed assets when markets open in the coming days.
"We note that an aggressive sell-off may well prove a very attractive long-term buying opportunity. However this should be balanced with the consideration that the end result of the political instability is uncertain, and there is no guarantee of a continuation of the very successful economic policies of the last few years.
"We note that the risks have increased significantly in the short term, but hope that the events of the last few days will result in positive change in the long term.
STANDARD LIFE INVESTMENTS STRATEGY TEAM IN AN E-MAIL TO REUTERS
It said Egypt itself was too small a part of the overall global emerging market index to make much of a difference.
"Hence the important issue for global investors is not whether to invest in Egypt but whether developments there have a major impact on other countries in the Middle East.
"Over the next few days and weeks, the oil price will be a very good trigger to monitor about whether to put more risk, including emerging market assets such as Egypt, into portfolios."
CITI NEW YORK IN THEIR MORNING NOTE
"Oil is presumably impacted by supply disruption risk through the Suez Canal, although there are no hints at any such problems thus far and with looting in Egypt apparently on the decrease for now, immediate supply disruption risk should be lower. For the longer term, though, there are risks that a new Egyptian government might manage the canal differently or that canal passage insurance costs could permanently increase, adding a premium to prices." (Compiled by World Desk and Markets Desks)
