Egyptians rally for power, Mubarak ailing

CAIRO (Reuters) - Staking its claim to Egypt's presidency, the Muslim Brotherhood rallied in Cairo on Tuesday to demand the ruling generals hand over real power, following moves by the army that its U.S. ally labeled an assault on democracy.

Up to 10,000 gathered as darkness fell on Tahrir Square, cradle of last year's Arab Spring revolution, chanting the name of the Islamist who they say won the weekend's presidential election and condemning measures to curb his powers that will leave much legal authority in the hands of the army for months to come.

The election result is due to be announced later this week.

"Down, down with military rule!" chanted the crowd, one of the biggest in months at the capital's protest rendezvous, but showing no sign of seeking confrontation with troops as the Brotherhood treads warily through a shifting political arena.

"We are here to finish the revolution," said Ahmed Badawy, a Brotherhood member bussed in, like many, from the provinces.

"We are showing the military council we can see that it is trying to reproduce the old regime and abort the revolution."

In a mark of the movement's desire to put violence behind it and assure Egyptians, fellow Arabs and anxious world powers that it can rule a democracy, one man held a poster of presidential candidate Mohamed Morsy reading "Egypt's Erdogan". Turkish Prime Minister Tayyip Erdogan is a model, for some, of modern Islamic leadership in a nation also long used to influential generals.

"The military council should stick to what it is supposed to do," said the man holding the sign, Hassan al-Attar, 60, adding they were clinging to power for fear of joining ousted autocrat Hosni Mubarak - in prison for oppression and corruption.

News as the rally was breaking up that Mubarak, 84, had been moved from prison and was critically ill in hospital left most little moved. Their anger is directed at those who followed him.

The dissolution of a new, Islamist-led parliament on the eve of the presidential election run-off, and a decree issued as it ended that took new powers for the Supreme Council of the Armed Forces (SCAF), have been widely condemned in Egypt and abroad.

But weariness after the turmoil and economic hardship of the past 16 months, and a lack of enthusiasm for two presidential contenders from the familiar old adversaries of the army and the Brotherhood, have dimmed many rebellious spirits.

Despite calls to rally, few of the young, urban activists who first launched the revolt turned out on Tahrir on Tuesday.

While many feel betrayed by the generals, who pushed out Mubarak to appease the revolt but now seem to be entrenching their own privileges, the latest anger has not turned violent; neither the Brotherhood nor the army, engaged in a hesitant new symbiosis over the past year, seem anxious to start a fight.

WESTERN DILEMMA

The rise of Islamists, not just in Egypt but other Arab states where autocrats were overthrown last year, has also left Western powers with a dilemma, so that criticism of SCAF's moves seems unlikely to bring any immediate sanction for a military elite that has been funded for decades by the United States.

The Pentagon, which gave the Middle East's biggest army $1.3 billion in annual aid this year, rebuked Field Marshal Hussein Tantawi's military council on Monday and urged it to hand "full power" to civilians, as it had promised to do by July 1.

The State Department said it was "concerned by decisions that appear to prolong the military's hold on power" and urged SCAF "to restore popular and international confidence in the democratic transition process by following through on their stated commitments".

But worries in Washington's vocal ally Israel about Islamist leaders in Cairo reneging on a 1979 peace treaty, or aiding Gaza's Hamas militants, mean Washington is unlikely to alienate its Egyptian military allies for the sake of the Brotherhood.

A militant attack on Israel's border was a reminder of the lawlessness Egypt's revolution has brought to the Sinai desert. But Israeli officials say the fact that U.S. aid is conditional on peace with Israel will keep Egypt's Islamists in line.

"Any rise of an Islamic regime ... is worrisome," Vice Prime Minister Moshe Yaalon said. "But on the other hand, Egypt today is dependent to a large extent on the peace agreement."

Egypt's election committee refuses to give results from the weekend's presidential run-off before Thursday. The Brotherhood says its data show Morsy won by 52 percent to 48 over former general Ahmed Shafik, Mubarak's last prime minister.

Shafik's camp shot back that they have a one-point lead.

But army and election committee sources say the count does show Morsy winning. The military seems to be prepared for that.

"SQUARE ONE"

Where the political system goes now is unclear. What had been seen as the final step in a "transition to democracy", the inauguration of a president, now seems only a beginning.

"We're back at square one," Hussein Ibrahim, a senior Brotherhood member of the dissolved parliament, told Reuters.

"After Egyptians waited for the election of a new president to end the transitional period, we discovered that by electing a new president we are restarting the transitional period."

At a news conference, a spokesman for the Brotherhood played down talk of head-on conflict with an army with which the movement has lately developed a cautious working relationship.

"Why do we rush to the word 'confrontation'?" said Yasser Ali. "We do not seek any confrontation with anyone. No one in Egypt wants confrontation ... There has to be dialogue between national forces, and the people alone must decide their fate."

The secretive SCAF has appeared to make up rules as it goes along for what is supposed to be progress toward democracy, giving it considerable flexibility in interpretation.

With the economy, notably the tourist trade, suffering badly, Egypt is looking for financing from the IMF. For the generals to maintain influence but avoid taking all the blame for economic troubles, they have an interest in sharing at least some responsibility with civilian politicians.

Speaking publicly on Monday, generals from SCAF insisted they were still committed to a full handover of power and blamed squabbling politicians for the failure to draft a constitution.

One noted that the new president was free to appoint his own government, which could then draft laws that the head of state could pass into law. But the process will involve SCAF, in its role as legislator, able to amend or blocks laws as it sees fit.

Another general pointed out it was not SCAF but the constitutional court, staffed by judges from the old regime, that annulled the results of January's parliamentary election.

In another potentially explosive judicial saga on Tuesday, a court adjourned until September one of several civil cases that challenge the Brotherhood's very right to exist or engage in politics, using old laws aimed specifically at the Islamists.

(Additional reporting by Tom Pfeiffer, Edmund Blair, Shaimaa Fayed, Patrick Werr, Alastair Macdonald, Saad Hussein and Samia Nakhoul in Cairo, Jeffrey Heller in Jerusalem and Andrew Quinn and David Alexander in Washington; Writing by Alastair Macdonald; Editing by Kevin Liffey)

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