Army endorses Egyptians' right to protest

(Reuters) - Egypt's armed forces pledged not to fire on peaceful demonstrators on Monday as thousands of people, freed from fear after decades of oppression, tried to press home their campaign to oust President Hosni Mubarak.

The army, which put Mubarak into power in 1981, seemed to be weighing whether to shift its loyalties as the former general's opponents spoke of getting a million people onto the streets on Tuesday to mark a week since the unprecedented protests began.

The military command, which may be keener to preserve a 60-year-old system of army-backed government than to prolong the personal rule of the 82-year-old Mubarak, issued a statement on Monday calling protesters' demands "legitimate" and promising not to use force against people expressing themselves peacefully.

The White House and the European Union renewed their calls for Mubarak to accept the will of the people, though refrained from telling their veteran ally outright that he should quit.

Egyptians in the streets had no such reservations.

"The people want the president out!" chanted thousands in Cairo. "Wake up, Mubarak! Today is your last day!" was the cry of a crowd in Mahalla, a textile mill town in the Nile Delta.

On the sixth day of rallies that have roused fellow Arabs and undermined the long-entrenched assumptions of diplomats and investors, tens of thousands on the streets of Cairo and other cities poured scorn on Mubarak's bid to save his 30-year rule by naming a new set of loyalists to his government.

"There is no turning back. There is no fear," 35-year-old Hassan Shaaban said at the permanent rally in central Cairo. "After Mubarak, no other president will dare to oppress us."

ARMY SPEAKS

Since Friday, after Mubarak's hated police fought battles with young demonstrators, the army has been on the streets in a massive show of force backed by its U.S.-built tanks. But the soldiers, widely admired by Egyptians, have looked on patiently, letting people vent their fury over poverty and dictatorship.

In its first formal comment on events on Monday, the armed forces command issued a statement calculated for popular appeal. "The armed forces will not resort to use of force against our great people," it said, though it would stop looters.

"Your armed forces, who are aware of the legitimacy of your demands and are keen to assume their responsibility in protecting the nation and the citizens, affirms that freedom of expression through peaceful means is guaranteed to everybody."

In Washington, which has backed Mubarak with money and arms as a vital ally against radical Islam in the Middle East, the White House spokesman said bluntly that he must address the grievances of his 80 million people and give them freedom. But he refused to say outright that Mubarak himself should go.

EU foreign ministers meeting in Brussels called for "an orderly transition to a broad-based government, leading to a genuine process of essential democratic reforms."

The uprising erupted amid frustration over repression, corruption, poverty and the lack of democracy. It was in part inspired by the fall of Tunisia's strongman leader on January 14 and has now prompted talk of a domino effect like that of 1989 which swept Soviet puppet governments out of eastern Europe.

"Something historic is happening in the Arab world," Finnish Foreign Minister Alexander Stubb said. "But it's too early to say whether this is the Berlin Wall moment, the 1989 moment."

TUESDAY RALLIES

About 140 people have died in clashes with security forces in scenes that overturned Egypt's standing as a stable country, promising emerging market and attractive tourist destination.

Mubarak, a close U.S. ally and a stalwart in Western policy toward the Middle East, responded by offering economic reform to address public anger over hardships. New Finance Minister Samir Radwan told Reuters: "It is a national mission at a very critical time." But he added he had no new policies just yet.

Troops backed by American-built tanks paid for with U.S. aid made no effort to disperse the crowd well after dark, hours after a curfew started. Military helicopters flew overhead.

"I'll go home when Mubarak leaves," read one banner.

Some worked mobile telephones, urging friends and family to join them through the night, hoping for mass rallies on Tuesday.

Mubarak's new government did not impress them: "This is all nonsense," said protester Omar el-Demerdash, 24, a research executive. "The demand is clear: We want Mubarak and his men to get out. Anything other than that is just not enough."

On Monday, Mubarak named General Mahmoud Wagdy as interior minister to replace a man reviled for his repressive tactics.

"This new cabinet is too little, too late. I think Mubarak will probably be gone well before 30 days is up," Zaineb Al-Assam of London-based Exclusive Analysis said.

"There are some figures in the cabinet who are deeply unpopular. An example is General Wagdy. That's going to add to the protests. Mubarak will be seen by the army as a liability."

MUSLIM BROTHERHOOD

Although the movement started with no clear leaders or organization, the opposition is taking steps to organize.

The Muslim Brotherhood, an Islamist group, said it was seeking to form a broad political committee with retired U.N. diplomat Mohamed ElBaradei to talk to the army.

The Brotherhood, with wide support among poor Egyptians, has until now kept in the background of an uprising spearheaded by the young urban poor and students. It fears a harsh crackdown.

But on Monday it called on people to keep up the protests until Mubarak and his ruling party were fully swept from power.

As the first Arab nation to sign a peace treaty with Israel, Egypt plays a key part in the peace process, and a change in leadership could have big implications for these efforts.

"We certainly don't want Egypt to fall into the hands of extremists," British Foreign Minister William Hague said. "We want an orderly transition to free and fair elections."

In Israel, some commentators voiced shock at Obama's move to abandon Mubarak -- "a bullet in the back from Uncle Sam," said one. Prime Minister Benjamin Netanyahu said he feared a radical Islamist takeover in Cairo like that in Iran in 1979.

Foreign governments scrambled to ensure the safety of their nationals trapped by the unrest in Egypt. One group of tourists was hunkered down in Cairo's Marriott Hotel:

"I had heard a lot about Egypt's history and the pyramids so I am very disappointed I cannot see all that, but I just want to get out," said Albert So, an accountant from Hong Kong.

Companies, from gas drillers to supermarkets, also pulled out staff as confrontation brought economic life to a halt. Financial markets and banks were closed for a second day.

Internationally, global stocks flattened out after opening down on concern about oil and developed market stocks were up. Europe's benchmark Brent crude was just short of $100 a barrel on fears the unrest could spread to regional oil producers.

Moody's downgraded Egypt's credit rating to Ba2 with a negative outlook from Ba1, saying the government might damage its already weak finances by increasing social spending to calm the protests.