As clashes between protestors and security forces were still ongoing in several cities across Egypt, an address to the nation by the head of the ruling military council on Tuesday night was rejected by the crowds in Tahrir Square, the epicenter of the revolution earlier this year.
Field Marshal Hussein Tantawi said the military had no interest in holding on to power, and remained committed towards transferring authority to a civilian government.
With the resignation of the cabinet under Prime Minister Essam Sharaf accepted, a new national salvation government would be established until presidential elections, now to be held before July 2012.
“The army is ready to go back to barracks immediately if the people wish that through a popular referendum, if need be,” Tantawi added in the speech broadcast on Egyptian State Television.
Omar Khaled, a 25-year-old political activist in Tahrir Square, told CNBC the speech lacked details about the new government, and felt that holding parliamentary elections in the current climate would “not be conducive” to the country’s democratic development.
But by the time Cairo headed into rush hour traffic on Wednesday morning, the numbers in the square had fallen sharply from the estimated 100,000 late on Tuesday. Previous demonstrations have shown similar cyclicality, with the numbers usually gathering momentum again later in the afternoon.
Political parties were divided in their reactions towards the speech.
Reports of injuries were still coming in as of 7 am GMT (2 am New York time), with the streets between the square and the Ministry of Interior still a focal point of skirmishes. Protestors could be seen throwing Molotov cocktails, while security forces used tear gas.
The United States said it remained “very concerned about the violence” and “urged restraint”. White House Spokesperson Victoria Nuland also added that the administration was “looking into reports of use of US tear gas”. An estimated 37 people have been killed since the start of the clashes on November 19.
Tantawi also said the economy was “retreating” and that a lot of investments had left the country since the start of the revolution.
Egypt’s benchmark EGX30 index has lost 11 percent since Thursday and 48.5 percent so far this year. The Market Vectors Egypt ETF in the US fell 4.9 percent, to the lowest level since its creation.
“In macroeconomic terms, the lack of a cabinet means that much-needed funding, specifically from the IMF, will be delayed, which I am concerned about. Egypt needs financing in the short term,” Angus Blair, Head of Corporate Development at Beltone Financial told CNBC.
Protests also hit the port city of Suez with no disruptions reported to Suez Canal activity. The canal, which did not see a closure despite the unrest throughout the year, is an important source of economic growth for the country, and serves as a passage way for roughly eight percent of world seaborne trade.