Egypt stirs Islamist joy, Gulf, Israeli doubts

LONDON (Reuters) - Egypt's new president may lack real foreign policy clout for now, but the mere fact that a Muslim Brotherhood man is at the helm of the biggest Arab nation will embolden fellow Islamists seeking revolutionary change around the Middle East.

Mohamed Mursi's tenure as head of state is likely to unsettle Israel, please the Jewish state's arch-foe Iran, and dismay secularist critics of the Brotherhood at home and abroad who argue that political Islam is no antidote to unemployment, a flatlining economy and social misery, analysts say.

It will also stir misgivings among some Gulf Arab states still struggling to respond effectively to the ousting of their long-term ally, deposed president Hosni Mubarak.

Analysts say any variations in aid flows from the Gulf may be an indicator of the health of their relationship with Cairo.

"Mursi's victory will not benefit us directly. But it is a symbol of a victorious revolution," Abu Yazen, an activist from the Syrian city of Hama, the repeated scene of bloodshed during Syria's 15-month-old uprising, told Reuters.

"Mursi and his victory illustrates that revolutionaries will not rest until they reap the rewards of their work," he added.

Mustapha el-Sayed, political science professor at Cairo University, said Mursi's victory in presidential elections confirmed a trend started in Tunisia "that the political force most likely to come to power in most Arab states after the fall of their regimes is the Islamists."

The Brotherhood, the world's oldest and most established contemporary Islamist movement, has wide influence in the Arab world even if, like in Egypt, its followers have often been repressed in Muslim-majority countries.

After wins by Islamists at legislative polls in Tunisia and Morocco, Mursi's election is prompting the world to think again about how it deals with advocates of Islamic rule.

But the Egyptian military is expected to keep a tight rein on foreign policy and will protect a peace treaty with Israel that brings in $1.3 billion of U.S. military aid a year.

As a result, the ability of the Mursi government to provide immediate material support to kindred political forces in other Arab countries may be limited.

COLDER PEACE WITH ISRAEL

And in any case, his urgent tasks will be at home, namely to bring Egyptians the stability and prosperity they are desperate for after stagnation and corruption under Mubarak, followed by 16 months of crisis.

But his focus on domestic affairs will not stop critics of the Brotherhood from looking on with trepidation.

Israeli officials have said they respect the election result and expect Cairo to continue to preserve the treaty. But Former Israeli Defence Minister Binyamin Ben-Eliezer said in an interview with Israel Radio that while the peace treaty would continue, it would be "much colder" in future.

"There's not a shadow of a doubt we have awoken to a new world, a different world, a world that is more religious, Islamist and anti-Israel. ... the man is known for his extremist views against the peace treaty with Israel," Ben-Eliezer said.

The Sunni Brotherhood, whose Palestinian offshoot Hamas rules the Gaza Strip, is strongly critical of Israel, which has watched the rise of Islamists in Egypt with growing concern.

Hamas hopes a Mursi presidency would loosen the economic shackles of a boycott of Gaza that Israel says is meant to stop the flow of arms to Gaza.

"The question is how Western states react, if they isolate Hamas further and keep trying to squeeze them out of power, then of course Hamas will turn to the Brotherhood for support, it is only logical," said Michael Stephens, researcher at the Royal United Services Institute based in Doha.

"They're a pragmatic party that takes help from anybody they can get."

Britain's Quilliam think tank said a topic to watch closely was increased rocket attacks from Sinai which "could destabilize the relationship between Egypt and Israel, particularly if Israel seek unilateral action inside Egyptian territory."

MURSI WIN LIKELY TO INFLUENCE LIBYA

In Libya it is still unclear how well the Muslim Brotherhood-linked party, the Justice and Construction Party, will do in Libya's first free elections slated for July 7 because the organization does not enjoy the same institutional popularity that it does in Tunisia or Egypt.

But experts and Libyan liberals alike believe that the Brotherhood win in Egypt will boost the confidence of their Libyan counterparts.

"The Brotherhood in Libya will see it not just as a victory for Egypt but a victory for the Brotherhood (generally)," said political scientist Omar Ashour.

He said if the Libyan Brotherhood were successful in Libya, an oil producer with big financial reserves, their Egyptian counterparts would look to them for contracts and opportunities to help the Egyptian economy through its struggles.

In Libya, secularists watch Mursi with some concern.

Watching a re-run of the Egyptian president's speech on a news channel this morning in his office, Mahmoud Jibril, Libya's wartime rebel prime minister who resigned last October told Reuters that Mursi's win in Egypt would "definitely" boost the Libyan branch of the Brotherhood.

"It makes our task here as democratic forces calling for a civil state and calling for equal rights for all Libyans, and calling for a real democratic process much harder," he said.

Gulf Arab states have reacted warily to Mursi's win.

Shadi Hamid of the Brookings Institution Doha branch said Mursi's win represented the first time an Islamist party had risen to the presidency in the Arab world.

"There is a symbolic power that is surely concerning to Gulf leaders especially those in Saudi and the Emirates because they are increasingly concerned about their own Islamist opposition."

GULF ARABS SEEN PREFERRING 'WEAK" EGYPT

Noman Benotman, a senior analyst at Quilliam, said Gulf states wanted the "weak Egypt" they were used to under Mubarak and did not want to regain the diplomatic weight it had in the 1950s and 1960s during the heyday of Arab nationalism.

"The Brotherhood is the group with the soft power and the influence to be able to revive Egypt and make it, once again, the most influential country in the Middle East," he said.

"Watch the economic cooperation with the Gulf. Will they fulfill the projects they have promised? I suspect not."

Hamid of Brooking said Gulf states would use economic clout to pressure the Brotherhood. "Egypt is going to need assistance - loans, foreign direct investment -- and the Gulf leaders, if they're smart, will use that to their own benefit," he said.

Emboldened by the growing clout of Islamists elsewhere, members of Islah, or Reform, in the United Arab Emirates have stepped up demands for greater power to go to a semi-elected advisory council.

"It's great, let the Islamists win, let them be demystified and show that they don't have a special warrant to create jobs, or resolve the Palestinian issue -- they are just regular guys," said Mishaal al-Gergawi, an Emirati political analyst.

"Jobs, the economy, society, identity -- all these issues that people are worried about in the Gulf, Islamists don't have an advantage in addressing these," he said.

(Additional reporting by Hadeel Al Shalchi in Tripoli, Oliver Holmes in Beirut, Jeffrey Heller and Allyn Fisher in Jerusalem, Nidal al Mugrabi in Gaza, Regan Doherty in Doha, Joseph Logan, Raissa Kasolowsky and Marcus George in Dubai, Yasmine Saleh in Cairo)

(Editing by Samia Nakhoul)

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