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New constitution approved in Egypt

Stable economy looks unlikely

A woman cut another woman’s hair during a Cairo demonstration in protest of the Islamist-oriented constitution.

AHMED ABD EL LATEF/ASSOCIATED PRESS

A woman cut another woman’s hair during a Cairo demonstration in protest of the Islamist-oriented constitution.

CAIRO — The official approval of Egypt’s disputed Islamist-backed constitution Tuesday held out little hope of stabilizing the country after two years of turmoil and Mohammed Morsi, the Islamist president, may now face a more immediate crisis with the economy falling deeper into distress.

In a clear sign of anxiety over the economy, the turbulence of the past month and expected austerity measures ahead have some Egyptians hoarding dollars for fear the currency is about to take a significant turn for the weaker.

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The battle over the constitution left Egypt deeply polarized at a time when the government is increasingly cash-strapped. Supporters of the charter campaigned for it on the grounds that it will lead to stability, improve the grip of Morsi and his allies on state institutions, restore investor confidence, and bring back tourists.

But there are already multiple fights on the horizon. ­Although the constitution passed by some 64 percent nationwide, according to official ­results announced Tuesday, the turnout was a meager 33 ­percent and the Islamists were unable to expand their base.

After the constitutional referendum, which ended Saturday, the US State Department bluntly told Morsi it was now time to make compromises, and said it had deep concerns about the constitution.

‘‘President Morsi, as the democratically elected leader of Egypt, has a special responsibility to move forward in a way that recognizes the urgent need to bridge divisions, build trust, and broaden support for the political process,’’ said Patrick Ventrell, acting deputy spokesman. ‘‘We hope those Egyptians disappointed by the result will seek more and deeper engagement. ‘‘

He said Egypt ‘‘needs a strong, inclusive government to meet its many challenges.’’

After a spate of resignations of senior aides and advisers during the constitutional crisis, Morsi appeared to have lost another member of his government late Tuesday night when his communications minister posted on his Twitter account that he was resigning.

The minister, Hany Mahmoud, said he ‘‘couldn’t cope with the culture of government work, particular in the current conditions of the country.’’ The resignation could not be immediately verified.

Morsi signed a decree Tuesday night that put the new constitution into effect. He is expected to call for a new election of Parliament’s lawmaking lower house within two months.

In the meantime, the mostly toothless upper house, the Shura Council, will hold legislative power.

But the chamber is overwhelmingly Islamist-dominated, so any laws it passes could spark a backlash from the opposition.

In a bid to reach out to the opposition, the leader of the Muslim Brotherhood, the fundamentalist group that is the backbone of Morsi’s presidency, said he hoped the charter will be a ‘‘good omen’’ for Egyptians.

‘‘Let’s all begin to build the renaissance of our country with free will, good intentions, and strong determination, men, women, Muslims and Christians,’’ Mohammed Badie said on Twitter.

But the opposition said the passing of the document was not the end of the political dispute. Critics fear the constitution will usher in Islamic law in Egypt and restrict personal freedoms.

‘‘This is not a constitution that will last for a long time,’’ said Khaled Dawoud, a spokesman for the main opposition coalition, the National ­Salvation Front, which has vowed to fight for more freedoms, and social and economic rights.

In a sign that the new battleground may be the economy, Dawoud said the Morsi administration was ‘‘confused’’ both on the political and economic fronts. The turmoil over the constitution sparked huge protests that turned deadly at times, and the tension only added to a weakened economy.

At the height of the protests, the government called off its talks with the International Monetary Fund over a $4.8 billion loan which Morsi’s government viewed as a way to attract much needed foreign investors and tourists, and deal with a high budget deficit.

Since President Hosni Mubarak’s ouster in February 2011, the country has lost more than half of its foreign currency reserves — from $36 billion in 2010 to around $15 billion currently. Economists say that Egypt’s current foreign reserves barely cover three months of imports, which is the IMF’s minimum recommended coverage.

There were signs on Tuesday that some Egyptians were starting to hoard dollars for fear that the currency could weaken significantly.

That was fueled in part by a decree issued by Morsi late Monday banning people from leaving Egypt with more than $10,000 or its equivalent in other currencies.

The bank run prompted the Central Bank of Egypt to declare its commitment to guarantee all deposits in local and foreign currencies.

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