Hosni Mubarak, who has reshuffled his government but pledged to stay on until elections in September, resigned as head of the ruling party, Al Arabiya television said in a report that could not be confirmed. State television said only that the leadership of the party, including Mubarak's son Gamal, had resigned and named the new secretary general as Hossam Badrawi, seen as a reformist member of the liberal wing. But the protesters were not impressed by the latest gesture.
"These are not gains for the protesters, this is a trick by the regime. This is not fulfilling our demands. These are red herrings," said Bilal Fathi, 22. Earlier Mubarak met some of the new ministers, the state news agency said, in a clear rebuff to the hundreds of thousands of anti-government protesters who rallied at Tahrir Square in central Cairo for a 12th day.
"The status quo is simply not sustainable," US Secretary of State Hillary Clinton told a security conference in Munich, referring to the situation in Egypt but also the wider Middle East. Saboteurs blew up a gas pipeline in northern Egypt overnight, disrupting flows to Israel and also to Jordan, where protesters angered by economic hardship have been demanding a more democratic political system.
NEGOTIATIONS Vice President Omar Suleiman began meeting prominent independent and mainstream opposition figures, state television said, to try to work out how to ensure free and fair future presidential elections while sticking to the constitution.
But with some of the protesters insisting they wanted not just Mubarak but also his allies out straight away, it was unclear even that would be enough to end the crisis. An Egyptian army commander was shouted down when he tried to persuade thousands of demonstrators at Tahrir Square to stop a protest that has stalled economic life in the capital.
"You all have the right to express yourselves but please save what is left of Egypt. Look around you," Hassan al-Roweny said through a loud speaker and standing on a podium. The crowd responded with shouts that Mubarak should resign, at which Roweny left, saying: "I will not speak amid such chants."
Western governments have expressed support for the protesters but were cautious about expecting too much too fast. "President Mubarak has announced he will not stand for reelection nor will his son ... He has given a clear message to his government to lead and support this process of transition," Clinton told a security conference in Munich where world leaders will discuss how to proceed.
"That is what the government has said it is trying to do, that is what we are supporting, and hope to see it move as orderly but as expeditiously as possible under the circumstances," she said. German Chancellor Angela Merkel said change needed to be "peaceful and orderly", while British Prime Minister David Cameron called for a rapid transition to a new leadership. "The longer it is put off, the more likely we are to get an Egypt we wouldn't welcome," he said.
EXPLOSION Mubarak said on Thursday he believed Egypt would descend into chaos if he were to give in to protesters' demands that he quit immediately. He has styled himself as a bulwark against Islamist militancy and essential actor in maintaining a peace treaty Egypt signed with Israel in 1979.
State TV called the pipeline attack a terrorist operation. Residents in the area reported a huge explosion and said flames were raging in an area near the pipeline in the El-Arish area of north Sinai. The SITE intelligence group, which monitors al Qaeda and other Islamist websites, said earlier this week some groups had been urging Islamic militants to attack the pipeline to Israel.
"Saboteurs took advantage of the security situation and blew up the gas pipeline," a state television correspondent said. The government in the past has used a perceived threat from Islamist militancy to justify its use of emergency laws which helped keep Mubarak in power. Al Qaeda, which has its ideological roots in Egypt, has been largely sidelined in the protests against Mubarak.
NO EASY COMPROMISE The United Nations estimates 300 people have died in the unrest and the health minister has said around 5,000 people have been wounded since January 25, while a Credit Agricole report said the crisis was costing Egypt about $310 million a day.
With the unrest crippling the economy in the Arab world's most populous nation, some Egyptians want a return to normal. But a bourse official said on Saturday the stock market would not reopen on Monday as originally planned, without giving a new date. Banks were due to reopen on Sunday. Mubarak met the prime minister, the finance minister, the oil minister, the trade and industry minister and the central bank governor on Saturday, the state news agency said.
In Tahrir Square, protesters occupying the usually busy intersection in the heart of the city said they were not giving up, despite continuing tensions with Mubarak loyalists who attacked them earlier in the week. "We are not leaving the square until our demands are met," one of them shouted over a loudspeaker, after a relatively peaceful night where some sang patriotic songs and chanted poetry over loudspeakers talking of victory over Mubarak.
Some ordinary Egyptians outside the protest area shouted profanities at those heading to the square in frustration at the collapse in law and order in some areas. Fights erupted now and then between protesters and people trying to persuade them to go home. The unprecedented challenge to Mubarak has rallied many different strands of society - professionals and the poor, secular and religious, Muslims and Christians, internet-savvy youth with members of the Muslim Brotherhood Islamist movement.
Egyptian leader Hosni Mubarak, an "old friend" of the United States, should stay in office during a democratic transition, President Barack Obama's special envoy Frank Wisner said in Munich on Saturday. "The president must stay in office in order to steer those changes through," Wisner, who met Mubarak this week, told the Munich Security Conference via video link. "President Mubarak's continued leadership is critical.
"It's his opportunity to write his own legacy. He has given 60 years of his life to the service of his country, this is an ideal moment for him to show the way forward." On Friday, Obama said the proud "patriot" Mubarak should listen to his people and make the "right decision," avoiding an explicit request for the longtime US ally to step down immediately.
But citing unnamed US and Egyptian officials, the New York Times reported on Saturday that new vice president Omar Suleiman and senior Egyptian military leaders are exploring ways for Mubarak to make a graceful exit. Mubarak, 82, whose three decades as leader of the Arab world's most populous nation had gone unchallenged until now, has said he is "fed up" with his job, but prefers to stay in power until September elections while calm is restored.
Wisner was dispatched to Cairo on Monday by the US administration, and met with the Egyptian leader and with Suleiman, the veteran former ambassador to Egypt said. He is now back in the United States. "The crisis is of extraordinary importance. What happens in Egypt affects all of our interests throughout the region," Wisner said.
"The United States has had a long and very close relationship - 30 years plus - standing with Egypt. Where Egypt goes, the domestic order, the external orientation of the Middle East, will be profoundly affected." Wisner said his mission "was to make sure that we communicated in a respectful manner to a man who has been an old friend of the US but who now faces the huge responsibility of having to lead Egypt through a transition to a new and a different future, and to do so without resorting to force."
Earlier, US Secretary of State Hillary Clinton called Saturday for progress toward open and accountable governments across the Middle East as the way to long-term stability, despite short-term risks. Referring to mass protests in Egypt, Tunisia and other Arab countries, Clinton told a security conference in Germany that the "challenge is to help our (Middle East) partners take systematic steps to usher in a better future."
On Friday US President Barack Obama delivered a clear hint that Egyptian President Hosni Mubarak should step down now and make way for a political transition amid mass protests calling for his ouster and democratic change. In an update of a warning speech she gave last month in Qatar calling for reform in Arab countries, Clinton said the Middle East was being battered by a "perfect storm of trends."
She spoke of too many young people seeking too few jobs in countries with depleting water and energy resources - and expressing their frustrations on social-networking sites. "This generation is rightly demanding that their governments become more effective, more responsive, and more open," the chief US diplomat told leaders and senior officials from Europe, Russia and Afghanistan.
"This is what has driven demonstrators into the streets of Tunis, Cairo, and cities throughout the region. The status quo is simply not sustainable," Clinton said. "Across the region, there must be clear and real progress toward open, transparent, fair, and accountable systems," she said.
She said changes were occurring at different speeds in different countries, but each must undertake the journey toward democracy. "There are risks with the transition to democracy," she said, adding it can be chaotic and can cause short-term instability.
"Even worse, the transition can backslide into just another authoritarian regime," she said. "Revolutions have overthrown dictators in the name of democracy, only to see the political process hijacked by new autocrats who use violence, deception, and rigged elections to stay in power, or to advance an agenda of extremism," she said.
There have been a rash of dire warnings in US-ally Israel that a post-Mubarak Egypt, free to choose its own destiny, would likely become another radical Islamic theocracy like Iran. "The transition to democracy will only work if it is deliberate, inclusive, and transparent," Clinton said.
On the other hand the French prime minister's office says that France suspended the sale of arms and tear gas to Egypt in late January, as an uprising to force the ouster of President Hosni Mubarak mounted. The official says that the decision to suspend the sale of arms was made at a January 27 meeting.
According to the official, speaking Saturday, the meeting came two days after the French Customs service suspended authorisation to export equipment to maintain public order, notably explosive products such as tear gas. The official, not authorised to speak publicly, asked not to be named. France was embarrassed by an offer to share its know-how in maintaining order with Tunisia despite an uprising that ultimately pushed President El Abidine Ben Ali into exile.