CAIRO (Reuters) - Efforts to resolve Egypt's rapidly worsening political crisis suffered a blow on Wednesday when the army abruptly postponed "unity" talks that the opposition had minutes earlier said they would attend.
Confirmation that the secular, liberal opposition coalition would join the meeting after boycotting reconciliation talks hosted last week by Islamist President Mohamed Mursi had raised hopes of an end to street protests and deadly violence.
The latest convulsion in Egypt's transition to democracy was brought on by a decree last month from Mursi in which he awarded himself sweeping powers to ram through a new constitution.
The constitution, to be voted on in a national referendum, is a necessary prelude to parliamentary elections due early next year.
Mursi's move caused huge controversy, dividing the Arab world's most populous state and bringing thousands of pro- and anti-government protesters onto the streets in the worst upheaval since the fall of Hosni Mubarak almost two years ago.
The unrest has so far claimed seven lives in clashes between the Islamist Muslim Brotherhood and the opposition. But the army has yet to use force to keep protesters away from the presidential palace, now ringed with tanks, barbed wire and concrete barricades.
The postponement of the talks came as Egyptians abroad began voting at embassies in the referendum on the new constitution that Mursi fast-tracked through an Islamist-dominated drafting assembly.
The start of the voting process was a setback for the opposition, which had hoped to delay the plebiscite.
OPPOSITION 'NO' VOTE
The main opposition coalition will push for a "no" vote in the referendum rather than boycotting it.
"We will vote 'no'," opposition politician and former Arab League chief Amr Moussa told Reuters. Another senior opposition figure also announced that the group would push for a "no" vote.
Moussa also said he would attend the army's unity talks, along with Nobel Peace Prize laureate Mohamed ElBaradei, leftist Hamdeen Sabahy and the liberal Wafd party leader Mounir Fakhry Abdel-Nour
Moussa, contacted after the army announcement of a delay, said he was not aware of the change of plans.
The army said the delay was due to a low level of acceptances from those invited. It did not immediately say when the talks might be reconvened.
Defence Minister Abdel Fattah al-Sisi, who is also head of the armed forces, said on Tuesday that the talks would not be political in character. "We will sit together as Egyptians," he said.
The army dominated Egypt throughout the post-colonial era, providing every president from its ranks until Mubarak was overthrown last year, and oppressing the Muslim Brotherhood.
After his election in June backed by the Brotherhood, Mursi shunted aside generals who had held interim power after Mubarak and appointed a new high command. The army nonetheless portrays itself as a guarantor of national security.
The government said voting on the referendum at home would be spread over two days, December 15 and December 22, while the opposition said it wanted the vote to be held on one day only.
CHAOTIC PROTESTS
The opposition had argued that the chaotic protests and counter-protests of the last two weeks meant the referendum should be postponed, but large opposition rallies this week did not change the Islamist president's mind.
State media said the two-day voting plan had been adopted because many of the judges needed to oversee the vote were staying away in protest at the decision to hold the referendum. Voting therefore had to be staggered to move around those judges willing to cooperate.
The crisis is already damaging the Egyptian economy, with the national currency at an eight-year low against the dollar.
Finance Minister Mumtaz al-Said said on Tuesday that a $4.8 billion International Monetary Fund loan, a cornerstone of Egypt's economic recovery hopes, would be delayed until next month because of the crisis.
Any further delay beyond the first quarter of next year would damage recovery hopes, HSBC warned in a research note. "Egypt's room for maneuver, however, is now extremely limited and the consequences of more protracted delay will be severe," the bank said.
On Tuesday, thousands of opposition supporters had gathered outside the presidential palace in Cairo to demand that Mursi postpone the referendum. But a bigger crowd of flag-waving Islamists, who want the vote to go ahead, assembled at two mosques and some remained on the streets through the night.
(Additional reporting by Yasmine Saleh and Edmund Blair in Cairo; Writing by Giles Elgood in Cairo; Editing by Alastair Macdonald and David Stamp)
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