Update: 

New day: Egypt’s Muslim Brotherhood era is underway; President Mohamed Morsi at the Organization of Islamic Cooperation conference in Mecca

CAIRO: Two months after the elections and constitutional maneuvers by the armed forces, the dust has begun to settle in Egypt, revealing that the Muslim Brotherhood controls the levers of power. The clarifying moment came on August 11 when President Mohamed Morsi removed the two top military leaders, consolidating the Brotherhood’s hold over the government.

Realization has sent tremors of concern across the region and to Washington, but all may be over-reading the change. Despite a change of tone and public embrace of Iranian President Mahmoud Ahmaedinejad, indications are that a radical break is unlikely from Morsi’s Egypt. Not only are the new military appointees well -known to the US and Israel, but Morsi has called for regime change in Syria, and conservative Gulf countries have stepped up with financial help for Egypt.

Such moderate reactions are surprising because it’s widely believed that the latest changes in Egypt were orchestrated above Morsi, in the politburo of the Ikhwan Al-Muslimoon, the Muslim Brotherhood. Morsi’s presidency, and with it Egypt’s Ikhwani era, has just begun, and more surprises could be in store.

Since Morsi’s election in June, Egypt has had two effective, opposing and undermining poles of power. One was the newly elected president; the second was the Supreme Council of the Armed Forces, which had ruled since February 2011 by direct appointment from former President Hosni Mubarak, his last official act. SCAF did not move to relinquish power since the election. On the contrary, in the midst of the second round, hours before vote counting was due to begin, SCAF, headed by Minister of Defense Mohamed Tantawi, issued a “complementary constitutional declaration” transferring legislative powers to SCAF. Tantawi clearly had little respect for Morsi.

A week prior to the latest reshuffling, on the heels of the terrorist attack in the Sinai that left 16 Egyptian security officers murdered, Morsi replaced the chief of intelligence services, appointing Mohamed Shehata, who had most recently acted as liaison with the Israelis on the release of soldier Gilad Shalit.

Even as Egypt is engaged in a wide military campaign in the Sinai, Gaza’s government has sheepishly tried to maintain a presence on Egypt’s radar. Many in Egypt are quick to point the finger towards Gaza in those attacks, and Hamas has vehemently defended itself. Nevertheless, Hamas, relatively content with consolidation of power in Morsi’s favor, was noticeably quiet as a joint military-police campaign for eradicating pockets of extremists in the Sinai also targeted tunnels connecting Gaza to the Sinai, which for years have provided routes for goods, people and also weapons.  On Sunday Hamas Prime Minister Ismail Haniyeh called upon Egypt to coordinate its security arrangements with Gaza, excluding the Israelis – a call Egypt can be expected to ignore.

News of Morsi’s gambit with the military obfuscated another news item less than 24 hours earlier: Prince Hamad bin Khalifa al-Thani of Qatar, on a visit to Egypt, deposited $2 billion of US dollars in Egypt’s Central Bank, a much needed injection for Egypt’s foreign reserves. Once more, Qatar is proving to be the Brotherhood’s greatest foreign ally, yet not necessarily Egypt’s, and one might suspect that the move received – ex-ante or ex-post – Qatari blessing. Relations with the Gulf emirate could not be better. The Qatar-based broadcast news service, Al Jazeera, has been a stalwart supporter of the Muslim Brotherhood since the revolution, acting as its de facto channel when Egypt’s national television was SCAF-dominated.

Relations with Saudi Arabia, with whom the Brotherhood has historically had tense relationships, are more complicated. There’s undoubtedly some febrility in Riyadh regarding Morsi’s consolidation of powers. Establishment newspaper Al-Shark Al-Awsat published aneditorial warning that Morsi “enjoys limitless power, and is even more powerful than former president Hosni Mubarak, even at the height of his reign!”

Amid Morsi’s visit to Mecca for the Organization of Islamic Cooperation summit in mid-August were muted signs of tension. For one, Saudis sent the relatively low-ranking governor of Jeddahto greet Morsi at the airport. During the summit, Morsi warmly embraced Ahmadinejad, and in a climate of possible Egyptian-Iranian rapprochement, Morsi is due to travel to Iran to attend the Non-Aligned Countries Movement summit at the end of August. Iranian media have hailed Morsi’s rise, as the Muslim Brotherhood has been more indulgent towards Iranian nuclear brinkmanship than the Gulf countries – a development not favored by the Saudis.

Yet Egypt under Morsi has also broken away from Iranian support for Syria. Also at the OIC summit, Morsi stated that it was time for regime change in Syria, a first for him. The president could be signaling the return of a more regionally involved, pan-Arab Egypt.

Economic conditions in Egypt and dependence on US foreign aid could dictate Morsi’s outreach. Egypt under the Muslim Brotherhood may turn out to be more moderate and cautious than many had assumed.

Morsi’s reshuffling of army leadership can’t be viewed as a Muslim Brotherhood takeover. After all, he’s Egypt’s elected leader, and any reduction in SCAF’s power is a step forward. The consolidation of power increases decision predictability, both politically and economically. Nevertheless, legislative powers should be restored to the parliament. Concentration of powers with the presidency is unsustainable and can be tolerated, at home and abroad, only for a brief period. Any international legitimacy Morsi acquires will rapidly dissipate if his hold on power transforms into attempt at totalitarian accumulation.