CONSTITUTION AND CONFIDENCE: EGYPTIANS GRAB FOR DOLLARS

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 Islamist President Mohammed Morsi 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.

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.

"In times of change, politics are the driver of the economy and not the other way around," said Mourad Aly, a media adviser for the political arm of the fundamentalist Muslim Brotherhood, the backbone of Morsi's presidency and the main group that backed the constitution.

But there are already multiple fights on the horizon.

The U.S. State Department bluntly told Morsi that it was now time to make compromises, acknowledging deep concerns over 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 that 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 that he "couldn't cope with the culture of government work, particular in the current conditions of the country."

Morsi signed a decree Tuesday night that put the new constitution into effect after the election commission announced the official results of the referendum held over the past two weekends. It said that the constitution has passed with a 63.8 percent "yes." Turnout of 32.9 percent of Egypt's nearly 52 million registered voters was lower than most other elections since the uprising nearly two years ago that ousted authoritarian leader Hosni Mubarak.

Morsi is expected to call for a new election of parliament's lawmaking lower house within two months.

In the meantime, the traditionally 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. Many fear a legal crackdown on independent media, highly critical of Islamists.

In a bid to reach out to opposition, the leader of the Muslim Brotherhood said he hoped that the charter will be a "good omen" for Egyptians.

But the opposition said that the passing of the document was not the end of the political dispute. Critics fear that 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 group, the National Salvation Front, vowing to fight for more freedoms, social and economic rights.

The turmoil over the constitution sparked huge protests that turned deadly at times. For a moment, the tension looked like it was spiraling out of control and only added to an already weakened economy.

Over the last two years, the country has lost more than half of its foreign currency reserves from $36 billion in 2010 to around $15 billion currently. Economic experts say that Egypt's current foreign reserves barely cover three months of imports.

Rumors swirling around impending tax hikes, subsidy cuts and other bread-and-butter issues have heightened the public's concern. Around 40 percent of Egyptians live just at or below the poverty line of surviving on around $2 a day.

In a sign of the worsening economy, the number of people living on under $1 a day rose to 25 percent in 2011, up from 21.6 percent in 2009, according to government statistics released last month.