By Barry Rubin

A critical moment has arrived for Egypt. But what does it mean? President Morsi has rescinded much of his decree claiming total power, but he could accomplish much the same thing after the constitution is confirmed, and perhaps if he forces the reinstatement of the elected parliament whose election was declared invalid by a court. At any rate, Morsi's concession has not quieted the demonstrations - another sign that concessions in the Middle East don't bring agreements - and so this crisis is not going away.
There are three broad possibilities for Egypt. Either the regime will fall, the opposition will be repressed, or there will be an increasingly violent civil war.
The regime will not fall due to these demonstrations alone. Remember what happened to the Mubarak regime - it fell for the following reasons:

– The army would not defend it.
– The army then overthrew it.
– The Muslim Brotherhood-led opposition would not compromise.
– The West would not support the regime.

These conditions, except perhaps the first one, are not in place today. Ultimately, Mubarak's regime - not just Mubarak, but the whole regime - fell only because the army overthrew it. There is no sign of this happening now. And the West, ironic as it might be, supports the Muslim Brotherhood government, especially because the U.S. is willing to go ahead with transferring almost $10 billion in aid. Also, the Brotherhood will not concede to the opposition on any substantive point, despite whatever cosmetic maneuvers it makes.
Let's remember that Western - and particularly U.S. - policy has spent the last two years talking about how terrible it is to have a dictatorship or military rule. The armed forces have been systematically discouraged by the West from being in government.
By definition, of course, the Brotherhood regime is supposedly not a dictatorship because it won two elections and is probably about to win a third one. So an elected regime cannot be a dictatorship? This regime has declared that it is above all court decisions and all previous laws. Isn't that a dictatorship? It intends to impose highly repressive law on its society. Isn't that a dictatorship?
The opposition thinks so; the West … does not. But what does the army think? Well, it does not take a principled stance against having a dictatorship; it is happy to live with a dictatorship that meets the military's conditions. Which are:

– The army chooses its own leaders.
– The armed forces sets its own budget.
– Nobody interferes with the military's vast economic holdings.

The regime has already met the second and third conditions, and to retain the military's backing, would give in on the first as well. But the regime wants more: that the armed forces actively put down the demonstrations. This is something the generals are reluctant to do.
The army doesn't want to be hated, to shoot people, and to set off a civil war in which it must round up hundreds of thousands of people and launch scores of operations each day. True, the police are obedient and will act against these demonstrations just as they tried to repress the anti-Mubarak demonstrations. But the police alone aren't sufficient.
What happens if the regime doesn't give in and the army doesn't stop the demonstrations?
The logical conclusion: the Brotherhood and Salafists will increasingly send violent vigilantes into the street to defend their government. They want to ensure that the constitution is adopted on December 15 - whether the opposition boycotts the vote is irrelevant to them - and afterward the Brotherhood regime can operate under that constitution.
Then, the opposition will be told: "You've lost, accept it, you have no choice. And besides: we are acting legally under this constitution that the people accepted."
President Morsi will have to decide whether to try to override the courts and to reinstate the previously elected parliament (almost 75 percent Islamist), or to make a concession and allow elections for a new parliament (which might be only 55-60 percent Islamist).
Thus, the key issues are how high the level of violence will rise, and whether the current conflicts will make the regime speed up or slow down the fundamental transformation of Egypt into a Sharia state in which Islamic law is strictly interpreted.