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updated 1/31/2011 9:37:55 AM ET 2011-01-31T14:37:55

Guests: Richard Engel, Howard Fineman, Charles Dunbar, Marc Ginsberg, Cynthia Tucker

CHRIS MATTHEWS, HOST:  Trouble on the Nile.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington. 

Leading off tonight: Unrest in Egypt.  Proving the Iraq war wasn‘t needed, these protests in Egypt, as well as in Yemen and Tunisia, are all aimed at dictators supported by the U.S.  The demonstrations have not yet turned anti-American, but they could.  These are the events the Bush administration hoped to encourage by lying about weapons of mass destruction and invading Iraq.  A live report from Richard Engel at the scene coming up.  And we‘ll stay on this story throughout the hour as events warrant.

Plus, loony tunes week.  The Republican Party thought they could dance with the Tea Party.  This week, the chickens came home to roost.  They hoped to look like a serious opposition this week in the State of the Union.  Instead, they had to watch the jamboree—Glenn Beck pursued by hundreds of rabbis who think he‘s telling crazed Nazi history.  That‘s when he‘s not threatening to chainsaw rabbits on his show.  Michele Bachmann is rewriting slavery right out of the history books and bumping poor John Boehner from the spotlight.  And Sarah Palin—did we forget her for a second? -- she‘s making juvenile snipes at the president‘s State of the Union, plus all (ph) stuffs about “WTFs,” et cetera.  What a week of loony tunes from a party that promised what (ph) it was, common sense conservatism.  Remember that?  That‘s not what we‘re seeing this week.

Also, two GOP senators have decided there‘s a loophole in the Constitution, specifically in the 14th Amendment.  They want to amend it to end automatic citizenship for the children of illegal immigrants.

And once again, Republicans are making the case that Democrats just don‘t love America.  In his speech Tuesday, President Obama called the United States the greatest nation on earth and a light to the world.  John Boehner has now complained that the president never actually said the words “American exceptionalism.”  Can we please get serious here?

Finally, why does Glenn Beck remind me of this guy?

(BEGIN VIDEO CLIP)

HUMPHREY BOGART, “THE CAINE MUTINY”:  I—I don‘t see any need of that.  Now that I recall, he might have said something about mess boys, and then again, he might not.

(END VIDEO CLIP)

MATTHEWS:  Glenn Beck‘s ranting against HARDBALL coming up.

Let‘s begin with Egypt.  NBC News chief foreign correspondent, Richard Engel, is on the ground in Cairo.  Richard, is this a revolution?

RICHARD ENGEL, NBC CHIEF FOREIGN CORRESPONDENT:  It certainly feels like that right now.  The protesters aren‘t calling themselves demonstrators anymore.  They call themselves revolutionaries.  And they say their goal is nothing less than to topple the regime of Hosni Mubarak.  There has been nothing like this in this country for decades, certainly not during the rule of President Mubarak himself.  So from the Egyptian government‘s perspective, yes, it is a revolution.

Government officials, however, are still trying to say that nothing is going on.  They have been very slow to react to this crisis politically.  And a short while ago, the speaker of parliament said that tomorrow there would be a meeting of Egypt‘s national security council to study the situation and that there would be a parliament meeting on Sunday.

So the Egyptian government is trying to slow things down.  And the protesters on if streets think they have the government on the ropes, they have Mubarak on the ropes, and they want to keep going.

MATTHEWS:  Is there any break in the security forces?  Has anyone taken off their uniform?  Is anyone joining the protesters?

ENGEL:  Not large numbers.  But mostly—there have been some reports and we have confirmed that a very small number of the riot police, who are generally recruited from the poorer neighborhoods in Cairo and across the country, were refusing to fire tear gas, rubber bullets at the protesters and did take off their uniforms and join them.

But most significantly, we‘re seeing the army, which has been called in to Cairo, called in to enforce a nationwide curfew that no one is obeying, and we‘re—the army has arrived.  We‘ve seen their tanks.  There are some very close to where I‘m standing right now.  But they have not been taking any violent action against the demonstrators.  So they‘re not joining the demonstrators, but they‘re not cracking down on them, either.

MATTHEWS:  How can we tell who‘s going to win this test of power?  In the past, Mubarak has been smart to give people some leeway, let them burn off their steam and then basically wait them out.  Is that what his strategy is this time?

ENGEL:  That seems to be the strategy, by having this national security meeting tomorrow, having a parliament session on Sunday.  We‘re hearing relatively conciliatory remarks from Egyptian officials saying that they should meet, that the protesters on the street are being impatient, being rash, being violent, that we should all sit together, according to Egyptian officials and discuss the situation.  That‘s the approach that they are taking—slow it down, give the protesters some things they want to hear, certainly talk of reform, lowering prices.  It‘s unclear if that will be enough at this stage.

MATTHEWS:  Can you tell if there‘s any anti-American aspect to the protesters?

ENGEL:  Not anti-American in that it‘s violent against Americans.  I was out on the street.  People asked me where I was from.  I said I was from American television, and they were very supportive of that.  So there isn‘t—no American buildings have been burned.  American flags weren‘t being set on fire.

But people were cheering (ph) against Mubarak, saying that he was an American spy, that he‘s an American stooge.  And they believe that the United States has been complicit in supporting Mubarak for years, that they have been supplying his armed forces with weapons, that they have been turning a blind eye to corruption.  So there‘s anger toward the American administration because of its association with Mubarak.

And then just more broadly, this is a population that has many anti-American sentiments.  There are people here who believe widely in conspiracy theories, anti-Israeli.  The general thing that you see on the Arab street is very concentrated here in Egypt.

MATTHEWS:  Let me ask you about the Islamic aspect.  I don‘t sense a religious piece to this, or a greater Arab thing, that it‘s mainly an Egyptian revolution.  Is that fair to say?

ENGEL:  It‘s hard to know.  And this—the protests and the demands of the protesters have been changing as this situation develops.  Initially, it was mostly students.  It was the unemployed.  It was people who are angry with corruption who are taking to the streets, a lot of educated young Egyptians who are using Twitter and social networks to get out the word.

Then today, the Muslim Brotherhood joined the demonstrations.  We heard quite a few Islamic slogans.  People were shouting “Allah-u Akbar.”  Will that ultimately hold the day?  Will the Islamic movement hijack what started out as a labor movement, as a free rights movement?  That‘s still unclear.  The Egyptian government has been warning against that and says it needs crack down so that the Muslim Brotherhood does not take control.  It‘s unclear if they‘re going to be proven right.

MATTHEWS:  Let me ask you about the geography.  Is it mainly taking place in that part of downtown along the Nile that most tourists are familiar with, that Corniche, the road that runs along the river?  Is that where it‘s all happening?

ENGEL:  It culminated there, but—and I‘m right in the center, along the Corniche that you‘re talking about.  Cairo is a large city divided in two halves by the Nile river.  And earlier today, when the protests began, they started out at mosques that were spread out all over the city, and the idea was to have all of the protesters converge like spokes in a bicycle wheel right into the center of the city.  So we saw a lot of violent clashes in Tahrir Square in downtown Cairo.

But as people have been going home, they‘ve been bringing some of the protests back to their individual neighborhoods in the outskirts of the city.  There have also been demonstrations in Suez, Alexandria, on the Nile delta.  But the biggest concentration of people and the most violent ones were today when everyone got together in downtown Cairo.

MATTHEWS:  You know, when you visit Cairo—I‘ve been there a few times—you get a sense there‘s a lot of bureaucrats.  There‘s a lot of people with at least a minimal stake in stability.  They dress Western.  They have jobs.  They take a break more than we do, perhaps at times.  There‘s a lot of cafe society.  But they‘re not—they‘re not desperate people, at least the ones that hang around downtown.  Is this a revolution of the very poor or a revolution of the middle?

ENGEL:  I think it‘s of the lower middle.  And it‘s of the exact working-class people that you were talking about, people who maybe work in a government office, in a post office or something like that, drive a cab as a second job.

MATTHEWS:  Yes.

ENGEL:  Those people are having a very difficult time in Egypt right now.  Prices have gone up.  Rents have gone up.  It‘s difficult for young people if they don‘t have enough money to pay dowries and to get married.  So it is a fairly broad-based, large segment of society here, people who have jobs, maybe even two, but still can‘t pay their bills.

MATTHEWS:  My sense of Egypt and how it works is it‘s all tied together by relationships, by brothers-in-law, family relationships, people basically on the take with each other, very complicated networked relationships that are good for the people on the inside.  You get the business.  You get the jobs.  And the people on the outside never have a chance to break into that.  Are we looking at the people here who know they‘re never going to break into that inner power structure of Cairo?

ENGEL:  And sorry I was looking away.  We‘re just—we‘re just being told right now that Mubarak—President Mubarak is expected to give a speech in a short while.  These would be his first public statements, perhaps putting an end to some rumors that he has fled the country.

MATTHEWS:  I see.

ENGEL:  What he says will be critical.  Going back to—because if he gives conciliatory remarks and remarks that people on the street just dismiss, it could inflame these protests even more.  So he has to walk a very delicate line.  If he gives in too much and upsets people, it could spell the end for him.

When the president of Tunisia gave a speech and came out on television and said, I understand, I understand this movement is taking place, I get it, it ended up being the end for him and he went on to Saudi Arabia.

Going back to your other point, there is a feeling of a glass ceiling here, that there is an elite of tycoons that run the country, that run the big businesses, and that the average person on the street has absolutely no shot of making it and advancing himself further.

And that‘s why people are out.  They feel that their children aren‘t going to necessarily have a better life than they will.  And when you feel that kind of frustration and you‘ve been feeling it for a long time and the government doesn‘t give you an opportunity to vent those frustrations, you have a situation like the one we‘ve been seeing here.

MATTHEWS:  Mubarak has been very tough and his people have been very tough on his critics like us, saying, Every time you recommend relief or reform, whether it‘s Iran or you recommend an election in Gaza, the bad guys win.  The ayatollahs win.  Hamas wins.  Every time you guys interfere with the Middle East, the bad guys win.

And our own history books have taught us, every time there‘s a revolution, if the power structure gives in and shows some relief or some uncertainty and gives way to the crowd, they definitely go down.  So I can understand why Mubarak is listening to Secretary Clinton, saying, Don‘t give us advice.  Your own history books tell you that every time a revolution is met with what looks like concessions, the revolution goes further and demands the overthrow of the government.

So Mubarak seems to know what he‘s doing here more than we do.

ENGEL:  There is that possibility.  And many people in Cairo are very worried that this movement, if it goes further, could get hijacked by Islamic radicals who do not believe in democracy and very much have their own agenda.  And that is, as you say, the history of popular revolutions.  They start out as exciting, apparently idealistic movements, and then will turn into something else.

That‘s what happened in Iran.  In the beginning, people thought, This is a great thing.  We‘re going to have Islamic law.

MATTHEWS:  Yes.

ENGEL:  We‘ll have free rights for everyone and a just society.  And then it turned into the regime that it is right now.  So he could end up being proven right, and saying that there needs to be a strong hand.  That message, however, is not being accepted by the people, who say that he‘s just had too many years to try and change things in this country and has let the people grow too poor and too frustrated.

MATTHEWS:  You know, just a look at our own history books, Richard, it seems to me—we look at Castro.  He was going a democratic revolutionary, a bourgeois guy of the middle class.  Kerensky in Russia was going to be democratic revolution.  In both cases, they went hard left, all the way to communist.  In this case, in the Middle East, I guess the longer we go without seeing real signs of religiosity, the better.  Is that a fair estimate, from our Western point of view?  As long as this stays to look like a middle class or a lower—working class Egyptian revolution and not an Islamic one, the better for us.

ENGEL:  It won‘t look like an Islamic revolution.  The Muslim Brotherhood—it‘s a group I know very well, I‘ve spent a lot of time with them here in Egypt—they don‘t operate openly.  You‘re not going see people carrying Muslim Brotherhood flags and waving them in the streets.

MATTHEWS:  OK.

ENGEL:  They control a lot of the organizations that people would think are popular, a lot of the labor unions, the lawyers union, the different professional syndicates in this country.  So what could seem like a professional revolution by the middle class could also have a lot of involvement by the Muslim Brotherhood.

And this is something that the Egyptian government is certainly aware of, clearly something that U.S. intelligence agencies are aware of, and to a degree, the Egyptian people are aware of.  And if you listen to the speeches, the statements by the press secretary and secretary of state, they did give Mubarak a great deal of latitude.  They just said, Don‘t call in the army to crush the people.  They don‘t want a Tiananmen Square-like situation.  Other than that, they didn‘t say he had to go, just, Don‘t carry out massive bloody repression and give people real reform.  That could be perceived as giving him quite a pass.

MATTHEWS:  Let‘s talk about America and Joe Biden, the vice president, and Secretary Clinton.  It seems like we‘re trying to square the circle.  The vice president wouldn‘t call Mubarak a dictator, but wouldn‘t deny that he was one.  Secretary Clinton is asking for him to show restraint in the way that his military and security forces handle the mobs today.  But it doesn‘t seem like we have an answer for him, like, Here‘s how we‘re going to help you out over there.  He‘s our strong partner, we say, but we don‘t seem to have really good counsel.

What are we saying to Mubarak today about how he should handle this, we Americans?

ENGEL:  You know, frankly, I have no idea.  Mubarak—he‘s going to come out and speak, we‘re told, fairly soon.

MATTHEWS:  OK.

ENGEL:  But all that I‘ve been able to gather from what U.S. officials are telling him is not to have a massive crackdown and to offer the people some sort of reform, allow them to live better, and see if that will calm the situation down.

I do not think the U.S. wants to have a major resolution here.  I do not think—I think there‘s too many unanswered questions, some of which you‘re raising right now, that have a lot of people in Washington very nervous about what happens in Egypt.  Certainly, Israel is very nervous.  The Muslim Brotherhood, those professional syndicates that I talked about, if they came to power, one of the first things they‘d do would be to cancel the peace accords with Israel.

MATTHEWS:  Right.

ENGEL:  That is something they would cancel.  So that could disrupt things astronomically across the region.

MATTHEWS:  Well, it‘s a great thing to speak with you, Richard Engel.  You learned your business out there without a credential, just a regular reporter going over there and learning and living with the people and learning Arabic and learning the Egyptian people.  You‘re the best guy to be talking to.  Thank so you much.  We‘ll back to you as developments occur.

ENGEL:  I think Mubarak is coming up and speaking right now.

MATTHEWS:  OK, thank you.  We‘re going to be getting a translation of that.  We‘ll be right back.  He‘s speaking to the people.  We‘ll have the hot news the minute we get back.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Hosni Mubarak, the president of Egypt, is speaking right now.  We‘re going to be getting a translation in a moment.  We also have a bulletin from the Egyptian parliament speaker.  He says President Mubarak remains in control.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Egyptian President Hosni Mubarak is speaking now, as we told you. 

Let‘s listen to the English translation. 

(JOINED IN PROGRESS)

HOSNI MUBARAK, PRESIDENT OF EGYPT  (through translator): -- citizens.

These demonstrations came to suppress the aspirations, lawful aspirations for more democracy, and speed actions to combat unemployment, raising the standard of living and fighting poverty and addressing corruption. 

I am fully aware of these lawful aspirations of the Egyptian people, and I am also aware of the degree of their sufferings, to which I‘m always attached and working day after day. 

However, the problems facing us and the goals sought by us cannot be achieved through violence, nor chaos.  They can only be achieved by national dialogue and conscious, concerted, genuine efforts.  The youth of Egypt is a dear wealth. 

And Egypt looks at them to live up and urge them to steer away from those who entice chaos and looting public and private property, arsons, and knocking down what we have been building.  I have a firm belief and convictions that we will continue our political, economical and social reforms for a free and democratic Egyptian society, embracing the modern principles and opening to the world. 

I have taken the side and will—will always be taking the side of the poor people of Egypt, convinced that the economy is too dangerous to be left to economists alone.  I have always been keen on directing the government‘s policies towards economical reforms, to be expedited and speeded up to lift the suffering of the people. 

Our plans combat unemployment and provide more educational services, health care, housing and many other services to the youth and citizens will remain conditional on our efforts to maintain Egypt‘s secure, stable homeland of a civilized people that cannot jeopardize its aspiration to future or leave it to go down the drains. 

We will go above the arsons and looting, which may indicate further plots to shake the foundation of stability of Egypt.  I call on our youth and call on each and every Egyptian citizen, man and woman, to work for the public interest of the people and to stand up for the (INAUDIBLE) of their country, not by setting ablaze or assaulting private and public property. 

Not by this we can achieve the aspirations of Egypt and its people.  Yet, these aspirations can be achieved for a better future by way of awareness, dialogue and genuine efforts for the public good. 

My fellow citizens, I address you today in—not only as the president of the republic, but also as an Egyptian citizen, which my fate put me under the responsibility of this country, exhausted my life for the country in times of war and peace. 

We have weathered hard times and surmounted these obstacles when we stood up for them one people, one nation, and when we were aware our direction and our cause and set our goals right. 

The goals to reform which have—we have embraced has no point of return.  We will continue steadily by new steps, emphasizing our respect to the rule of law, new steps towards more democracy, more freedoms to citizens, new steps to reduce unemployment, raise the standard of living, develop services, new steps to stand by the side of the poor and people of low income. 

Our options and our goals will define the shape of our futures, and we have no other alternative to achieve them, but to embrace genuine work, consciousness, and struggle.  We will continue to maintain what we have earned and embark on this, cautious of the future of the nation.

The incidents that took place today and the past few days have left the majority of the Egyptian people fearing for Egypt and its future, cautious of further mayhem, chaos and destruction. 

I, shouldering my first responsibility to maintain the homeland security and the citizens‘ safety, cannot tolerate, cannot allow this fear to grip our people.  And, therefore, I wouldn‘t allow this to haunt our future and our faith. 

I have requested the government to step down today.  And I will designate a—a new government—a new government as of tomorrow to shoulder new duties and to account for the priorities of the upcoming era.

And I state once again that I will not be lax or tolerant.  I will take all the steps to maintain the safety and security of all the Egyptians.  I will safeguard the safety of people—Egypt and the aspirations of our people.  It‘s the duty and responsibility for which I have taken the oath to safeguard and to maintain. 

May God save Egypt, its people and may guide our steps all.  And may peace be upon you all. 

MATTHEWS:  Of course, that was Egyptian President Hosni Mubarak speaking in real time, defending the actions of his military in streets of Cairo and vowing to press ahead with social and economic reforms.

Professor Charles Dunbar is an international relations professor up at B.U.  He joins right now.

Professor, it seemed to be an appeal from the president, from President Mubarak, to the people who weren‘t in the streets, to those who have property, to those who have a stake in the establishment over there, not to join that revolution. 

Your thoughts?

CHARLES DUNBAR, MIDDLE EAST EXPERT, PROFESSOR, BOSTON UNIVERSITY:  I

think that‘s absolutely right. 

I think he‘s in a Very, very difficult situation.  And you heard all the familiar themes:  I will not tolerate further chaos and mayhem, and I will—and the—the theme of a plot against some sort of unspecified people who are trying to—to endanger Egypt‘s security. 

The electrifying point—I didn‘t hear the whole speech, but, of course, the be electrifying point—intended to be electrifying—at the end was that he would announce a new government tomorrow, that that is the big gesture.  We will see if it—if those people that you mentioned accept it.

And stay tuned until tomorrow.  That‘s, I think—

MATTHEWS:  But, Professor, I think you know and the people of Egypt know that the government of Egypt is basically Hosni Mubarak.  And that premiership—premiership underneath him and the Parliament underneath him are all responsive to him. 

And, therefore, it can‘t be that much of a different government.  They have the same amount GDP tomorrow they have today, the same amount of resources in the government‘s hands.  The government can‘t deliver any more to those poor people in Egypt tomorrow with a new government than they can today, can they? 

DUNBAR:  I entirely agree. 

I think this was the—this was intended to be the big gesture, you know, the throw the bums out and we will get some new bums in.  But the—

(LAUGHTER)

DUNBAR: -- the problem is exactly as you described it.  And it—it‘s

it‘s very significant. 

I think the key point, he‘s obviously going to—if there are more demonstrations tomorrow—and it certainly sounds as if there are going to be—he‘s going to break a lot of heads and try to go back to the traditional way of saying, right, we will—we will throw the bums out, but, in the meantime, no more of this. 

And we will see what happens when he does.  It—

(CROSSTALK)

MATTHEWS:  Egypt is—

(CROSSTALK)

MATTHEWS:  Professor—

(CROSSTALK)

MATTHEWS:  Professor, Egypt is a big country.  Who are we not seeing in the streets?  Who is back at home in their homes and their offices right now or today who don‘t want to see this succeed?  Who are the stakeholders? 

DUNBAR:  Well, my sense is, who do not want to—want to see—who do not want to see Mubarak succeed or to see the—the revolution—

MATTHEWS:  The people in the streets.  They don‘t want the revolution.  Who is opposed to the revolution in Egypt right now?  Who is on Mubarak‘s side?

DUNBAR:  The establishment, the—the people who benefit from the—from the—the present system. 

And the—the key point is whether they can mobilize really large numbers of people, and, in my view, when the police—and I heard it mentioned that the military was engaged as well—when they say, enough, we won‘t—we won‘t break any more heads.  And that‘s what—

MATTHEWS:  Do you—

DUNBAR:  That‘s what they are facing, in my judgment. 

MATTHEWS:  Give me a sense, Professor—

(CROSSTALK)

MATTHEWS: -- of the Egyptian society.  When you go there as a tourist or as a visitor, what you see is a lot of middle-class and perhaps working-class people who are dressed reasonably well.  They are in the souk.  They are doing business.  They are making some money.  They have a stake in society. 

Are those—are those the people that are the heart of Egypt, the bureaucracy, the—those people that you see, or are the poor people outside the city that you never do see, are they the power? 

DUNBAR:  Well, all of the above. 

I think it‘s crucial what the middle class does and the kind of people that you mentioned and—and below, people who are working.  There‘s an elite that‘s going to—that is, I think, going to watch very carefully to decide whether they should jump.  

Mr. ElBaradei already has made his decision that he will jump and go

with the opposition.  Middle-class people, I think, will be very quick to -

to move to support a revolution.  But middle-class people don‘t like having their heads broken. 

You will find plenty of poor people right in the city of Cairo and in the—you know, in the countryside.  But Egypt, I wouldn‘t want to guess the rate of urbanization, but I would say it‘s probably—it‘s probably over half. 

So, it isn‘t as if there are a lot of people out in the countryside that are hard to mobilize.  They have got plenty of people to mobilize in the city.  And it‘s just a question of whether, once again, the violence—enough security force violence will put a lid on.

They will try to find—I would also say, try to find some sort of concessions that they can make in terms of the economic—immediate economic benefits, subsidies, that sort of thing.  It‘s well to remember the last big riot they had was in 1977 over the decrease of subsidies on—on basic commodities. 

MATTHEWS:  Let me—let me go to a couple questions, the pressure point, the critical point here, the acid test of this regime. 

The shah would not fire on his own people.  He wouldn‘t start mowing people down.  He knew perhaps that his own army wouldn‘t stand for it.

Is it your sense that the security forces in Egypt would ever resort to lethal force against this mob? 

DUNBAR:  I think some would.  I‘m—I‘m—I‘m not sure.  I think he will have a very hard time doing that.  Rubber bullets are one thing.  Breaking heads is one thing.  That‘s what they will try to get away with. 

My guess would be no, that—

MATTHEWS:  Yes. 

DUNBAR: -- mowing people down is something that—that isn‘t going to happen. 

The big problem is that it‘s very hard to see what concession Mubarak can—Mubarak can make, if there‘s any possibility of getting a compromise.  And it‘s hard to know what they would compromise on.  So, no, I—my guess would be that mowing people down is not going happen. 

MATTHEWS:  In the Middle East, we have always seen an all-or-nothing situation.  Either you have the shah, with all his faults, or the Palestinian Authority, with all its faults—and they are much better than they ever were, of course—or one of these other potentates over these dictatorships, or what—the alternative always seems to be worse.

And I guess the question for us, is there any alternative government in Egypt that would be favorable to us? 

DUNBAR:  Yes.  I think the—well, for example, you take a figure like Baradei, who wanted to run against Mubarak.  I think he would—no, I think that—that that is possible. 

Most Egyptian governments, I—well, that‘s not right.  There is a—

I think there‘s the basis for forming a new government.  I think the symbolic gesture of the removal of Mubarak might permit others to step forward.

MATTHEWS:  I see.

DUNBAR:  The Muslim Brotherhood, of course, is prepared to do that.  And I want to make it clear, my view, that the Muslim Brotherhood does not mean a—a completely hostile Egyptian regime. 

The Muslim Brotherhood is very anxious to play in the politics as it is now.  They did not—they did not participate in the demonstrations initially.  I understand that they are now doing so.  That is a—is also a possibility, where there would be a—an appearance of a very dramatic change.  I don‘t—but an ability to create a government that would work with the United States. 

MATTHEWS:  OK. 

Professor Dunbar of Boston University, sir, thank you very much.  We will be having you on again. 

Let me bring in Richard Engel, who is still over there. 

Richard, what‘s your take on President Mubarak‘s speech of just a moment or two ago? 

RICHARD ENGEL, NBC CHIEF FOREIGN CORRESPONDENT:  Yes, I was just listening to the speech.  That‘s why I broke away for a little while. 

Very interesting.  A lot of the people here don‘t accept it.  He started out by justifying the crackdown.  He said it was necessary.  He called the protests riots and said they—they threaten national security. 

He also said that they are creating fear in the hearts of Egyptian families and that he, as the president, couldn‘t accept to see Egyptians frightened and bullied in this way. 

He did offer some concessions that people may or may not accept.  His biggest concession was, of course, his government.  He said that he called on his government to resign.  Effectively, he fired all of his ministers.  And he said he would work toward some reform. 

And I‘m looking for a quote.  He said that there would be more steps to democracy, more steps to freedom, that there would be actions taken to alleviate unemployment, to improve basic services, and to help the poor and those with limited incomes, no specifics, but he did promise reform, and he said that the protests should stop. 

Whether this—this act of firing his government and now having to create a new government will be enough to—to stop the street protests will—remains to be seen.  I guess it depends on who he—who he intends to include from the opposition in the new government. 

But it didn‘t sound like any major, major concessions, certainly not what the street protesters were demanding.  They want him to be out of the country. 

MATTHEWS:  Right.  When you look at the picture of this government, it‘s a picture of Hosni Mubarak.  So, how can they change the picture of the government—

ENGEL:  They have been many—

MATTHEWS: -- without getting rid of him? 

ENGEL:  They have had many cabinet reshuffles in Egypt, and not major changes of policy.  So, is it going to be real this time?  I think you‘re going to find very few Egyptians, certainly very few protesters, who are going to believe that it is. 

A lot of the anger today was directed at President Mubarak‘s ruling party, the National Democratic Party.  The headquarters, which is just behind me, was actually set on fire.  So, to reorganize the cabinet and reorganize the ministries with, most likely, other members of the National Democratic Party, which controls the—the vast majority of the government, would probably be—not be acceptable at this stage of the game. 

But—you can hear people already chanting behind me—or below me, I should say—that they want the—the government to go.  They want President Mubarak to go. 

MATTHEWS:  What is your sense as a Middle East person about the impact throughout the region?  If you were sitting in Cairo right now—I mean, not in Cairo—in Riyadh, or you‘re sitting in—in Damascus right now, or you‘re a government official in one of those countries, is this contagious, more so than we see already? 

Could this go from Tunisia, to Cairo, to perhaps Damascus, to perhaps

even to Saudi Arabia? 

ENGEL:  Yemen.

Saudi Arabia, lot—a lot less likely.  Saudi Arabia is still very, very wealthy.  It has a relatively small population.  I‘m not saying Saudi Arabia is perfect, but it doesn‘t have the same sort of symptoms that the governments that have been a targeted thus far.

Syria is a much closer example.  A police state, a lot of poor people, a high urban population.  You were talk about urban populations versus rural population.  These movements have been in urban centers.  That‘s where it‘s easier to organize people.

Farmers live on farms.  They are spread out.  Here in Cairo, you can have 10 people living in a single apartment, in a building with 50 apartments in it.  So, if you just add it up, you have a very, very dense, very volatile population packed into this city, about 18 million people in Cairo alone.

So, yes, there are other countries that share those characteristics.  Yemen, very poor, government not very strong, seen as a largely as a dictatorship.  Syria, similar to Egypt.  In fact, its history Egypt and Syria once tried to unite and become one country.  So, they have a lot—a lot shared solidarity as well.

CHRIS MATTHEWS, HOST:  If you‘re in Israel now and if you‘re Bibi Netanyahu, the prime minister, are you thinking that this might be an opportune time for Hezbollah to strike, to begin rocketing?  I mean, you always want to hit your enemy when they‘re vulnerable, or for Hamas to begin another sort uprising?  Is this troublesome to Israel, this event we‘re watching?

ENGEL:  I think it‘s troublesome for Israel because Egypt sets the tone for the rest of the Arab world.  The Arab League is here.  Egyptian movies are made here which are popular across the region.  Music that is the most popular across the region generally comes from here, the pop music that‘s on the radio stations.

So, if this country becomes more hostile to Egypt, it will certainly spread across the region.  Whether Hezbollah, a Shiite movement backed by Iran would see this as an opportunity to strike, I think they have their own problems right now in Lebanon there, in the process of restructuring the Lebanese government.  It would seem like adventurism even too risky for Hezbollah to engage in at this stage.

MATTHEWS:  Let me ask you about you and your experience in that country, where you learned about the Arab world right in that city.  What is this—how does this fit in to your sense of the way you sort of grew up in that part of the world as a journalist?  Does—how does this fit?  Does it surprise you what we‘re watching right now?  Does it fit into some sort of sequence of events you‘ve watched in that region over time?

ENGEL:  Yes.  I lived here for about four years and in lived in a very poor area, several different areas, oftentimes with people from the Muslim Brotherhood.  They were my neighbors.  They would come in and check on me.  They were very religious—anti-American to a degree but accepted me on a personal level.

So, to come back here now and obviously, I‘ve been back since then many, many times, it is extraordinary to see these events taking place right now.  The ruling party of Mubarak has always been seen as so incredibly strong, so monolithic that it could just smother any problems with its own bureaucracy.

When I was here, there was a major problem with land reforms.  And what the government did was just absorb the grievances.  It said, OK, if you have a problem, just bring it to the courts.  And it just slowed the people down.

MATTHEWS:  Yes.

ENGEL:  And people were never—didn‘t have the guts to go out and sort of take to the streets.  This is not something that Egyptians take lightly.  It is not something they do.  So, for them to be out screaming anti-Mubarak slogans, which I‘m hearing right now is an incredible turn of events.

MATTHEWS:  When you visit Egypt, as I‘ve done a couple of times, you get—and recently—you get a sense it‘s a very—a very arranged society, with everyone knowing their role and it‘s something you can put on paper.  But yet, it seems like a compliant society where people accept their roles, accept their station, accept the fact they have a certain piece of the soup where they can do their business and they know how to get their food sources and their—whatever sources, their souvenirs and they sell them.  And it‘s very complicated, richly layered society, and used to working together in all these arrangements.

Does it surprise you this can all come apart like this in a day or two?

ENGEL:  Well, the problem was and I know exactly the Egypt you‘re

describing.  It was very much like that when I lived here.  There were many

people who were poor.  But they accepted their lot in life.  And they had

fairly low expectations.  And people just got on with it.  And there was a

almost an honor in poverty.

           

What you‘ve seen now over the last four or five years, however, is a real explosion in the gap between the rich and the poor.  There are now areas in Cairo and it‘s always been like this, but it‘s gotten much worse where you have people who barely can get by on a day‘s salary, living next to incredible mansions that cost $1 million, $2 million, $3 million, $4 million, $5 million in Cairo.  And you didn‘t have these great discrepancies in wealth that you have right now.

MATTHEWS:  Yes.

ENGEL:  And it‘s gotten so much more expensive.  When I was living here, I could get an apartment.  I personally paid $100 a month for the apartment I was living in.

I was talking to one of the protesters today, his apartment and probably a similar caliber apartment is closer to $400 and $500 a month.  He said that he has about $600 a month to make in car payments because he‘s bought his car on loan.  That‘s something else people couldn‘t have done in the past.  You had to buy everything in cash.

So, now, people are finding themselves stretched thin.  They can barely afford to live in their apartments.  They can‘t afford to even get married because there‘s a system here of dowries, so it‘s very expensive.

And I think that‘s what really pushed it—this incredible discrepancy in wealth—

MATTHEWS:  Yes.

ENGEL:  -- the inability for people to feed themselves, to find a wife, to find an apartment, and they are no longer just willing to accept a humble life because they can‘t have that humble life.

MATTHEWS:  Last question, what‘s going on right around you right now, Rich—Richard?

ENGEL:  It‘s fairly late at night and people are reacting to the speech by President Mubarak.  There are not many demonstrators on the streets.  I must say it‘s been a very long day.  And events began fairly early.

MATTHEWS:  Yes.

ENGEL:  It seems most people have gone home.  Whether they are coming out and preparing for a new day tomorrow, it‘s hard to tell.

When the army moved in, the police pulled back.  Once the police pulled back, there really wasn‘t anyone to clash with any more.  And the protesters don‘t want to clash with the army.

So, it seems like things are pretty much going to bed right now in Cairo.

MATTHEWS:  Yes.

ENGEL:  Still some scattered protests, but tomorrow—I feel as the old expression goes—is a new day.

MATTHEWS:  OK.  Thank you very much, Richard Engel from Cairo.  Great reporting, obviously.

Let‘s go right now, we‘re hearing from Marc Ginsberg, right now, a friend of mine.  He‘s American ambassador to Morocco under President Clinton.

Marc, Mr. Ambassador, let me ask you—your insight into this scene we‘ve just heard.  We‘ve just got a “Reuters” report the Egyptian army has taken control of the streets.  We just heard from Richard Engel that the people will be intimidated by that.  They will not clash with armed military.

Does that mean this can be crushed, do you think?

AMB. MARC GINSBERG, FMR. U.S. AMBASSADOR OT MOROCCO (via telephone): 

It depends ultimately, Chris, on whether or not the army is provoked to actually fire on the demonstrators if indeed they are confronted.  Muslim Brotherhood and other more radical activists obviously don‘t want this crisis to completely dissipate unless it‘s done so on their terms.  And the demonstrators are not going to be satisfied to merely walk away because Mubarak ordered the army on the streets and the police retired.

After all, almost every one of the Egyptian leaders since the 1953 revolution came out of the army and if the army remains loyal to Mubarak, they‘re going to take orders from his regime because they have as much to lose as anyone if his government is toppled.

MATTHEWS:  Is there respect for the army in Egypt?  Do the people look up to it as a true authority or just power?

GINSBERG:  There is enormous respect from the days in which the army was victorious in the eyes of Egyptians in 1973.  Obviously, the army has between glue that has largely held the country together.  It is seen as one of the few tickets for the young Egyptian to be educated because they have no access to public schools.  So, yes, there is enormous respect for the military in the country.

MATTHEWS:  So, it goes back to Nasser, it goes to the overthrow of King Farouk, who was sort of a neo-colonial figure.  And ever since the army came in, leading this Arabist movement back in the ‘50s, there‘s been respect for Sadat to some extent and now for Mubarak‘s eminence as military people per se.  Is that what the government of Egypt really is, is a military government putting on mufti.  Is that what it really is?

GINSBERG:  You got it exactly right, Chris.  It is—it is a quasi-civilian government that is hiding behind the camouflage of civilian clothing but really military officers.  As you mentioned, in 1953, from the revolution, the people had the choice between the Muslim Brotherhood and Gamal Abdul Nasser, the first—the colonel who led that revolution.  They rejected the Muslim Brotherhood then.

The question is whether or not the people will embrace the army and permit them to name a successor to Mubarak, or whether they will embrace the Muslim Brotherhood that they rejected in 1953.

MATTHEWS:  You know, the great thing about Egypt is it‘s its own country.  It was always there before there was an America or Britain or anything, there has been an Egypt.  It‘s like China.  It‘s a real country.  It wasn‘t just carved off the map or out of the map by the Europeans, like so many African and third world countries have.

It‘s got a real rooted history.  It‘s not just an Arab country.  It was a country long before it was an Arab country—long before Islam, there was an Egypt.

Will it see itself in this moment of chaos as joining a greater Islamic world or is holding to its national identity?

GINSBERG:  There‘s no doubt that the Egyptians view themselves as the center of culture in the Arab and the Muslim world and the center of Islamic learning.  I studied there.  I used to take classes at the al-Azhar University, which is considered to be the pre-eminent Islamic institution in the Muslim world, Chris.

MATTHEWS:  Right.

GINSBERG:  And the fact is that there‘s enormous pride going back to the history of the pharaohs.  The Egyptians embrace their ancient culture.  But they‘re very dissatisfied with their current regime.

MATTHEWS:  Well, let me ask you about the prospects we‘re looking at as an American.  We‘re looking at the map of the world right now and where Egypt sits in the world.  It‘s so strategically located.  It has, of course, the Nile River.  It has, of course, the Panama Canal.

It is the largest and only true partner even if it‘s a cold peace with Israel.  It is, in fact, the key to whatever Middle East peace we‘re able to arrange in our lifetime.  It always tends to support the moderate forces in the Suez Canal.  It has always supported the moderate forces in that region.

If this government, this moderate pro-western government falls, is there any hope of something as good for us to replace it?

GINSBERG:  Well, it‘s very unlikely.  Even though Mohamed ElBaradei parachuted in (INAUDIBLE) the head of IAEA, he has no legitimate political apparatus behind him.  The only opposition that has a strong political apparatus to take cover (AUDIO BREAK) demonstration is the Muslim Brotherhood.

MATTHEWS:  Yes.

GINSBERG:  And after all, this was the group that was progeny as well for al Qaeda.  Even al-Zawahiri, the number two of al Qaeda, the number two, the evil doctor, to Osama bin Laden, was, in fact, what part of the Egyptian conspiracy that assassinated President Sadat.  So, there‘s always been an issue of the military versus the extremist Islamists.

MATTHEWS:  Well, let me ask you about that, just going back so we get our own footing here.  When Sadat was killed just 30 years ago, in 1981, in that horrible scene in that parade, there was infiltration of the army, right, that led to that assassination.  They just gunned him down with a sweep of weapons, a spray of bullets at a reviewing stand.  That shocked people like me because I realized that even the army wasn‘t secure.

Is there—is there a clear delineation now between the Muslim Brotherhood, which would be the opposition here, and the army?  Are they clearly at odds with each other?  Or is there infiltration within the army of Islamist elements that might side with a revolution tomorrow or the next day or next week?

GINSBERG:  Chris, the lower you go down the conscription poll, the more likely you‘re going to find sympathizers to the Brotherhood.  The higher up in the establishment—to the military establishment, the least likely.  They‘ve been co-opted.  They understand the threat that the Islamic extremists pose to their future, as well as the future of Egyptian society.

The people who came up—come up through the ranks are the ones who could be least trusted if they‘re, shall we say, noncommissioned, have been conscripted, and enlisted at the lower ranks.

MATTHEWS:  Right.

So, let‘s talk about the region.  You‘re ambassador Morocco, which is a relatively stable country, obviously, with a great history.  It‘s got the kingship there, the monarchy.  You‘ve got other Arab countries.  You have the Baathist regime still in Damascus.  You‘ve got this new government in Iraq, which seems to be somewhat leaning towards Iran.  You‘ve got Iran, you‘ve got Jordan.

Which country do you think would be the next step in this spreading revolution that began in Tunis and has moved over to Cairo?

GINSBERG:  Well, you have to just look at Algeria where rioting has already been taking place.  Believe it or not, even in Khadafy‘s Libya, you have an enormous dissatisfied society of underprivileged, underemployed youth.  And even in morocco, which has, after all, a relatively stable monarchy, there‘s still also the same statistics at work, Chris—unemployed, disenfranchised youth who are angry at the corruption and the takeover of society by the elites who control most of the wealth.

My bigger fear is Jordan.  There‘s been Islamist-led demonstrations in Jordan last year and the king, someone who we respected and admired, the young king and that wonderful queen of his, Queen Rania, they lost enormous personal popularity because of the threat that Islamists have posed in the country as a result of preying upon the fear over economic deteriorating situation.

MATTHEWS:  It‘s just there—I know what you‘re talking about.  Thank you.  It‘s a wonderful country if you come to visit it, but I‘m not sure all the people are happy in Jordan.  Let me thank you very much, Marc Ginsburg, my friend, United States ambassador to Morocco under President Clinton and obviously a man of ability in this area.

Let‘s go to MSNBC‘s political analyst Howard Fineman, who‘s with “The Huffington Post,” of course.  Cynthia Tucker has been sitting with me off camera here.  She‘s a writer for “The Atlantic Journal Constitution,” a columnist as well.

Let me ask you, first, Howard.  This is—this is politics.  This is what we saw in Eastern Europe with the contagion of freedom.  We saw it begin in Hungary and Poland, stretch into Eastern Germany, East Germany, all over Russia, going down to Bulgaria.  It just spread and spread and spread.  Television, what we‘re watching, is an enormous instrument for this kind of thing.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST:  Well, the difference is, in those days, in the spread of contagion or freedom, with the fall of the wall and the end of the Soviet Union, that was all pretty amyloid gravy for the United States in terms of our position.

This is a much more complicated—to switch metaphors—tiger, that we‘re riding here.  The Obama administration is trying to say, yes, we‘re in favor of the democracy.  The Israelis are trying to say, yes, we‘re in favor of democracy.  But as we well know, once it starts, it‘s not clear where it‘s going to end.

MATTHEWS:  What does Secretary Clinton want?  What does the president

what does Joe Biden want?  Do they know what they want?

           

FINEMAN:  What they want is more democracy but still allies.  That‘s the trick they‘re trying to pull.

MATTHEWS:  OK.

FINEMAN:  Now—

MATTHEWS:  They want Mubarak to win the election.

FINEMAN:  Not necessarily Mubarak.

But a couple of points—first of all, I happen to just coincidence talking to one of the leading Middle East diplomats here in Washington the other day.  My sense is that their concern is about Jordan, as the ambassador just said.  Jordan has got a Hashemite king who traces his lineage all the way back to Muhammad.  But they‘re now 80 percent to 85 percent of the population are Palestinians, people who regard Israel as their homeland.  So, they‘ve got a tremendous geopolitical problem right there.   

The army is what matters in Egypt.  I think the Israelis think that the army is the key and the army is still in control there.  That‘s my sense of it.

Whatever you‘re seeing on TV right now, the army is in control.  But the problem is, who does the army get to replace Mubarak?  Can it be ElBaradei?  As the ambassador said, he‘s not really well known.  He doesn‘t really, he‘s got more ties in Vienna than he does in Cairo.

MATTHEWS:  Right.

FINEMAN:  So, who do they get?  Is it somebody else out of the military that we‘ve never heard of?  That sounds kind of unlikely.  So, everybody in the United States and Egypt and Jordan and Israel have sort of been an alliance here.  As a matter of fact on the Hill, there‘s about to be a new push for foreign aid, in which, as my understanding is, the Jordanians, the Israelis and Egyptians were going to join hands together to try to keep that alliance going.

But now with this happening in the streets of Egypt, that becomes much more complicated.  You don‘t know who your allies are, you don‘t know who you‘re trying to sell on behalf of.  So, it‘s an enormous complication.

MATTHEWS:  Yes.

FINEMAN:  But don‘t forget, this began when the president gave his speech in Cairo, at the beginning of his administration, calling for democracy.  These kids are saying, yes, that‘s what we want.  This wasn‘t originally the Muslim Brotherhood out there.  These were kids in the streets with Facebook and Twitter.

MATTHEWS:  Yes.  We always said the Middle East deals in slogans.  We deal in slogans.  We say we like democracy, but we want our side to win.

CYNTHIA TUCKER, ATLANTA JOURNAL-CONSTITUTION:  Absolutely.  This is—this is a lesson not in—just in the limits of U.S. power, Chris.  But in the limits of what democracy means.  For us in the U.S., democracy means a well defined set of civil institutions.  It also has meant in the 200 years or so of this country economic advancement.  That‘s what we think of.

But people—and people in other countries may think of economic advancement as well.  Whether that comes with democracy, not necessarily.  It also means they get to choose who their leaders are.

MATTHEWS:  Right.

TUCKER:  We don‘t.

One of the reasons that this country has such an unfortunate history of backing dictators and the Egyptian state police are some of the worst in the world.  Their methods of torture, imprisonment are horrible and helped create the Muslim Brotherhood because—

MATTHEWS:  The Jordanians aren‘t exactly sweethearts either.

TUCKER:  Because of the way they clamped down on the sentiments.

MATTHEWS:  And we like that.

(CROSSTALK)

TUCKER:  And when they vote, they may not vote for people who like us.

MATTHEWS:  And I think that‘s our challenger here watching this. 

Which side are you rooting for, Howard?

FINEMAN:  Well—

MATTHEWS:  Which—what do you think the president is doing right now when he‘s sitting with his Tom Donilon, and his national security forces (ph)?  Are they rooting for this?

FINEMAN:  I think they‘re trying to play a very difficult hand to get on—to stay ahead of the democracy curve here in these countries.  If there‘s any way they can possibly do it.

MATTHEWS:  And we have agents all over these countries.  Our agents are sitting right in the middle of this.  We hope.

FINEMAN:  One would hope.

MATTHEWS:  One would hope.  Anyway, thank you, Howard.  We‘ll be back.

Howard and Cynthia Tucker, thank you.  We‘ll be right back in an hour at 7:00 Eastern for a live edition of HARDBALL on this big night, a dangerous night.

More politics coming up right now with Cenk Uyghur.

           

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