WRAPUP 4-Egyptians plan victory march, Islamist role rising
* "Victory March" on Friday raises questions
* Revolts in Egypt, Tunisia, inspire unrest in region
* Life far from normal with tanks in Cairo, labour unrest
(Adds regional developments, Islamist group comments)
By Sherine El Madany and Patrick Werr
CAIRO, Feb 17 (Reuters) - Egyptian youth leaders moved to set up a new political party on Thursday as the Islamist Muslim Brotherhood played an increasingly important role in preparing for post-Mubarak elections promised within six months.
Pro-democracy leaders plan to bring one million people out on the streets for a "Victory March" on Friday to celebrate Mubarak's ouster, and perhaps remind the generals now in charge of the power of the street that ended Hosni Mubarak's rule.
Inspired by Egypt, and a Tunisian revolt before that, protesters have taken to the streets across the Middle East and North Africa. Bahrain has cracked down on anti-government protesters and clashes were reported in Libya and Yemen.
Life in Egypt is still far from normal six days after the momentous overthrow of Mubarak, 82, with tanks on Cairo streets, banks closed, worker protests and demonstrations given voice by revolutionary fervour and schools shut down.
"The Higher Military Council will put matters back on track, but help us," army spokesman General Ismail Etmaan said on state television late on Wednesday night, appealing to Egyptians to stop striking and start getting back to work.
"The armed forces do not have future ambitions and want to hand power to the civilian parties when they are strong so that they don't collapse," he said.
The Brotherhood has a member on the committee redrafting the constitution, is on a council set up by activists to protect the revolution and has said it will set up as a political party as soon as laws are changed to let it and others do so.
The Brotherhood's spokesman appeared on state television a few days ago, a first for a movement banned in the Mubarak era. Having been timid in the early days of the revolt, it clearly thinks it is safe to come out.
The Brotherhood is viewed with suspicion by Washington but is seen as the only truly organised bloc in Egypt and reckons it could win up to 30 percent of votes in a free election.
In another sign of the transformation of Egyptian politics, al-Gama'a al-Islamiya (Islamic Group), which took up arms against Mubarak's administration in the 1990s and was crushed by security forces, held its first public meeting in 15 years.
"Our position is to turn a new page with the new regime," said Assem Abdel-Maged, a group member who spent years in jail for his role in the 1981 assassination of President Anwar Sadat. "We will perform any positive role we can to help society."
The Higher Military Council that took over after the overthrow of Mubarak was under pressure on Thursday from activists demanding the immediate release of political prisoners and the lifting of emergency rule.
Iran has created a further headache for Egypt's new rulers by saying two of its two naval vessels would pass through the Suez Canal, a move Israeli Foreign Minister Avigdor Lieberman, a far-right partner in the governing coalition, called "provocative".
It was not clear when the Iranian ships were due to arrive at the southern mouth of the Suez Canal. A senior canal official said it had received no notification so far. Any naval crossing needs approval from Egypt's foreign and defence ministries.
If they pass, it will be the first crossing by Iranian naval vessels since the 1979 Islamic revolution poisoned relations with Egypt, which signed a peace deal with Israel that year.
The crossing has threatened to be distraction for the army council as it seeks to restore law and order and revive an economy damaged by the 18-day revolution that toppled Mubarak.
The interim government has sharply cut the nation's economic growth forecast to between 3.5 and 4 percent from around 6 percent before the popular uprising. Egypt's stock market has been shut for three weeks after plunging as the unrest began.
The ailing former president, holed up with his family in the Red Sea resort of Sharm el-Sheikh, is still coming to terms with the uprising, vowing to "live and die on Egyptian soil".
A committee, which includes a member of the Brotherhood, Sobhi Saleh, as well as legal and constitutional experts, met on Thursday as the military dismantled the mechanisms that kept Mubarak's autocratic rule in place.
Saleh said on Wednesday the military council had pledged to lift emergency laws before elections are held.
Some secular leaders fear that racing towards elections in a nation where Mubarak suppressed most opposition activity may hand an edge to the Brotherhood, banned under Mubarak.
The military council has already dissolved parliament and suspended the constitution and now the committee must hammer out new amendments, likely to shorten presidential terms and ensure fair election rules, that must be ready in 10 days.
As part of a transition to democracy and civilian rule, the nation will vote in a referendum on the amendments prior to parliamentary and presidential elections which the military says it hopes to hold within six months.
Uncertainty remains over how much influence the military will seek to exert in reshaping a corrupt and oppressive ruling system which it has propped up for six decades.
Members of the new pro-democracy Council of Trustees of the Revolution said on Wednesday its goal was to unite ranks, protect the revolution and open a dialogue with the military.
Existing registered parties are mostly small, weak and fragmented. The Muslim Brotherhood, which under the now suspended constitution could not form a party, may be the best organised group, but its true popularity has yet to be tested.
And with no clear leaders, the youth movement that was pivotal to the revolution due to its use of social networking to organise protests is seeking to overcome splits and expects to announce a timetable for a new political party on Thursday. (Reporting by Marwa Awad, Edmund Blair, Alexander Dziadosz, Shaimaa Fayed, Andrew Hammond, Alistair Lyon, Sherine El Madany, Tom Perry, Tom Pfeiffer, Yasmine Saleh, Patrick Werr, Jonathan Wright, Dina Zayed in Cairo, Amena Bakr in Saudi Arabia, William Maclean in London; writing by Peter Millership; editing by Jon Boyle)
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