Cairo: Islamists and opposition groups said on Sunday unprecedented talks with Egypt’s vice president could sow the seeds for political reform but had not addressed the core demand of removing President Hosni Mubarak.

The government and the powerful armed forces tried to get the nation back to work on Sunday, the first day for banks to open after a week-long closure due to unrest that the United Nations says may have killed 300 people.

“The (talks) process is opaque," Nobel peace laureate Mohamed ElBaradei, who has emerged as spokesman for the loose-knit opposition which includes the banned Islamist Muslim Brotherhood movement, told NBC television in the United States.

“Nobody knows who is talking to whom at this stage ... It is all managed by the military ... and that’s part of the problem," he said. “The president is a military man, the vice president is a military man, the prime minister is a military man."

As the talks took place, armoured personnel carriers stood guard at Cairo intersections where soldiers had erected sandbag barriers. Buses dropped employees off at large state banks.

Demonstrators in the central Tahrir Square, marking a “Day of Martyrs" for those killed in protests, said they would intensify their 12-day battle to oust the president who has vowed to stay on until September elections.

With some Egyptians keen for a return to normal life, the government has warned of the damage to political stability and the economy of prolonging protests that have shaken the Middle East and opened a new chapter in Egypt’s modern history.

Commander Urges Normality

The commander of the army, which many say holds the key to Egypt’s future, toured Tahrir (Liberation) Square to try to persuade the protesters, complaining about poverty, repression and corruption, to leave the usually busy intersection. “We want people to go back to work and to get paid, and life to get back to normal," army commander Hassan al-Roweny said.

The United States, Egypt’s ally which provides the army with $1.3 billion annually, has underlined the need for gradual change in political talks between the government and opposition groups in order to achieve an orderly handover of power.

“I don’t believe that we solve the world’s problems by flicking a switch and holding an election ... Egypt is a classic case in point," said British prime minister David Cameron, echoing a note of caution in the West over any sudden change.

Washington and its allies have struggled to keep up with events in the Arab world’s most populous nation, which was the first Arab country to sign a peace deal with Israel and is the guardian of the Suez canal and a force against militant Islam.

With signs of economic life resuming and concessions from the government to the reform movement, the cabinet wants the uprising to settle down to political talks to put an end to clashes between demonstrators and Mubarak supporters.

There have also been signs of compromise in the opposition movement, with leaders backing off their refusal to talk to the government until Mubarak, 82, and the old guard leave.

Talks with Brotherhood

But many reformists who used the Internet to mobilise mass support are determined to immediately force out Mubarak, a former air force commander who took over when Anwar Sadat was assassinated, fearing a loss of momentum in popular anger.

The United States has backed the talks between vice president Omar Suleiman, a long-time intelligence chief, and opposition groups, but made clear dialogue must be given time.

The government said in a statement the sides agreed to draft a road map for talks, indicating Mubarak would stay in power to oversee change.

The government would also move to release jailed activists, guarantee press freedom and lift Egypt’s emergency laws “according to the security conditions". A committee was set up to study constitutional issues.

Footage showed Suleiman, with a portrait of Mubarak behind him, chairing the talks which the opposition complained had failed to meet their demand for a complete overhaul of the nation’s political system.

Abdel Monem Aboul Fotouh, a senior member of the Brotherhood, said the government statement represented “good intentions but does not include any solid changes".

It is testimony to the ground protesters have gained that the government is willing to talk to the Brotherhood which would have been unthinkable before protests started on 25 Jan. Before that date members were being regularly rounded up and jailed.

The Brotherhood, which took a backseat in the early days of the protest and then raised its profile, has downplayed Israel’s fears of an Iranian-style theocracy emerging in Egypt.

Asked about the talks, Mohamed Adel, the Sixth of April youth group which has been among the core protesters, said: “They evade the demands of the people."

Ahead of the talks, the leadership of the ruling National Democratic Party quit, including the president’s son Gamal, in a move the Brotherhood said was a ruse to “choke the revolution".

Opposition activists reject any compromise which would see Mubarak hand over power to Suleiman but also serve out his term—essentially relying on the old authoritarian system to pave the way to full civilian democracy and saving his face.

Mubarak’s Future

However, Rachid Mohamed Rachid, who was sacked along with the rest of the cabinet by Mubarak in response to protests, said: “I believe the presence of ... Mubarak in the next phase of transition for the next few months is ... very critical."

At Tahrir Square, thousands gathered despite unseasonably bad weather, joining noon prayers to honour the “martyrs" killed in the bloodshed of the last few days.

But many Egyptians, even some who joined widespread nationwide demonstrations to end the 30-year rule of Mubarak, say they are desperate for a return to normal life.

Shops have been closed, making it hard for Egyptians to stock up on basic goods. Some prices have risen, and economic growth, which was running at 6%, is expected to suffer.

The pound closed at 5.93 to the US dollar having weakened by 1.3% since it was last traded on 27 Jan.

“The way things are looking we do not expect a run on the pound at the moment. We think that the prevailing atmosphere is a lot calmer than we might have assumed last week," Angus Blair, head of research Beltone Financial, told Reuters.