He succeeds Hosni Mubarak, who was overthrown 16 months ago after a popular uprising. The military council which has ruled the biggest Arab nation since then has this month curbed the powers of the presidency, meaning the head of state will have to work closely with the army on a planned democratic constitution.
Thousands of Brotherhood supporters burst into cheers on Cairo's Tahrir Square, waving national flags, setting off fireworks and chanting "Allahu Akbar!" or God is Great, greeting a dramatic victory, tempered by the army's continuing role.
"Say! Don't fear! The military must go!" crowds chanted.
For Morsy, a U.S.-educated engineer who spent time in jail under Mubarak, a spokesman said: "This is a testament to the resolve of the Egyptian people to make their voice heard."
Shafik, a former air force commander and Mubarak's last prime minister, offered no immediate reaction. He has said he would offer to serve in a Morsy administration.
Morsy, 60, won the first round ballot in May with a little under a quarter of the vote. He has pledged to form an inclusive government to appeal to the many Egyptians, including a large Christian minority, who are anxious over religious rule.
The military council will retain control of the biggest army in the Middle East, whose closest ally is the United States. Morsy has said he will respect international treaties, notably that signed with Israel in 1979, on which much U.S. aid depends.
"President Morsy will struggle to control the levers of state," Elijah Zarwan, senior policy fellow at the European Council on Foreign Relations, said in Cairo.
"He will likely face foot-dragging and perhaps outright attempts to undermine his initiatives from key institutions. Faced with such resistance, frustration may tempt him to fall into the trap of attempting to throw his new weight around," Zarwan told Reuters. "This would be a mistake.
"His challenge is to lead a bitterly divided, fearful, and angry population toward a peaceful democratic outcome, without becoming a reviled scapegoat for continued military rule."
LIMITED POWERS
Morsy will not enjoy the extent of modern, pharaonic powers exercised by Mubarak: those have been curtailed by a military establishment which will decide just how much he will be able to do in government. The Brotherhood had said it would press on with protests against the army's latest rulings.
Still, his victory in the country's first free presidential election breaks a tradition of domination by men from the armed forces, which have provided every Egyptian leader since the overthrow of the monarchy 60 years ago, and installs in office a group that drew on 84 years of disciplined grassroots activism to catapult Morsy into the presidency.
He has promised a moderate, modern agenda to steer Egypt into a new democratic era where autocracy will be replaced by transparent government that respects human rights and revives the fortunes of a powerful Arab state long in decline. Morsy is promising an "Egyptian renaissance with an Islamic foundation".
Yet the stocky, bespectacled party official, appears something of an accidental president: he was only flung into the race at the last moment by the disqualification on a technicality of Khairat al-Shater, the group's preferred choice.
With a stiff and formal style, Morsy, who has a doctorate from the University of Southern California, cast himself as a reluctant latecomer to the race, who cited religious fear of judgement day as one of his reasons for running. He struggled to shake off his label as the Brotherhood's "spare tyre".
Questions remain over the extent to which Morsy will operate independently of other Brotherhood leaders once in office: his manifesto was drawn up by the group's policymakers. The role Shater might play has been one focus of debate in Egypt.
"I will treat everyone equally and be a servant of the Egyptian people," Morsy said at his campaign headquarters in Cairo shortly after polling ended last Sunday, a week before his victory was confirmed by the Mubarak-era judicial body overseeing the vote.
But many Egyptians, not least the Christian minority, remain suspicious of Morsy and even more so of the group he represents. Anti-Brotherhood sentiment, fuelled by both a hostile media and some of the group's policies, has soared in recent weeks.
COMMENTS (17)
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With Morsi declared winner of the presidential elections it is unlikely that tensions will be defusd as there might still be protests calling on the ruling generals to revoke the sweeping new powers they usurped last week after the Supreme Court ruled that the Islamist-dominated parliament should be dissolved. Apart from political uncertainties Egypt's economy is in a meltdown. Before the revolution there were $36bn in reserves. Now it's less than $15bn. Tourism and exports are rock bottom - 12% of the population is unemployed and 42% of the population lives below the poverty line.
@imransbb: What mythical "Liberal" are you referring too. The current ruling Kleptocratic Coalistion? Mubarak also claimed to be a Liberal, So did Musharraf. Our self identifies liberals are cut from the same cloth. @Butt: You are making stuff up. @Mj: You mean the transition to a democracy , or do Tourists prefer Dictatorship with Secret Police an all.? I dont think so.
Muslim Bortherhood has to play its cards right and focus on the economy and avoid any confrontation with Israel and its interest. The Army should be given its space but should be slowly confided into its limits. The Counterrevolutionary forces will try to start Ethinic, religious strife to reverese the democratic gains. Just like in Algeria. The Muslim Brother hood has to threadh very carefully.
@Mj: A small correction. Meant to write, "Actually, a democracy can be secular but not every democracy is secular."
@Butt: Actually, a democracy can be secular but not every democracy is democratic. The opposite end of a secular, liberal democracy is tyranny of majority, whereby the majority may, for instance, chose to persecute, kill, or restrict the rights of religious, ethnic, or linguistic minority (for eg. persecution of Ahmedis) . The populations needs to be reasonably educated, well-informed, and not under the thrall of clerical class before its dispensation could be sufficiently towards a liberal democracy, which respects liberty, freedom and choice of its citizenry.
hahaha, you gotta feel sorry for the secularists, a historical election that has shut the liberals up for good and proven the vast majority wants islamic rule, funny how theyve become so intolerant of a 'democratic' outcome! ;)
Frstly congrts Muslim Brotherhood, now the leader of Muslim Brotherhood your responsibility is too much,egypt is in aftermath,people thought that your are the once who solve there problems, so please show your positive potency to get to the bottom of the problems.May allah help you & Plz don’t forget the people of gaza who celebrate your victory.
I doubt the tourists, which account for 25% of Egypt's GDP, would be thralled with this development.
@Hi There: "democracy is best revenge" as a famous liberal leader once said.
@All Above Only answer for liberals and seculars is the progress of Turkey under Islamist Party.
@Hi There: Lets wait and see how well these theocrats perform before you start lambasting secularists. I hope the Coptic minority is not persecuted for their beliefs, which appears to be likely.
@Hi There: They'll be tears of laughter when egypt implodes from bad leadership because of it's psuedo religious beards destroying the government. secularism is the way of the future.
The Fall of Egyptian Tourism Industry would be the first victim than the economy!
Pakistan's liberals no need to afraid, our Islamist are trade-able and are not more than a pressure group in in a society, divided in the sects and tool of maintaining status quo under the control of establishment.
I feel sorry secularists, here take these tissues to wipe your tears
Arab fall.