The two men appointed to replace them were also members of the SCAF — something that could indicate either the military's agreement to the shuffle or splits at the highest level of the armed forces. Lt. Gen. Abdel-Fattah el-Sissi replaced Tantawi and Lt. Gen. Sidki Sayed Ahmed replaced Annan. They were sworn in shortly after the announcement.
Days before the inauguration, the ruling generals decreed constitutional amendments that gave them the power to legislate after the military dissolved parliament, as well as control over the national budget. It also gave them control over the process of drafting a new constitution.
With Sunday's moves, Morsi restored to his office the powers taken from him, seizing back sole control of the constitution drafting process and the right to issue laws.
He decided that if the 100-member panel currently drafting the document did not finish its work for whatever reason, he will appoint a new one within 15 days and give it three weeks to finish its work. The draft will then be put to a vote in a national referendum within 30 days. Parliamentary elections will follow if the draft is adopted.
"There was a duality of power," said Saad Emara, a senior Muslim Brotherhood member. "This had to be settled in favor of one authority. The boat with two captains sinks."
Omar Ashour, a visiting Scholar at the Brookings Doha Center who has interviewed SCAF members over the past year, said Morsi's decisions were negotiated with several of the generals who sat on the military council.
"The military council was not going to last forever," he said. "It is a critical battle, but this is not final."
With power now concentrated in the hands of the Muslim Brotherhood, some fear Egypt will only move from an authoritarian state to an Islamic state.
"Now the military returns to the barracks and Morsi has absolute powers," said Abdullah el-Sinawi, a prominent political commentator and longtime supporter of the military as the guardian of Egypt's fast-fading secular traditions.
Abdel-Rahman Youssef, a liberal popular TV presenter and a supporter of Morsi, said this is a historic opportunity for political reform in Egypt.
"Egypt is now before a real test — to have a powerful president yet to stop him from being repressive," he said.
While Morsi's Brotherhood is considered to be the country's strongest political group, its base of support remains limited when compared to the respect enjoyed by the military. There is hardly an Egyptian family that does not include a member in active service or who had military experience. The military has a vast economic empire that accounts for about 25 percent of GDP.
But the military has been tainted in the 17 months they ran the country after Mubarak's ouster, with the SCAF accused of mismanaging the transitional period and committing human rights violations.
For now, however, Morsi appeared the victor.
Hours after announcing the shake-up, a confident looking president appeared at an annual religious ceremony to hand monetary awards to young Muslims from Egypt and elsewhere who have learned the Quran, Islam's holy book, by heart.
Mohammed Aboul-Ghar, a founder of the new Egyptian Social Democratic Party — a secular group critical of the military as well as Morsi's Muslim Brotherhood — said the power struggle has now been settled in Morsi's favor.
"The military council was forced out of power and lost its position and this was inevitable," he said. "In the power struggle, the military council was increasingly weakened because of its decisions" and its failure to secure a more straightforward path to democratic transition, he said.
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