(Reuters) - At the end of January, a guest speaker drew an unusually large audience of diplomats to the 33rd floor auditorium at the Egyptian Foreign Ministry headquarters in Cairo. For latecomers, there was standing room only.

What made the event unique wasn´t the turnout, but the speaker: Mohamed Morsy, a leading figure in the once-banned Muslim Brotherhood, had come to outline his group´s vision of Egypt´s place in the world.

"One year ago, it was unthinkable. But a lot of things were unthinkable in Egypt one year ago," said Foreign Ministry spokesman Amr Roshdy, recounting Morsy´s address in the Foreign Ministry tower on the banks of the river Nile.

Foreign Minister Mohamed Kamel Amr did not have time to attend - he was busy with a foreign dignitary. But he caught Morsy on his way out of the building and invited him to his office for a coffee. They chatted for an hour.

Under President Hosni Mubarak, Morsy´s political views could have landed him in jail. But today he heads the Brotherhood´s Freedom and Justice Party, the biggest party in parliament, which has started to make its voice heard in the corridors of power even before it has assumed any executive office.

There have been some results: the group says its lobbying led the Foreign Ministry to toughen Egypt´s stance towards President Bashar al-Assad over his attempts to crush the uprising in Syria - a tangible impact on an area of policy that was once the personal realm of Mubarak.

"If you want to influence the next government´s policy, you need to talk to the Brotherhood, and you need to talk to them in depth," a Western diplomat based in Cairo, who declined to be named, said.

The Brotherhood´s FJP party won more than 43 percent of seats in parliament, converting deep roots in society into electoral success that raised questions over how it might balance its Islamist platform with the realities of Egypt´s 1979 peace treaty with Israel and an economy that depends on international tourism for one in eight jobs.

The steady stream of delegations driving up the hill to the Brotherhood´s new headquarters on a plateau overlooking central Cairo testifies to the fact that Western states, foreign businesses and international institutions are already courting the group as a government-in-waiting.

Top U.S. diplomats and senators have been among the visitors to the new cream-colored headquarters with green shutters and an arched portico, filing through the cavernous reception where portraits of bearded Brotherhood leaders from the past hang.

Emboldened by its electoral success, the Brotherhood is becoming ever more vocal about how Egypt should be run. Its focus has not been tighter application of Islamic Sharia law but on Egypt´s economic crisis, rising crime and political reform.

Aware that voters are now looking to it for progress, the Brotherhood wants to get into government. It is pressing the military rulers to appoint a cabinet reflecting the make-up of parliament, code for a coalition led by the Muslim Brotherhood.

The Brotherhood´s move to the front and centre of public life brings with it the scope for more friction with the army, seen as anxious to preserve influence even after it hands power to a new president at the end of June.

Until now, the Brotherhood has mostly avoided tension with the military, forging an uneasy accommodation with the powerful ruling institution out of concern that the dramatic political gains achieved since Mubarak fell could be reversed.

The consensus view is the group will not abandon that cautious approach soon: the focus of waves of state oppression since it was founded in 1928, the Brotherhood owes its very survival to pragmatism.

But more tension could be inevitable as the Brotherhood tries to advance reforms with the potential to challenge the political and economic power of a military that has been a deeply influential player in Egypt since army officers overthrew the monarchy in 1952. There are already signs of strain.

"SLOW BURN"

"It´s a working relationship but a tense one and likely to get more tense," said Shadi Hamid, an expert on Islamist movements at the Brookings Doha Center. "It will be more of a slow-burn confrontation."

Top of the Brotherhood´s political reform agenda is forging a stronger parliament for the Arab world´s most populous nation that will check the powers of the next president - a position they have decided not to seek for now.

Brotherhood leader Mohamed Badie has said the presidential powers, to be set out in a new constitution, must be curbed "so that we don´t produce another pharaoh". Parliament will pick a 100-person assembly that will write the constitution for this nation of 80 million people.

Vested with little power for now, parliament has been the target of criticism from a public thirsting for results in the few weeks since it convened. But even without the reforms needed to strengthen it, the chamber is playing a more assertive role.

Brotherhood MPs have breathed life into a myriad of parliamentary committees. They include the foreign affairs committee, one of the tools that has helped the group lobby government to toughen Cairo´s stance towards Damascus.

The outcome, say Brotherhood officials, was the February 19 decision by the army-appointed government to formally recall Egypt´s ambassador to Syria - a protest at the crackdown by the government of Assad, an Alawite, on mainly Sunni opponents including the Brotherhood´s Syrian offshoot.

Roshdy, the Foreign Ministry spokesman, said the ministry´s decision was determined by the situation on the ground. But the ministry had seen MPs´ statements, he added.

"The time for ignoring the public demands vis-à-vis foreign policy is behind us," he said.

Brotherhood MPs have held several meetings with the foreign minister in recent weeks. Essam el-Erian, the Brotherhood lawmaker who chairs the parliament´s foreign affairs committee, was invited to a February 19 lunch with the minister and the visiting Qatari president of the U.N. General Assembly.

"They (the Brotherhood) want to work with everybody. This is the message I, as an Egyptian, am getting," Roshdy said.

Gamal Hishmat, a Brotherhood MP who sits on the parliamentary committee on foreign affairs, drew a clear link between parliamentary lobbying and the Syria move.

"The withdrawal of the ambassador or his recall was a response to the pressure," he said.

The parliament is pressing for more: it has asked the government to explain how two Iranian naval ships that docked in Syria on February 18 were allowed to pass through Egypt´s Suez Canal linking Europe and Asia. Tehran is a close ally of Damascus.

It was also parliamentary pressure, say Brotherhood officials, which led to the government´s February 21 decision to increase power supplies to Gaza, the Palestinian territory that borders Egypt and is run by Hamas, another Brotherhood offshoot.

Ismail Haniyeh, head of the Hamas government in Gaza, thanked Egypt for the fuel after a February 23 meeting in Cairo with the speaker of parliament, himself from the Brotherhood. The next day, Hamas itself turned publicly against their long-time ally Assad, endorsing the revolt against him for the first time.

Ever more frequent Hamas visits to Cairo hint at the potential for deeper ties between the different branches of a Sunni movement united by a similar brand of Islamist thought but not a single political structure.

Egypt´s moves on Gaza and Syria could be the first hint of the type of foreign policy the Brotherhood will pursue - one seeking to assert a more robust Egyptian regional role after years of declining influence.

U.S. HOPE AND APPREHENSION

Mubarak´s critics say he oversaw that decline, aligning Egypt too closely with the United States and Israel instead of taking the bolder approach of a state such as Turkey, a regional heavyweight whose government has Islamist roots and which some in the Brotherhood see as a model.

U.S. influence has been thrust into the headlines because of an inquiry into the role of U.S.-based democracy groups in Egypt, a case that Washington says could put at risk some $1.5 billion in annual aid, $1.3 billion of it to Egypt´s military.

The case of the American civil society workers was on the agenda of a delegation of U.S. Senators who met the Brotherhood during a February 20 visit to Cairo.

"I was very apprehensive when I heard their election results," Lindsey Graham, a Republican Senator, said. "But after visiting and talking to the Muslim Brotherhood, I am hopeful they will be able to deliver not only to the Egyptian people, but we can have a relationship with Egypt, with the Muslim Brotherhood as a strong political voice," he said.

Muslim Brotherhood leaders talk of relations on an equal footing with the United States and the rest of the world.

While saying it will respect Egypt´s international obligations, including the peace deal with Israel, the group has said Cairo could review the treaty if Washington were to hold back the aid that came with the agreement.

"We don´t owe anyone any favors," said Hishmat, the lawmaker on the foreign relations committee. "Even with the threat to the U.S. aid, we are not intimidated in the way the previous regime used to be," he said.

Mubarak´s foreign policy ultimately had one goal: keeping him in power rather than advancing Egypt´s interests, he said.

Hishmat´s political CV bears witness to the struggle the Brotherhood faced trying to enter public life under Mubarak. Running for parliament in 2005, Hishmat lost to a Mubarak loyalist in a vote that was declared rigged against him.

Over coffee at a Cairo hotel, the 55-year-old doctor and university lecturer smiled as he reflected on the irony that the Mubarak loyalist in question was Mustafa el-Feki - the former head of the foreign affairs committee.

One of a series of Brotherhood leaders interviewed by Reuters, Hishmat recalled how Fathi Sorour, the former speaker of parliament, had once rebuked him for questioning why Egypt could not follow the U.S. example by giving lawmakers a say over foreign affairs. Foreign policy was the realm of the presidency and the presidency alone, Sorour snapped at him.

"He said frankly: ´Whoever thinks the Foreign Ministry shapes foreign policy is wrong. It is the presidency that shapes it. The Foreign Ministry is only the implementer,´" Hishmat said. "We want to change this approach."

In discussions on Syria, the Foreign Ministry had at first been hesitant to change tack, citing concerns over the well-being of Egyptians living in Syria and a fear that Cairo would lose any ability to wield any influence over Damascus.

But they changed their mind, Hishmat said, adding that ministers in the government seemed afraid to take decisions. "In this government, most of the hands are trembling," he said. "They sense that if they have a job today, they won´t tomorrow."

The current government, led by Prime Minister Kamal al-Ganzouri, is the third since the eruption of the uprising against Mubarak. It is due to stay in office until the military council hands power to the new president.

With the weakness of an already frail economy weighing on the Brotherhood´s mind, the group on February 20 voiced its strongest criticism yet of the Ganzouri government.

"Egypt is suffering from escalating economic and security crises which confirm the failure of the government," the FJP said in a wide- ranging statement on domestic and foreign policy issues. "It has become clear that there is a desire to export (pass on) more crises to any future government."

ALCOHOL AND BIKINIS

In its public discourse, the Brotherhood lists its main concerns as the economy and social justice, typically downplaying the concerns of those Egyptians who fear it aims to implement a conservative Islamist agenda down the road.

A fifth of Egyptians live under the poverty line and Brotherhood officials know their political fortunes will hinge on whether they can improve the lot of ordinary people.

Seeking to understand Brotherhood thinking on the economy, everyone from investment bankers to the ruling military council have met the group in the last few months.

Badie, the Brotherhood leader, told Reuters in a February 8 interview he had despatched three of the group´s top economists to offer advice to the military council, which he said had requested a meeting with him to discuss the economy.

The IMF, which is in talks with Egypt over a $3.2 billion loan, had also asked to see the group, said Essam el-Haddad, the group´s adviser on foreign affairs. "What we agreed to was the principle of dealing with the IMF. But as for the details, we do not know because we are not an executive arm as yet," he said.

Western embassies have hosted seminars where Brotherhood policy makers have mingled with bankers and investors. EFG-Hermes, a Cairo- based investment bank, says it has taken its foreign clients to meet the group.

The emerging view is that the Brotherhood, whose leaders include entrepreneurs who managed to run small empires even from jail, is open to business. That even applies to a tourism industry largely built around Red Sea beach resorts where women wear bikinis and alcohol is freely available.

Though the group had been cagey about the possibility of tighter restrictions on alcohol, for example, nobody expects it to risk driving away the foreign visitors and their cash which is so vital to Egypt´s economy.

Yet there is concern over whether the group has the experience to steer macropolicy. A statement of opposition to a World Bank loan set alarm bells ringing among economists who say Egypt badly needs such funds to support economic growth.

It is difficult to underestimate the scale of the challenge facing the Brotherhood as it seeks to change government in a country run right from the top for decades. It will not have everything its own way: its relationship with the military and the new president will likely define the scope for change.

And while the group has found a receptive audience in the Foreign Ministry, other institutions may be less cooperative.

PUSHING THROUGH NEW LEGISLATION

The Brotherhood has spoken of a need to purge the Interior Ministry of remnants of the Mubarak apparatus, a move that will likely revive old hostilities with security forces more used to arresting Islamists than taking orders from them.

Though Mubarak mostly depicted the group as an enemy of the state, the Brotherhood renounced violence decades ago, separating it from more hardline groups behind the militancy of the 1980s and 1990s. Anwar Sadat, Mubarak´s predecessor, was killed by Islamist soldiers- turned-assassins in 1981.

The Brotherhood´s lingering suspicion of the state has immediately become apparent in the kind of bills its MPs have introduced to parliament.

One amendment will prevent the referral of civilians to military courts where for decades Brotherhood members were sentenced in summary fashion. Another will adjust the rules for the forthcoming presidential election to make the vote count more transparent, said Mohamed Beltagi, a Brotherhood MP.

"It´s so that there cannot be central control of the result procedures," Beltagi told Reuters. Under the amendment, the election results will be announced at local polling stations as the votes are counted rather than all at once in Cairo.

He expressed irritation that the military council had issued the presidential election law just days before parliament convened for the first time, denying it the chance to debate the bill. It was one of several cases of the army trying to "preempt events and confiscate the future", he said.

In the assessment of another Western diplomat, the Brotherhood are acting like "serious decision-makers who are willing to take criticism for long term-gain".

Parts of the Egyptian civil service, such as the Foreign Ministry, had started adjusting to the idea they will run the next government.

"I think a subtle recalibration is happening where a range of officials are - of their own volition - trying to be responsive to the Muslim Brotherhood before it emerges to lead a new coalition government," the diplomat said.

"It won´t be plain sailing. These are officials who have dealt with the same masters for a generation."

(Additional reporting by Ayman Samir; Writing by Tom Perry, editing by Peter Millership) (© Thomson Reuters 2012. 02/26/12)