HIGHLIGHTS: President Stresses 'Smooth handover' of Power||Appointment Gives Veil of Democracy to Planned Succession||Gamal Accuses Time-servers of Obstructing Economic Development & Reform|| STORY: Egyptian President Hosni Mubarak named his son Gamal to a senior post in the ruling National Democratic Party, fuelling speculation a new dynasty was in the making as he stressed the importance of a "smooth handover" of power.

The 74-year-old head of state spoke straight after his son's appointment was announced to rapturous applause from the 6,000 delegates assembled for the party's first congress in a decade.

"President Hosni Mubarak, leader of the National Democratic Party, has taken the decision to name Gamal Mubarak as party political secretary," a party official announced live on state television.

Gamal, a 39-year-old former banker wearing a grey suit for the occasion, rose and bowed with a cautious smile.

"We must give young people the opportunity to shoulder leadership responsibilities," the president told the faithful, as the cameras of state television zoomed in on his son seated alongside the party old guard.

"New generations of young party cadres must regularly join political life. Development is a continuous operation which does not stop at a given generation.

"Broadening the participation of young people in political life ... is an essential guarantee of a smooth handover of responsibility from one generation to the next," he said.

Mubarak has led Egypt ever since his predecessor Anwar Sadat was gunned down by Islamic militants in his bodyguard in 1981, and speculation has grown that after two decades in power, the aging president may be ready to hand over the reins.

First Lady Suzanne Mubarak was seated in the front of the conference hall with other leading dignitaries to watch her son's elevation.

But his rise through party ranks has come despite the president's repeated assertion that he has no desire to be succeeded by his son, as was the late Syrian president Hafez al-Assad by his son Bashar on his death in 2000.

Gamal was already a member of the party secretariat -- he was named head of the head of the party's youth and development committee in 2000 -- and analysts said his advance through the ranks of the party was being used as a springboard to give legitimacy to his succession as president.

"This appointment gives a veil of democracy to the handover of power from father to son, because the promotion of Gamal to the top ranks of the NDP allows the regime to reject acusations that it is not following the rules of democracy," one political commentator told AFP.

A creation of Sadat, the NDP variously claims between two and five million members, and is by far Egypt's largest political party.

In the last parliamentary elections NDP members won 388 out of 444 elected seats, with many of the seats contested by party members running as independents against NDP official candidates.

However, political observers say that the NDP stands for very little other than loyalty to the president.

Gamal has declared in speeches that the party needs "new blood" to replace time-servers who obstruct political and economic reform, and who are not attentive to citizens' concerns.

PHOTO CAPTION

(L) Egyptian President Hosni Mubarak answers a question during a joint press conference with President Bush at the White House in this March 5, 2002 file photo

( R ) Gamal Mubarak has been made the party's political secretary, with responsibility for developing its thinking on a range of issues.