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Israel-Egypt Peace Treaty Gassed-Out

New Nadir Reached in Sinai



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The Egyptian Natural Gas Holding Company and the Egyptian General Petroleum Corporation announced on April 23, 2012, that they are “terminating the Gas Supply and Purchase Agreement” with Israel since the East Mediterranean Gas Company failed its payments. The East Mediterranean Gas Company is an Israeli-Egyptian joint company that operates the El Arish–Ashkelon submarine pipeline, which transfers gas from Egypt to Israel. The Israelis deny the claim. Though the event has clear political repercussions, it matters little since at the time of the announcement Egypt can’t supply gas even if it wanted to. Since Mubarak’s regime was ousted in early 2011, the Arab Gas Pipeline—see map below—has been attacked roughly once a month. Following an Explosion in Sinai early this year, the entire pipeline is inoperable. Egyptian and Israeli authorities openly blame the attacks on Islamists opposed to peace with Israel and Bedouins complaining of discrimination against them by the Egyptian government. The pipeline used to supply 40% of the gas consumed by Israel, but Israel is not worried about that since the recently discovered gas fields in the eastern Mediterranean Sea (see Greece Joins Gas Alliance) more than compensates for the loss of the Egyptian gas. Israel is worried because Egypt is—for the first time—openly breaching the peace treaty between the two nations.

Sabotaged Sinai Gas Pipeline

Sabotaged Sinai Gas Pipeline

Sabotaged Sinai Gas Pipeline

Sabotaged Sinai Gas Pipeline

In recent months the situation between Israel and Egypt is deteriorating rapidly. The Egyptian government is concerned about the violence in its heartland and cannot provide enough police forces to the increasingly violent Sinai Peninsula. The peace treaty with Israel forbids Egypt to place army units in Sinai. Yet, in recent months the Egyptians authorities asked permission from Israel to let military units enter Sinai and attempt to control the ongoing mayhem. Until now, Israel always complied, but the Egyptian army failed to reinstate order. These were the first signs the situation had changed. Now, the refusal of the Egyptian to supply gas—officially on economic grounds—adds to it a clear breach of the 1979 Israel-Egypt Peace Treaty economic annex. Egyptian public opinion opposes Israel. Recently, a new Israeli Embassy in Cairo was Announced, after the previous one was attacked and destroyed last September. In recent weeks, the Egyptian media and parliament have criticized Coptic Christians and the Grand Mufti of al-Azhar for visiting Jerusalem. Above everything else, former president Hosni Mubarak is facing criminal charges for his role in the 20-year gas supply agreement, which was signed in 2005. Egyptian officials have said the gas was initially sold to EMG at $1.25 per million British thermal unit (BTU). In 2008, the price was increased to $4 per million BTU, while countries like Turkey, Greece and Italy paid between $7 and $10. In such a way, the poor Egyptian people were subsidizing the rich Israelis. When the former president faces trial for the shameful deal he backed, it is unlikely that the deal would be respected.

Arab Gas Pipeline | Sabotaged

Arab Gas Pipeline | Sabotaged

Also Israel is taking clear steps against Egypt. In Rising Ottoman, I reported on the Israeli National Security Council travel warnings for summer 2012. Among others, it recommended Israeli citizens to avoid visiting Tunisia (Djerba Island is the site of a religious festival), Egypt (especially the Sinai Peninsula), and Turkey. The three were popular destinations for Israelis seeking summer shelters; the resorts of the latter could host up to a million Israelis in a good season. Yet, three days before the Egyptians announced the agreement termination, the Israeli government urged its citizens to leave Sinai, after it had apparently learned of Egypt’s intention to suspend gas supplies. The Israel step is a clear retaliation. “We want to understand this as a trade dispute... to turn a business dispute into a diplomatic dispute would be a mistake,” said the controversial Israeli minister of Foreign Affairs, Avigdor Lieberman, after the Egyptian announcement. Thus, Israel is retaliating by hitting the Egyptian tourism industry. Moreover, later this year Israel will finish building a new fortified fence between the countries. The fence is mighty, much taller and solid than the old fence separating Israel from Syria. After all, Bashar Assad is quite friendly towards Israel (see Lebanon Beats Syria).

In this reality, the USA was unlikely to remain unscathed. On the same day the commercial agreement with Israel was terminated, the Egyptian government refused to license eight US civil society groups. The groups included the election-monitoring Carter Centre, Seeds of Peace, Coptic Orphans, the Latter-day Saints Association and other organizations. The Egyptian Insurance and Social Affairs Ministry rejected the applications because the organizations’ activities violated “the state’s sovereignty on its lands.”


“Vote al-Shater”


The upheaval runs deeper. One of the main issues nowadays in Egypt is the list of approved candidates for the presidential elections that are about to take place on May 2012. In their last move, the generals running Egypt announced today (April 24) that they have approved a law amendment that would bar senior officials from the Mubarak era from running for president. The amended law bars from the presidency those who served in senior positions in government and the ruling National Democratic Party under President Hosni Mubarak in the last decade. It seems this step was intended mainly to block Ahmed Shafiq, who served as prime minister last year. Omar Suleiman—Mubarak's former vice-president and spy chief—has already been disqualified, along with two Islamists. The last could have been seen as a balancing step while the Muslim Brotherhood—probably the largest political force in Egypt—kept saying until March 2012 that it would not place a candidate for the presidential elections. Yet, this has changed. At the beginning of this month, the Muslim Brotherhood's Khairat al-Shater was named the Brotherhood's official candidate. Mr. al-Shater is a millionaire businessman, and the Islamist movement's chief financier. The group will use its extensive grassroots network of members to get the vote out for Mr. Shater and is already trying to convince other conservative parties to give him their backing too. Despite campaigning being not officially allowed until after list of candidates is published, the picture shows the campaign is already on. As of now, he is the leading candidate.

Elections 2012 in Egypt

Elections 2012 in Egypt
Vote Shater

Next month, we may witness a new Egypt. A former ally of Israel would then face a hostile border with the Zionist state. A mighty fence separating the two would be near completion. The gas deal would be a thing of the past, its agonizing details to be finally settled by an international court. Maybe a new coalition led by the Muslim Brotherhood would need to deal with a popular request to put the Peace Treaty with Israel to test by holding a general referendum on it. Wild winds whirl Sinai’s sands.

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