Cairo's move to cancel gas exports to Israel has Israeli strategists and politicians quietly panicked, writes Saleh Al-Naami "This is the last straw for the peace agreement with Egypt. The Camp David Treaty is worthless without Egyptian gas," is how former Israeli minister for infrastructure Binyamin Ben-Eliezer put it with great dismay. Ben-Eliezer had signed the 2005 gas deal between Egypt and Israel with Egypt's then minister of petroleum Sameh Fahmi. Ben-Eliezer said he could not believe his ears when he heard that the Egyptians suddenly announced the cancellation of the deal to sell gas to Israel. His reactions during a long interview with the Israeli economics newspaper The Marker were especially significant since he is described in Israel as "the engineer of the relationship with Egypt" and "the Israeli who was the closest to the ousted president [Hosni Mubarak]." Ben- Eliezer is also famous for saying, "Mubarak is a strategic treasure for Israel." The former minister mocks those who say that cancelling the gas deal was for economic reasons, since he believes that the step was motivated by politics and will have long-term strategic ramifications. "Relations between Egypt and Israel have completely changed course after the deal was cancelled," he suggested. "When once Egypt was a stabilising factor in the Arab region in a way that serves Israel's interests, we now exist in this region without the key role that Egypt played in our favour." Ben-Eliezer believes that the leadership of the Egyptian army allowed the deal to be annulled in order to improve its image in Egypt's domestic arena, which reflects the weakness of the military leaders. "The army leadership has weakened and surrendered its role to political players, which harms our interests," he explained. Discussing the significance of gas in Israeli- Egyptian relations, Ben-Eliezer said that he was in constant contact with former General Intelligence chief Omar Suleiman whenever there was a problem relating to gas, since Suleiman was the contact person for Israel, especially on the issue of gas. Ben-Eliezer admits that the gas deal harmed the vital interests of the Egyptian people, but added: "as a minister in the Israeli government, all I cared about was my country and my people, not others." Oddly, Israeli Prime Minister Binyamin Netanyahu cheerfully announced the cancellation of the gas deal since there were rumours that there was a trade dispute, and that it was not the result of a change in Egypt's position. Amir Barakat, an expert on strategic affairs, believes that Netanyahu's statements aimed to prevent damage in ties with the military leaders of Egypt, and that the Israeli prime minister knows full well that the Egyptian decision is in fact "the greatest crisis facing the energy sector in Israel's entire history." Yarom Ariav, former director-general of the Israeli Finance Ministry, explained that cheap Egyptian gas greatly enabled Israel to produce energy at a relatively low cost and save billions of dollars for the state treasury, allowing it to invest in other sectors. According to Ariav, Israel was buying gas from Egypt at a quarter of its value on global markets. Proof that Netanyahu's cabinet is dealing with Egypt's decision as a key strategic transformation is the fact that it took immediate steps to contain the repercussions of Cairo's decision. For example, Israeli Finance Minister Yuval Steinitz issued orders to cut through red tape preventing the extraction of gas at the Tamar gas field that is home to large gas reserves, located in the region separating Israel and Cyprus. The measure would compensate huge losses in gas after Egypt decided to stop exports to Israel. What makes the Egyptian decision even more critical is the fact that Yam Thetys gas field west of the Israeli town of Ashkelon, which provides 60 per cent of the gas needs of Israel's official power company, will run out within six months. If gas excavations are not planned at new gas fields, this means that Israel needs to construct more power stations that use coal that cost four times as much as importing gas. Another indicator of the dire economic repercussions of the Egyptian decision is an urgent measure by Israel's finance ministry to raise the cost of electricity for consumers by 25 per cent. On the political plane, Netanyahu's government moved on two fronts. First, it sent a senior official to Cairo to discuss restoring the gas deal; second, it turned to Washington to ask it to threaten economic sanctions to deter Egypt from taking other steps against Israel. The Israeli Ministry of Trade and Industry asked the US administration to look again at the 2004 QIZ (Qualifying Industrial Zones) Agreement which Egypt, Israel and the US signed. The QIZ Agreement exempts Egyptian products from taxes if 10 per cent of their components are imported from Israel. This means that Tel Aviv will ask the Obama administration to stop tax exemptions on Egyptian products. Israel took this step despite recent revelations by Israel's Export and Import Institution that in January and February 2012 Israel exported goods to Egypt worth $46 million, while exports during the same period in 2011 were no more than $12 million. This means that the volume of trade between Egypt and Israel multiplied almost four- fold after the Egyptian revolution. Israel is worried that the decision to cancel the gas deal is a prelude to other decisions, especially shutting down joint economic projects such as a large textiles project by Israel's Delta Company in Cairo. Or that Egypt's Central Bank will decide to end dealings between Egyptian and Israeli banks (Egyptian banks still allow transfers from Israel and vice versa). Some in Israel also warn decision-makers in Cairo that the US, the guarantor of the Camp David Treaty, will not hesitate to stop $1 billion in military aid to Cairo if the peace agreement is breached. Cairo's gas decision came amid debate in Israel about the future of relations with Egypt. There is a strong trend inside Israel's government, led by Foreign Minister Avigdor Lieberman, calling for dealing with post-revolution Egypt as a source of threat more dangerous than Iran's nuclear programme. Lieberman believes that relations with Egypt will become so precarious that this will require rebuilding the Israeli army, and giving priority to the army's Southern Command. Also, forming a new corps comprising of four brigades to be stationed on the border with Egypt, and securing funds for this. Lieberman asserts that there is good reason to believe that after presidential elections in Egypt, Cairo will substantially breach the Camp David Treaty by deploying Egyptian military forces in Sinai in a manner that would threaten Israel's national security. Israeli analyst and writer Tsivi Bareil, however, is one of the few inside Israel who understands Egypt's decision. In an article published in Haaretz, Bareil said that the pipeline that carried gas to Israel is viewed by Egyptians as a key symbol of normalising relations with Israel and the corruption of Mubarak's regime. He added that Egyptians also view the gas deal with Israel as compromising their vital national interests, since the price that Egyptians pay for gas is higher than the price Israel is paying for the same gas. Accordingly, the Egyptian revolution framed the gas deal as "a national disgrace". Bareil noted that Israel is counting on Washington's ability to force Cairo to de-link its policies towards Tel Aviv with the latter's treatment of Palestinians. He added that Israel is paying the price of the mistaken assumption that continued gas exports from Egypt is a fundamental pillar of peace between the two countries, neglecting the interests and dignity of Egyptians.
