The early-April arrest of Hizballah oper- atives in Egypt, accompanied by virulent attacks by the Egyptian media against Hassan Nasrallah, chief of the militant Lebanese Shi'ite organization, provide further evidence that non-Arab Shi'ite Iran has become a significant player in the heartland of the Arab world, to the consternation and anger of Sunni Arab elites. The current Egyptian drumbeat against Nasrallah, widely viewed in Cairo as an Iranian proxy, is a signal to all and sundry, at home, in the region and beyond, that Egypt is determined to draw the line in the face of Iranian penetration, and that it remains the indispensable actor among Arab states. Tehran and Cairo experienced little conflict with one another in the decades preceding the toppling of the pro-Western Pahlavi monarchy by Ayatollah Khomeini in February 1979. From this point on, however, Iran and Egypt found themselves on opposing sides of the geostrategic and political fence. Diplomatic relations were broken off, and never fully restored. Iranian authorities named a street after Sadat's assassin (to be changed again, in 2004, to "Intifada Street"). Egypt played a crucial role in bolstering Iraq against Iran during their eight-year war, providing much-needed manpower and selling it ample amounts of Soviet-made weaponry. As such, Cairo demonstrated to its Arab critics, who had ostracized Egypt after the peace treaty with Israel, that the Arab world, as conceived by generations of Arab nationalists, could not survive the challenges posed by non-Arab powers without Egypt standing in the breach. However, even then, there was no united Arab front regarding Iran. Hafez Asad's Syria found a strategic ally in Tehran. Squeezed between a rival Baath regime in Iraq, a powerful Israel and pro-Western Jordan, secular Arab Syria's alliance with theocratic Shi'ite Iran made good sense, strategically and economically. It would also become useful for Syria in maintaining its hegemony over Lebanon. Throughout the long years of the Iran-Iraq war and afterwards, Syria rebuffed Arab pressure to sever its links with Iran, while taking care to maintain an open line to pro-Western Arab states. Meanwhile, the specter of Iranian power increased. Iran was the main strategic beneficiary of the weakening and ultimate overthrow of Saddam Hussein's Iraq, attaining unfettered access to Iraq's majority, and now ruling, Shi'ite community. In the Gulf, it strengthened its hold over three islands belonging to the United Arab Emirates, brushing off all Arab efforts to negotiate an amicable resolution to the dispute; its naval capacity increased substantially, this in the world's most crowded sea lanes for oil tanker transport; periodic comments regarding Iran's historical claims to Bahrain tended to rattle Arab rulers; and restive Shi'ite communities in both Bahrain and Saudi Arabia appeared to be prime targets for Iranian meddling. The hand of Iranian intelligence in the truck bombing of an American military residential complex in Khobar, Saudi Arabia, in 1996 certainly rattled the Saudis even more. Most disturbing to Egypt was the deepening presence of Iran in the Arab-Israeli arena, via both the Lebanese and Palestinian spheres. To Cairo's and Riyadh's distress, Bashar Asad went much further than his father in enabling Iran to operate in Lebanon, and in bolstering Nasrallah. Egypt, Saudi Arabia and Jordan were angered by Nasrallah's instigation of the 2006 Lebanon war, and Iran's deep involvement, manifested by the Iranian missiles destroyed by Israel in the war's first hours. Official Egypt was even more perturbed by Iran's embrace of the Palestinian cause, its traditional bailiwick, beginning with the Karine A shipment of arms to Yasser Arafat, and expanding into strategic backing for Hamas, with Hizballah providing crucial logistical support. Hamas' continued parrying of Egyptian pressure to negotiate an intra-Palestinian accord and a cease-fire and prisoner exchange agreement with Israel made Egypt look embarrassingly weak. Moreover, Hamas' provocation of the Gaza war was all-too-reminiscent of Nasrallah's actions in 2006. In both cases, the wars stirred Arab public opinion, exposing Arab regimes to harsh criticism for their inability to prevent the Israeli onslaught. Most disturbing was Egypt's apparent loss of control over its sovereign territory to Iranian-Hizballah operatives, coupled with intolerable calls for the Egyptian public to insist on the lifting of the siege of Gaza. With Egypt's Muslim Brotherhood opposition being the parent organization of Hamas, official Egypt understandably viewed Iran's and Nasrallah's actions as brazen interference in Egypt's internal affairs. Clamping down on the Hizballah-Hamas smuggling and sabotage rings in Sinai is within Egypt's capability. Doing so will serve to at least partially counter Iran's increased power projection into the eastern Mediterranean region and increase Cairo's ability to midwife a new set of intra-Palestinian and Israeli-Palestinian understandings. In any case, Cairo will be watching closely as the new Obama Administration in the U.S. takes its initial operative steps to handle the Iranian file, particularly the nuclear portion. â€¢ The author is a Senior Research Fellow at the Moshe Dayan Center for Middle Eastern and African Studies, Tel Aviv University.