Cover story in Issue 24, March 16, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. Just before its 30th anniversary, the Israeli-Egyptian peace treaty survived one of its sternest tests. Despite angry region-wide protests against Israel over the 22-day December-January war in Gaza, the Egyptian government did not issue any harsh condemnations or convene the Arab League to call for sanctions against Israel or its Western backers. Nor, even more significantly, did it mobilize Egyptian armed forces or make any threat of military intervention. All this was taken for granted even though the war raged on territory once controlled by Egypt, was fought perilously close to the Egyptian border and some Egyptian border guards were accidentally killed. On the Egyptian street and in the media, the reaction was very different. The buzzword in Cairo was and still is "the genocide" committed by Israel against Palestinian civilians in Gaza. Nevertheless, the Egyptian government was far more critical of the Iranian-backed Hamas than it was of Israel. There was particular anger at the fact that Hamas, who are Sunni Muslims like the Egyptians, had allied themselves with Shi'ite Iran, which the Egyptian government sees as its most dangerous regional foe. Indeed, on the strategic level, in the fight against Hamas, Egypt and Israel found themselves on the same side. The shakeup of the Middle Eastern strategic architecture, largely set in motion by the Israel-Egypt peace deal, has created a state of affairs in which, in a showdown against an Arab force, Israel is not necessarily isolated in the Arab world. That was certainly not the case when Israel was founded in 1948. Then Arab rejectionism of Israel, led largely by Egypt, was monolithic. The loudly aggressive Pan-Arabism spread in the 1950s and 60s by Egypt's charismatic president Gamal Abdel Nasser was shaped around the idea of destroying Israel. In Nasser's day, Egypt sponsored Palestinian "Fedayeen" terror operations against Israel, and the Cairo-based and controlled Arab League led the economic boycott. Starting from 1948, Egypt played a leading role in five wars with Israel, the last of which, in 1973, left an indelible scar on the Israeli psyche. Complicating matters further, Egypt, until well into the 1970s, was a Soviet proxy, armed to the teeth with Soviet weaponry. Indeed, for the first precarious 29 years of Israel's existence, Egypt was its strongest and most inveterate foe. The idea of peace with the Arabs, especially Egypt, seemed hopelessly inaccessible. So when the late Egyptian president Anwar Sadat made his historic visit to Jerusalem in November 1977, Israelis were euphoric. The image of a smiling Sadat emerging from the plane that brought him remains etched in the collective memory as a transcendent moment that defied belief. Israelis hoped it would lead to warm relations between the peoples, heavy two-way tourist traffic, and, even more importantly, peace between Israel and the entire Arab world. After the September 1978 Camp David Accords, setting out the parameters for an Israel-Egypt accommodation, this heady optimism was reinforced by another iconic image: 30 years ago, on March 26, 1979, Sadat, Israeli prime minister Menachem Begin and U.S. president Jimmy Carter standing up after signing the peace deal on the White House lawn, and all three clasping hands in a gesture of single-minded purpose. The thinking was that once Egypt made the first move, the rest of the Arab world would follow. But to date, only one other Arab country, Jordan, has made peace with Israel. And the peace with Egypt, although it has survived Sadat's assassination, two Lebanon wars, two Palestinian intifadas and the recent war in Gaza, remains distinctly frosty. Cold or not, most Israeli experts attach incalculable strategic significance to the peace. Yet some hawks, such as Yuval Steinitz, the former Likud chairman of the Knesset's Foreign Affairs and Defense Committee, highlight what they see as worrying ambivalences in Cairo's policies towards Israel. They note, for example, that Egypt has been building a huge modern westernized army at great expense; that it has done little to help spread the peace to other Arab countries; that it often moves to undermine Israel's international standing; and that it allows widespread anti-Israel and anti-Semitic incitement. Their arguments are not without foundation. Of all the Arab armies, Egypt's is by far the strongest. During the three decades of peace, it has spent nearly $50 billion modernizing its armed forces and introducing state-of-the-art American equipment to replace obsolete Soviet stocks. It has a standing army of 450,000 compared to Israel's 175,000; it assembles its own front-line American MIA1 Abrams battle tanks, the equivalent of the Israeli Merkava; like Israel, it has a large tank force of around 4,000; like Israel, it has over 200 American-made frontline F-16 fighter planes; it has Apache attack helicopters, frigates capable of delivering satellite-guided Harpoon missiles and Scud ground-to-ground missiles. Israeli critics of the Egyptian military buildup ask why, if it is at peace with Israel, does Egypt need such an enormous force and they point out that, despite peace, most major exercises relate to Israel as the enemy. The latest of these, in mid-February, took place in the Sinai, with large Egyptian armored and air forces driving back an invader from the east (Israel). Egypt has also been less than forthcoming on the diplomatic front. In the mid-1990s, it tried to scuttle Israeli efforts to bring Jordan, Morocco and Qatar into the peacemaking club, and again in 2000, President Hosni Mubarak torpedoed any chance there may have been for peace with the Palestinians at that time, when he warned Yasser Arafat not to compromise over Jerusalem. Moreover, every five years, when renewal of the nuclear non-proliferation treaty (NPT) comes up, Egypt inevitably tries to bring international pressure to bear on Israel to dismantle its presumed nuclear arsenal. And over the past several months, Israeli diplomats have been complaining that Egypt has been working behind the scenes to scuttle a planned upgrading of Israeli ties with the EU. The cases of crude anti-Semitic, anti-Israel incitement in Egypt, from distribution of the Protocols of the Elders of Zion to swastikas and Hitler mustaches on Israeli leaders, are legion. There is also an effective cultural boycott. In 2007, for example, the Egyptian actors' union investigated Amr Waked, a rising Egyptian star, because he had worked alongside Israel's Yigal Naor in a biopic on Saddam Hussein. Soon afterwards, "The Band's Visit," an acclaimed Israeli movie about an Egyptian army band on a visit to Israel, was barred from the Cairo film festival. The unrelenting discreditation of Israel has been very effective: A late 2006 poll found that 92 percent of Egyptians see Israel as an "enemy state," and that only 2 percent regard it as a "friend to Egypt." "If Egypt has all along been making it difficult to expand the circle of peace with moderate Arab countries, if it ignores arms smuggling to terror organizations in Gaza, if it provides camouflaged diplomatic support to Hamas, if it educates the younger generation to hate Israel, and if it invests in a huge military buildup geared entirely to the possibility of a conflict with Israel, this is not the peace we expected," Steinitz complained soon afterwards in a seminal article in Haaretz. Still, for all its flaws, the peace with Egypt is right up there, along with Israel's strategic ties with the United States and its economic relationship with Europe, as among the country's most significant foreign policy achievements. "The fact that both Israel and Egypt know that war is no longer an option and the fact that the leaders say so publicly is of the utmost importance," says Eli Shaked, Israel's ambassador to Cairo from 2004-5. He argues that, despite its size and strength, the Egyptian army is not built for war against Israel. "It is meant to defend Egypt against real and imaginary threats unconnected to Israel," he asserts. As for the persistent stream of anti-Semitic and anti-Israel invective, Shaked maintains that Israel is partly to blame, because successive Israeli governments have done virtually nothing to stop it. He says when he tried to warn his superiors about the seriousness of the hate-filled rhetoric in the media, the mosques and the schools, no one showed much interest. On a home visit in 2004, Shaked presented a highly evocative slide presentation to the Knesset's Foreign Affairs and Defense Committee in an attempt to give the members a sense of the dimensions of the anti-Semitic phenomenon. "Some of the Knesset Members seemed uncomfortable even being told about it. They didn't want to touch it, on the grounds that Egypt was a very important country and the issue was not important enough to warrant a confrontation," he tells The Report. Not that the Egyptian authorities did very much when complaints were lodged. Shaked remembers complaining to Egyptian Foreign Minister Ahmed Aboul Gheit about the hanging of a huge banner showing a gallery of Israeli leaders, including then-prime minister Ariel Sharon, captioned "the murderers," from the second and third floors of a building opposite the Shaar Hashamayim Great Cairo synagogue on Adly Street. "I said, 'What have the Jews of Cairo done to deserve this? If these people have a beef against Israel, they should hang their banner outside the Israeli Embassy.' 'You have a case,' Aboul Gheit replied. But weeks later when we revisited the site, the banner was still there," he recalls. Shaked's term in Cairo coincided with one of the high points in Israel-Egypt ties. In 2004, the two countries started coordinating over Israel's planned disengagement from Gaza, Israeli Druze businessman Azzam Azzam, jailed on charges of spying, was released, and in December, Israel, Egypt and the U.S. signed a watershed free trade agreement. The deal provided for the establishment of "Qualified Industrial Zones" (QIZs), in which Egyptian textiles with an 11.7 percent Israeli component could be exported without duty to the United States. Hundreds of Egyptian textile firms registered, providing over 30,000 Egyptian jobs. In the following year, the volume of Israel-Egypt trade soared by 130 percent to around $134 million, and Egyptian textile exports to the U.S. increased by over 30 percent to an annual $750 million. Two years later economic ties between Israel and Egypt received another major boost, when Israel inked a contract to import $2.5 billion worth of natural gas from Egypt over a 15-year period. But, says Shaked, none of this helped to change the tenor of the complex Israel-Egypt relationship, which remained hugely significant, but cold and recriminatory. "On a scale of one to ten, I would rate the strategic importance of the ties with Egypt as close to ten," says Zvi Mazel, who was ambassador to Egypt in the key post-Oslo period, 1996-2001. "Egypt is the biggest country in the Middle East with 80 million people and the biggest army. It's imperative that we do all we can to live with it in peace." Mazel, who also served as a senior diplomat in the Cairo Embassy in the early 1980s, sees Mubarak's leadership as one of the reasons why the ties have remained constant but cold. "Unlike Sadat, Mubarak saw Egypt more in the Arab than the global context. Sadat wanted to forge closer relations with the West and to revolutionize the Egyptian economy, whereas Mubarak was far more cautious. Only in 1991 did he accept an International Monetary Fund development program to start privatizing the Egyptian economy. But it didn't last long and it didn't succeed. And the economic failure impacted on ties with Israel," he maintains. Mazel adds that when Mubarak came to power after Sadat's assassination in October 1981, Egypt was isolated in the Arab world. "It took Mubarak until 1989 to get back into the Arab League and bring it back to its headquarters in Cairo. And one of the ways of getting back into the Arab fold was to keep the peace with Israel cold," he says. Israel's leading experts on Egypt agree with the diplomats that the Israel-Egypt peace was a major strategic breakthrough. Yoram Meital, chairman of Ben-Gurion University's Chaim Herzog Center for Middle East Studies and Diplomacy, sees it as a historical watershed on three levels: Israel-Egypt ties, the Arab-Israel conflict, and the geopolitics of the Middle East. "The peace was signed when the Cold War was at its height, and it offered a model for a Pax Americana, in which the Arab side signs historic agreements which the Americans underwrite, giving them much wider political and economic significance," he says. According to Meital, this format led to unique strategic ties between all three countries. "There is a kind of Camp David coalition at work here," which he says could be seen in operation during the Gaza war, with Israel, Egypt and the United States all on the same side of the regional equation. Meital sees the large Egyptian army in the context of Egypt's hegemonic regional ambitions. Given its history and self-perception as a regional leader, a large modern army is a necessary element of Egypt's regional posture. And from the Egyptian point of view, Meital argues, the large army is actually a stabilizing factor, not meant for war but rather to prevent war. Although the commitment to peace by both the Israeli and Egyptian establishments is very strong, Egypt sees its military power as further underpinning the peace, in that it sends a quiet a message to Israel that it would not be a good idea to tangle with the Egyptians again. "They are not the Palestinians," Meital avers. Meital also takes issue with Israeli criticism of Egypt for not doing more to stop the anti-Semitic and anti-Israel incitement. He says it is totally wrong to conclude that the regime encourages incitement because it doesn't close down offending newspapers or use the censor more effectively. On the contrary, he argues, the regime's power of action is limited because of Egyptian political constraints. In some cases, doing what Israel would like to see could undermine the regime's stability. "The notion that a phone call to Mubarak or a letter from [the U.S.] Congress will ensure that he takes the appropriate action is simplistic. Political life in Egypt is very vibrant and public opinion very active. The assumption that Mubarak can simply shut people up whenever he feels like it and not pay a political price is simply wrong," he declares. Elie Podeh, chair of the Department of Islamic and Middle East Studies at the Hebrew University, agrees that the 30 year-old peace has major strategic implications. It removed Egypt from the circle of war against Israel; it created divisions in the Arab world; and it paved the way for further peace agreements. In Podeh's view, the huge significance of the peace comes to the fore in times of crisis. "The apogee was during the recent Gaza war. On the popular level, we took heavy criticism, but, to put it bluntly, on the government level Israel and Egypt were in the same camp," he observes. Israel, says Podeh, is no longer "a nation that dwells alone," and as the region lines up behind the pro-Western moderates or the Iranian-led radicals, Israel, short of a formal alliance, can draw very close to the moderates on the basis of common fear of the spread of Iranian influence. "What we are witnessing is the evolution of a tacit unwritten alliance based on mutual interests that are not going to change overnight," he maintains. So why does the peace between Israel and Egypt remain cold? Podeh argues that keeping it that way serves Egyptian regional and domestic interests. Because perceptions of Israel are so negative in the region as a whole and in Egypt itself, the Egyptian government can't afford to be seen to be getting too close, Podeh says. "In my view, even solving the Palestinian problem will not lead to a dramatic warming of ties. Things would improve, but Egypt's regional leadership aspirations and internal pressures would continue to influence the degree of warmth," he asserts. Indeed, in Podeh's view, it is partly because of its regional aspirations that Egypt has done so little combat to the widespread anti-Semitic criticism of Israel. But it is also because it helps the regime on the domestic front. "There are many socialization instruments that the regime could have used to promote the idea of peace. But the criticism leveled against Israel is a sort of safety valve, which deflects criticism from the regime itself," he contends. Podeh agrees that the main reason Egypt maintains such a large army is because of its self-perception as a regional power. But he adds that it is also to be ready for a worst case scenario of war with Israel. "Israel has contingency plans for war against Egypt and vice versa. Nevertheless, I would say the chances of war breaking out are very, very small. But the theoretical possibility of war is still here, and both sides have to prepare accordingly," he says. These days, because of its relations with both sides, Egypt is the main mediator between Israel and Hamas. Its goal, Meital and Podeh agree, is to stabilize the Gaza situation and to pave the way for meaningful Israeli-Palestinian negotiations. To this end, they say, it is trying to broker a reconciliation between Hamas and the Fatah-led Palestinian Authority, which it sees as a precondition for genuine Israeli-Palestinian progress. The strategic goal is stability, which serves Egypt's national interests and the interests of the regime. The 64-thousand-dollar question, though, is what will happen to Israel-Egypt relations after Mubarak? The diplomats and the experts all have the same prognosis: His successor will come from the ranks of the same ruling elite - probably either his son Gamal or Intelligence Chief Omar Suleiman - and there will be no significant change. "I don't see any sign of an impending takeover by the Muslim Brothers or any other opposition force. And, if Mubarak doesn't run in the next election, scheduled for 2011, the chances are that his son Gamal will take over as the ruling party candidate. If, however, he dies or is incapacitated before then, the successor could well be Omar Suleiman. In both scenarios, there will be more continuity than change," Meital predicts. The Gaza war highlighted the strategic importance of the Israel-Egypt peace for both sides. It also turned a spotlight on the deep resentment of Israel on the Egyptian street. The peace achieved by Sadat, Begin and Carter 30 years ago has remained a peace between governments, not peoples. Shaked argues that the very prowess, which enables Israel's survival in a hostile neighborhood and made the peace between governments an Egyptian interest, is one of the prime sources of the resentment that militates against peace between the peoples. This goes even beyond the Israeli-Palestinian conflict, and could prove insoluble. "Once a very senior general who was part of the Sadat regime told me over lunch that 'as long as Israel is on the top floor economically, technologically and militarily and we are somewhere in the basement, there will never be true peace between Israel and the Arabs,'" recalls Shaked. â€¢ Cover story in Issue 24, March 16, 2009 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.