Cairo Conundrum

The revolutionary wave rocking the Arab world is challenging all the old uncertainties, and unless Israel can find a way to deal with the new Egypt, there could be a stormy future ahead.

Protesters in Cairo (photo credit: Mohamed Abd El Ghany/Reuters)
Protesters in Cairo
(photo credit: Mohamed Abd El Ghany/Reuters)
AS THE DUST BEGAN TO settle on post-Mubarak Egypt, there were some worrying signs for Israel. A poll by the Washington-based Pew Research Center showed that a majority of Egyptians want to annul the longstanding peace treaty between the two countries; Egyptian Foreign Minister Nabil el-Arabi announced that Cairo was ready to “open a new page” in relations with Israel’s regional nemesis, Iran; Egypt worked behind the scenes to bring Iran’s Palestinian proxy, the fundamentalist Hamas, back into the Palestinian mainstream through a reconciliation agreement with the secular Fatah. Simultaneously, Egypt announced the reopening of the Rafah crossing point, raising questions about arms traffic into Gaza; the gas pipeline from Egypt to Israel was sabotaged twice and Egypt’s Finance Minister Samir Radwan declared that the peace treaty “does not obligate Egypt to sell gas to Israel;” repairs to the pipeline took longer than expected and by mid-May, gas was still not flowing.
The Pew poll also showed that the virulently anti-Israel Muslim Brotherhood enjoys wide support in Egypt, suggesting that the parties they back are likely to do well in the upcoming parliamentary elections; and the leading candidates for the key office of president have all made less than friendly noises about the Israeli connection.
For nearly three decades Mubarak’s Egypt had been the linchpin of the moderate regional camp ranged against the radical Iranian-led axis. In making peace with Israel in the late 1970s, Mubarak’s predecessor, Anwar Sadat, had realigned Egyptian foreign policy, moving from the Soviet sphere to a close alliance with the US, buttressed by far-reaching economic and military benefits.
The new tone coming out of Cairo has prompted speculation. Is revolutionary Egypt seeking a new regional orientation that could prove inimical to Israeli and Western interests? Will there be a new approach to Israel? Stronger backing for the Palestinians? Closer ties to Hamas in Gaza? Complicity in weapons smuggling? Will the new Egypt dare to abrogate the peace treaty with Israel and risk the loss of billions of dollars in crucial American military and economic aid?
 MOST ISRAELI ANALYSTS, in and out of government, do not believe Egypt will go that far.
But they acknowledge that the new mood in Cairo gives rise for concern. Yoram Meital, chair of Ben-Gurion University’s Chaim Herzog Center for Middle East Studies and Diplomacy and an expert on Egypt, speaks of a “revolutionary moment,” in which longsuppressed voices are surfacing in a new, more democratic environment.
“Things people only whispered in coffee shops are now part and parcel of the public discourse. This includes a strong anti-Israel strain, which influences candidates seeking election and elicits similar vote-seeking statements from them,” Meital tells The Report. According to Meital, however, this new democratic dialogue will not be enough to alter Egypt’s overarching national strategy, which will remain US-oriented, with all that that implies for the peace with Israel.
The impact will be rather on the bilateral Egypt-Israel level, which is almost certain to take a sharp turn for the worse. In other words, in Meital’s view, the “cold peace” will get significantly colder, without being abrogated altogether.
The cooling, he says, is already evident on the Palestinian track. Whereas before they tended to coordinate with Israel, the Egyptians, in the run-up to the anticipated UN vote on a Palestinian state in September, are now working closely with the Palestinians and the US. “Their goal is to break the deadlock by repackaging the Palestinian side through the Hamas-Fatah agreement and then going to the Americans in the lead-up to September and saying, ‘Look, we have created a promising new dynamic here.’ Basically, what they are trying to do is to help generate far more international pressure on Israel than at any time in the past,” he asserts.
Meital further argues that the Egyptian overtures to Iran are part of a new approach designed to enhance regional influence by maintaining ties with all the key players. But, he says, the Egyptians will not sacrifice their peace treaty with Israel or their relations with the US for the sake of ties with Iran, if that is what it comes down to. There is just too much for them to lose. “It reminds me of the late 1980s, when the Arab world renewed its ties with Egypt after severing them in the wake of the 1978 Camp David accords with Israel. The Egyptians said then that as much as they wanted to renew ties, they wouldn’t allow anyone to dictate their strategic decisions. Ties would have to be on their terms, which included peace with Israel,” he says.
Moreover, despite the fact that in the “revolutionary moment” there are great expectations in Egypt for a return to a role of regional preeminence, Meital insists that the current leadership and its elected successors will have to focus primarily on a range of complex domestic problems, including rising ethnic tensions and a deteriorating economy. And, looking ahead, Meital envisages a new threepronged leadership style: president, government and army, each with a degree of power, in a situation of give and take that, bottom line, should leave the peace with Israel intact. “The government might make populist noises, but the army will insist on maintaining security interests, such as ties with the US and the peace with Israel,” he concludes.
OTHER ISRAELI EXPERTS ON Egypt take a similar view. Eli Podeh, of the Hebrew University’s Department of Islamic and Middle Eastern Studies, distinguishes between anti- Israelism on the declarative level and genuine Egyptian national interest. “The current military-based elite in Egypt is not dissimilar from that of the Mubarak era and has a very good grasp of Egypt’s national interests,” he tells The Report.
“The relationship with the US is very important to them. They get over $2 billion a year in US aid. There is also the question of investments from the West and from rich Arab countries like Saudi Arabia and Kuwait. Moreover, any military escalation with Israel will hurt the two most important sources of Egyptian revenue: the passage of shipping through the Suez Canal and tourism.” Therefore, in Podeh’s view, any Egyptian distancing from Israel will stop short of annulment of the peace treaty.
Nevertheless, Podeh raises the possibility of Egypt adopting something akin to the Turkish model: strong Islamist parties balanced by the army at home, and a freer foreign policy abroad. This, he says, could have very serious regional implications for Israel. “Egypt and Turkey were very important cornerstones of Israel’s regional policy. Deteriorating ties with both means that something very significant is changing,” he asserts.
To meet the sweeping changes in Egypt and the rest of the Arab world, Podeh holds that Israel needs to come out with a far-reaching initiative for regional peace. Otherwise, he argues, relations with a rapidly changing Arab world will become progressively more difficult and Israel will eventually find itself totally isolated.
In early April, Podeh was part of a group of over 50 leading Israeli security people, ex-politicians, businessmen and academics who tried to goad the government into action of this kind by publishing an unofficial Israeli response to the 2002 Arab Peace Initiative.
But he is not optimistic. Instead of opening up to the Arab world, Israel’s right-wing leaders are digging in, he says. “I am afraid the events in the region are giving the right an excuse to say there is no one to talk to, that the region is unstable, and that therefore we should avoid taking any initiatives. I think that is a totally wrongheaded analysis and the very worst way to deal with the changes in the region,” he declares.
DESPITE THE PERVASIVE anti-Israel tenor in Cairo, not all prominent Egyptian voices have been critical of the peace treaty. In late April, Mohammed Bassiouni, the former Egyptian ambassador to Israel, came out strongly against revoking it. In an interview with the London-based “Asharq Al-Awsat,” he argued that the treaty had brought Egypt significant gains, including the return of the Sinai desert, recovery of its oil fields, regularization of international shipping through the Suez Canal with the attendant revenues, reduced military budgets and increased foreign investment.
In Bassiouni’s view, the treaty remains very important today: Egyptian access to Israeli decision-makers could help the Arabs, especially the Palestinians; moreover, the treaty with Israel remains a necessary condition for Egypt’s key relationship with Washington. “It’s win-win. We both gain from the treaty,” he declared.
The leading candidates for president, though, have been less enthusiastic. Amr Moussa, 74, Secretary General of the Arab League, and Ayman Nour, 46, a liberal politician who was jailed in 2005 after running against Mubarak, have both made disparaging remarks about the Camp David accords on which the peace treaty is based.
Nour even went so far as to declare “the Camp David era is over.” But although distancing themselves from Israel, neither man called for an annulment of the peace treaty. The contradiction perfectly encapsulates the dilemma faced by revolutionary Egypt’s new would-be leaders: By attacking Camp David, they can play to the masses; by upholding the peace treaty, they can preserve Egypt’s Western-oriented geo-strategic interests.
It is still far too early to say how the presidential race will play out. For now, according to the Pew poll, published in April, Moussa seems to be the front-runner with 89 percent of Egyptians holding a favorable opinion of him. Nour came in second in the poll with an approval rating of 70 percent, followed by 68-year-old Mohamed ElBaradei, the Nobel prize-winning former director of the International Atomic Energy Agency, with 57 percent.
As the parties gear up for parliamentary elections scheduled for September (the presidential election is expected to take place in November), they have created two umbrella groups: The Egyptian National Congress, which includes urban and rural youth groups, students, workers, leftists, liberals, Nasserists and greens; and the National Dialogue, dominated by the Islamist Muslim Brotherhood. In university elections in March, Brotherhood affiliates won 30 percent of the vote, leaving independent liberals and leftist candidates with a clear if disunited majority.
SEASONED EGYPT-WATCHERS, however, warn against reading too much into these results.
Zvi Mazel, a former Israeli ambassador to Cairo, insists that the Muslim Brothers are on the ascendant and that things between Israel and Egypt are bound to get worse. “If you look at Egypt’s internal affairs today, the Muslim Brotherhood is setting the agenda,” he tells The Report.
“They have established four political parties and are already talking about forming an electoral bloc. There is a strong chance that they will emerge as the largest group in parliament and will have to be part of any future coalition. True, foreign policy will still be in the hands of the president. But what will happen in an Islamist-dominated parliament and with a free press in which they have a powerful voice? It can only lead to an erosion of ties with Israel.”
Mazel also sees dark days ahead caused by a new more assertive Egyptian regional policy. He points out that much of the Egyptian public discourse is about a return to glory days under Gamal Abdel Nasser, when non-aligned Egypt was the undisputed leader of the Arab world, and he notes that both Moussa and foreign minister el-Arabi have Nasserist backgrounds. In Mazel’s view, the overtures to Syria and Iran in the radical axis should be seen in this context, and he contends that the Saudis, Egypt’s erstwhile partners in the moderate camp, are extremely worried.
In late April, Egyptian Prime Minister Essam Sharaf toured Saudi Arabia and the Gulf States in an effort to reassure them that Egypt had no intention of abandoning the gulf area to Iranian machinations. But according to Mazel, they were not convinced. “The Saudis are concerned about being left to face Iran on their own,” he says. “And after Sharaf’s visit, they held a meeting in Riyadh with the Gulf States and Morocco to lay the groundwork for a new bloc of moderate Arab states.”
According to Mazel, Egypt’s new foreign policy is confused and contradictory, and, ultimately, does not serve Egyptian interests. He argues that despite Egypt’s overtures, Iran won’t stop exporting the Shiite revolution or drop its nuclear weapons program, both of which threaten Sunni Egypt. Moreover, he maintains that making Israel the fall guy for this new foreign policy could also harm the Egyptian interest. “Do they want to get into a confrontation with Israel? Spend more money on the armed forces? Is that what the revolution was all about?” he fumes.
ONE OF THE LITMUS TESTS FOR future Egypt-Israel ties will be the supply of Egyptian natural gas. Based on the peace treaty, the two countries agreed in 2005 that Egypt would supply Israel with 1.7 billion cubic meters (bcm) of gas annually for 15 years. In 2008, the gas began to flow, and by 2010 Egypt was already supplying 2.2 bcm, approximately 40 percent of Israel’s gas needs and enough to produce about 16 percent of its electricity.
But the changes in Egypt have raised both security and political doubts about future supplies. The pipeline has already been sabotaged twice, in early February and in late April, and after the second attack, the Egyptian authorities were slow to repair the damage. At the same time, Egyptian officials claimed that the gas had been sold to Israel too cheaply, and suggested that some of their predecessors, including the Mubaraks and former energy minister Sameh Fahmy, may have taken kickbacks. Fahmy was arrested and Mubarak’s son, Gamal, already under detention, denied having pocketed a 5 percent commission. The implication was that the new dispensation in Cairo might want to renegotiate the terms of the gas deal with Israel, or even cancel it altogether.
Despite the difficulties, Infrastructure Minister Uzi Landau is determined to preserve the deal, which he sees as a major expression of the peace between the two countries. In a bid to mollify Egypt’s new leaders, Landau waxes effusive about the peace treaty - not something to be taken for granted from a member of Yisrael Beiteinu, the hawkish party led by Foreign Minister Avigdor Lieberman, long persona non grata in Egypt. “We continue to see in the peace treaty with Egypt a cornerstone of peace and stability in the Middle East, and in the gas deal the most important economic agreement to emerge from it,” Landau tells The Report in a carefully worded statement.
Nevertheless, says Landau, Israel is preparing for the eventuality that, for whatever reason, the flow of gas from Egypt might be cut off. Last summer, the Israel Electric Corporation (IEC) held a major simulation exercise, successfully meeting heightened electricity demand without Egyptian gas.
According to Landau, Israel is accelerating a number of local projects, which could pick up the slack in the event of a major disruption in Egyptian supplies. For example, the dual fuel plant in Ashkelon (gas backed up by coal), the construction of a Liquid Natural Gas emergency reserve container off the coast of Hadera, connected to the national gas pipeline and with a regasification unit on board, the upgrading of heavy oil and diesel fuel pipelines, and, most importantly, accelerated preparation for the introduction of natural gas from Israel’s own huge Tamar and Leviathan fields. If there are no glitches, gas from Tamar should start flowing in 2013, Landau says.
That means there is now a crucial period of between two and three years in which Israel would be more vulnerable to a cut-off of Egyptian gas. The contingency plan is to make up the shortfall with coal, oil and diesel, and an increased flow of gas from Israel’s already depleting Mari-B field. “There would be no disruption in the supply of electricity,” Landau declares. “But consumer prices would go up and there would be more pollution.”
Landau, though, very much hopes to preserve the Egyptian gas deal through the crucial two-year period and even after the gas from Tamar kicks in. “It’s much healthier for Israel not to be dependent on just one supplier,” he says. “And the competition will make for better prices.”
INDEED, IF THE GAS FROM EGYPT continues to flow, the quantity is expected to increase from the current 2.2 bcm to 5 bcm in 2014, comprising about 60-70 percent of Israel’s gas supply. That might have left Israel seriously vulnerable to an Egyptian cut-off had it not been for Tamar and Leviathan. “By way of comparison, Tamar has proven reserves of about 240 bcm, enough to supply all Israel’s gas needs for the next two or three decades,” energy expert Amit Mor, CEO of the Herzliyabased Eco Energy consulting firm, tells The Report. Indeed, in his view, the larger Leviathan field (450 bcm) could safely be dedicated entirely to export.
According to Mor, an Egyptian cut-off in the crucial two- to three-year period would cost Israel an additional $500-$700 million per annum. But he is confident Egypt will not cancel. “Its revenue last year was about $300 million and is expected to grow to $1 billion in three years time. Moreover, stopping the gas supply to Israel would put Egypt’s military aid from the US at risk, estimated at around $2.5 billion annually.
“It would also jeopardize the Qualifying Industrial Zone (QIZ) agreement between Israel, Egypt and the US, which is worth more than $1 billion a year in Egyptian exports to the US and provides tens of thousands of Egyptian jobs. This adds up to around $4.5 billion that could be put at risk if Egypt unilaterally suspends the supply of gas,” Mor asserts. “The supply of Egyptian gas to Israel is more important for Egypt than it is for Israel,” he concludes.
Mor also rejects Egyptian claims that the gas was sold to Israel too cheaply, pointing out that Israel pays over $4 per million British Thermal Units (BTU), which is significantly higher than the price for which Egypt sells its gas to Jordan, Syria and Lebanon. “The Egyptians are getting a very fair price from Israel,” Mor maintains.
The issues between Egypt and Israel, however, go far beyond the price of natural gas.
Thirty one years ago, on March 26, 1979, Menachem Begin, Anwar Sadat and US President Jimmy Carter signed a breakthrough Israeli-Egyptian peace treaty, the first between Israel and an Arab country, setting a precedent that was to have led to peace with the Palestinians and the rest of the Arab world.
But, as the revolutionary wave rocking the Arab world challenges all the old certainties, even that anchor of regional stability no longer seems secure. And unless Israel can find a way to deal with the new Egypt, there could be a stormy future ahead.