Looking out the panorama windows in the room at the Hotel Royal Golf Resort where Defense Minister Ehud Barak met with Egyptian President Hosni Mubarak on Wednesday, tourists could be seen strolling along a nearby promenade in shorts and flip-flops. Others were seen swinging their clubs on the bright green lawn of the 18-hole golf course. This week is one of the high tourist seasons in Egypt, with thousands of Europeans seeking refuge from the cold Christmas holiday back home on the sandy beaches in Sharm e-Sheikh. Inside the meeting room, however, there was a different atmosphere, one that was tense but friendly at the same time. In principle, the Egyptians told Barak, they are not opposed to hearing criticism. It all depends on the way it is expressed. Foreign Minister Tzipi Livni calling Egypt's security performance along the Philadelphia Corridor on Monday "deplorable" and harmful to the peace process was the type of language they were not willing to take lightly. Barak started off his round of meetings with his counterpart, Egyptian Defense Minister Muhammad Tantawi. The two have known each other for years, although their first meeting was under completely different circumstances. During the Yom Kippur War, both Barak and Tantawi were battalion commanders fighting against each another in fierce battles at the Chinese Farms. The two met again on Wednesday, this time exchanging pleasantries, hugs and kisses. Barak's next meeting was with Chief of the Egyptian Intelligence Services Omar Suleiman, the feared Egyptian official who is in charge of the "Israeli file" and particularly the talks Egypt is conducting with Hamas regarding the fate of kidnapped Cpl. Gilad Schalit. Barak then met privately with Mubarak and stressed the importance of stopping weapons smuggling as well as other regional issues, such as the Iranian threat. Egypt, Israeli defense officials said on the flight back to Israel, is just as concerned about Iran as Israel is. In all, Barak and his delegation walked away satisfied from their talks in Sharm. There were, however, two issues that stood out. The first was Livni's remarks, which, Barak explained to the Egyptians, did not reflect a change in Israeli policy. One Egyptian general told Deputy Defense Minister Matan Vilna'i that Mubarak, Tantawi and Suleiman felt comfortable talking to him and to Barak since - unlike Livni - they were both former generals and "generals know how to fight and talk." The second and more disturbing issue for the Egyptians was last week's report in The Jerusalem Post about Israel's decision to send the US videotapes allegedly showing Egyptians assisting Palestinian weapon smugglers in Rafah. The videotapes were sent to Washington last month by Israel's top defense echelon. The move was intended to influence Congressional hearings on the future of US foreign military aid to Egypt. After the Post broke the story last Tuesday, Israel's embassy in Washington was flooded with phone calls from congressmen on the appropriations committee who were asking to see the videotapes. At first, the embassy told callers that the report was false and that it had been made up by the Post. On Friday, however, the Post published another article citing senior diplomatic officials who confirmed that the tapes had indeed been sent by the defense establishment to the embassy in Washington, but had only been shown to administration officials - from the White House and the State Department - and not to Congress. Behind the decision was the Foreign Ministry, which believed that were Israel to show the tapes to Congress and openly lobby against Egypt, Israeli-Egyptian relations could be irreversibly damaged. This decision was taken against the recommendation of the defense establishment. On Monday, the report again made noise when Likud MK Yuval Steinitz quoted from it at a session of the Foreign Affairs and Defense Committee attended by Livni, who was then compelled to confirm that Israel had sent the tapes to Washington but decided not to show them to Congress. At his meetings Wednesday, Barak reiterated Israel's decision not to show the tapes to Congress, explaining that the only reason the tapes had been sent to Washington in the first place was because the US administration had asked Israel to provide evidence for its claim that Egyptian soldiers were helping Palestinian weapons smugglers. Despite the tension created by these developments, Israel and Egypt are not ready give up the strategic alliance they have managed to forge since they signed a peace agreement almost 30 years ago. Both countries are also aware that they need one another. Israel sees its peace with Egypt as a model for other Arab and Muslim countries in the region with whom it would like to normalize relations in the future. Israel also needs Egypt to mediate its informal talks with Hamas, both over the possibility of a hudna (cease-fire) with the terror group in the Gaza Strip, but also about a possible prisoner exchange under which Schalit would be released. With very few friends in the neighborhood, Egypt stands out. On the other side, Egypt views its relations with Israel as a strategic asset. Cairo recognizes the fact that Israel and the Jewish lobby have a great deal of influence in Washington and would not to see that influence turned against them, as it almost did with the videotapes.