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Hichem Karoui: Is business apolitical?
April 28, 2012
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Israel and Egypt officials are both downplaying the decision to cancel the gas deal contract, claiming that it has nothing to do with politics. Thus, they probably think it is the best way to ease the tensions between them.

However, the realities are there, and the denial may turn out to be self-delusion. The fact is that Israel is unhappy about the revolution that toppled Hosni Mubarak, while  Egypt is unhappy about so many Israeli attitudes that their listing could make a whole book.

The Camp David accords  and the subsequent  Egypt-Israel Peace Treaty were mentioned several times in the public space, both in Israel and Egypt, since the revolution. They have provided the formal framework under which Egypt has conducted its relations with Israel during the Mubarak presidency. The normalisation has always been subject to criticism in Egypt. It is undeniable , though, that while for many the treaty is just unworkable and in need of adjustment or cancellation, the strong opposition continues to exist alongside an acceptance of the Camp David Accords as the instrument that ended the state of war between the two states.

As it has been noticed several times, Israel’s security strategy in the region for decades has been based on the existence of autocratic regimes that were able to maintain relationships with Israel, irrespective of any popular feeling against such relationships , and at the same time to ensure that no threats to Israel’s security emanated from their territories. This is no longer the situation and Israel has certainly perceived the change. There is a new element in the politics of the region: the Arab public opinion. Henceforth, legislators and presidents are elected. They have to respect their constituencies in order to reach office and stay in their post.

Since the revolution, there was anxiety that a new Egyptian regime under the influence of the Islamists would cancel the Camp David accords ending the state of “cold peace.” Israel’s security arrangements in the region depend heavily on that treaty.

The SCAF expressed its commitment to the Camp David accords. But held under “fire” from the protesters of Maydan al-Tahreer, the military may feel much in need of popularity. Some of their recent attitudes cannot be understood outside this context.

Some months after the uprising  an Israeli force entered Egypt’s territory in pursuit of what they claimed were Palestinian militants, and in the process killed five Egyptian soldiers.

Egypt demanded an apology and compensation from Israel, as thousands of protesters demonstrated outside the Israeli Embassy in Cairo, burning an Israeli flag and demanding that the ambassador be expelled and the Embassy closed.

Feeling the danger, officials in Egypt and Israel tried to save the situation.

On October 11, Israel issued a formal apology to the Egyptian government and took responsibility for the shooting that killed the Egyptians near Eilat on August 18. This apology coincided with news of the Egyptian-brokered release of Israeli Sgt. First Class Gilad Shalit. On October 18, after five years in captivity, Shalit returned to Israel after Israel and Hamas, with Egypt serving as a mediator, completed a prisoner exchange deal. In exchange for Shalit, Israel agreed to free a total of 1,027 Palestinian prisoners in two phases.

On October 27, 27-year-old Ilan Grapel, an American law student from Queens who also has Israeli citizenship and was arrested on espionage charges in Egypt in June, was released in exchange for 25 Egyptians held in Israel.

A report for the Congress noted that for Israel, its foreign policy towards Egypt is in a difficult phase. Now, more than ever, Israel depends on a positive relationship with the Egyptian military to ensure the preservation of the  1979 peace treaty. Though it expressed its concern over the storming of its embassy, Israeli officials were careful not to harshly criticise the SCAF.

Now, to come back to the gas affair,  it is obvious for everybody that if this is a business decision, its consequences are highly political.

It is a business decision indeed, because Jordan, which receives Egyptian gas through the same pipeline – and previously paid $3 per million BTUs – agreed earlier this month to sign a new contract at prices closer to the global average ($ 6-7). But with Israel, this cannot be only a business decision.

Recently, an Israeli columnist (Zvi Bar’el) acknowledged, the issue is also “supremely political. Because in Egypt, as in Israel, the pipeline has become a symbol. A symbol of disgusting normalisation with an occupying country; a symbol of the corrupt government of former Egyptian President Hosni Mubarak, whose sons are suspected of having received commissions of 2.5 per cent to 5 per cent of the total billion-dollar transaction; and a symbol of the abandonment of the interests of the Egyptian public, which pays a higher price than Israel for the gas it consumes.”

Knesset Member Binyamin Ben-Eliezer, who signed the gas deal with Egypt during his term as infrastructure minister, said the deal’s termination is yet another indication that a conflict between Israel and Cairo is possible. Opposition Leader Shaul Mofaz called Egypt’s decision a “flagrant breach of the peace treaty between Israel and Egypt.” He added, “Egypt’s actions require an immediate response from the US.”

Lastly, the international shareholders of East Mediterranean Gas (EMG) for whom the decision to halt Egyptian natural gas exports to Israel was not due simply to commercial differences.

“Any attempts to characterise this dispute as a mere commercial one is misleading,” shareholders in East Mediterranean Gas Co. (EMG) said in a statement to Reuters. “This is a government-backed contract sealed by a memorandum of understanding between Egypt and Israel that specifically refers to the [1979] peace treaty.”

Thus enter the Camp David accords and the peace treaty on the stage. Ostensibly, the cancellation of a commercial deal is twice significant: it is about trade and finances, and it is also about policy and politics.

Better, it has been interpreted as ‘retaliations’: “Egypt cancelled the natural gas deal with Israel as a strategic move in response to Ampal American Israel Corp’s lawsuits against the Cairo government,” the Israeli company’s finance VP said at a meeting with bondholders. Ampal’s main holding is its 12.5 per cent stake in Egyptian gas exporter EMG.

The announcement, therefore, has raised speculation that it was intended to force Israel to call off an $8 billion lawsuit.

The above picture shows the extreme anxiety that characterises today the relationship. In such a context, nothing is apolitical, especially when it involves bilateral or international relations.
 
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The author is an expert in US-Middle East
relations at the Arab Center for Research
and Policy Studies (Doha Institute)
 

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