Egypt Feature: Cairo Cuts Gas Supplies to Israel --- Will the Power Play Backfire? (Mills)

Robin Mills writes for Foreign Policy:

It must be serious news to make Israel's ultra-hawkish foreign minister turn conciliatory. Yet Avigdor Lieberman described Egypt's April 22 cancellation of its deal to supply Israel with natural gas as "a trade dispute," minimizing the political repercussions of the end to the most significant economic tie between the two erstwhile adversaries. "To turn a business dispute into a diplomatic dispute would be a mistake," Lieberman counseled.

At first sight, the deal's cancellation is a blow to Israel. During normal times, 40 percent of its gas needs were met by Egypt. In the deal's absence, Israel's utility company has raised its rates by a third and has turned to burning expensive, dirty fuel oil. Even so, there are fears of blackouts this summer.

The formal cutoff was only the postscript to a long series of interruptions to the gas supply. The pipelines in the Sinai Peninsula have been bombed some 14 times since Egypt's revolution as law and order has broken down and Bedouin tribes have revenged their grievances against the government. Gas flowed to Israel for only 140 days last year, and 25 days in the first three months of this year.

Other Israeli politicians were not as sanguine as Lieberman. Finance Minister Yuval Steinitzworried that the cancellation was "a dangerous precedent which casts a shadow on the peace agreements and the peaceful atmosphere between Egypt and Israel."

Yet the cancellation is neither a challenge to the Camp David Accords nor a purely commercial matter. The decision is instead a product of Egypt's muddled domestic politics, which means short-term pain for Tel Aviv but a longer-term strategic defeat for Cairo. As for the law, it's at least debatable: The 1979 peace treaty obliges Egypt and Israel to maintain normal economic relations, but the gas deal is dealt with in a 2005 memorandum of understanding referencing the treaty. Such memoranda are generally considered nonbinding in international law.

The gas deal with Israel has long been deeply unpopular in Egypt. Quite apart from the unpopularity of trading with a regional pariah, the deal is seen as a giveaway.

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