Gas deal dispute reflects change in Israel-Egypt relations

CAIRO — The decorum of diplomacy has devolved into embarrassing headlines and testy one-liners in the increasingly strained relations between Egypt and Israel.

Israeli Prime Minister Benjamin Netanyahu said Tuesday that Egypt’s Sinai peninsula had become a “kind of Wild West” overrun by militants, terrorists and arms smugglers. Over the weekend, Foreign Minister Avigdor Lieberman had suggested massing more Israeli troops along the border with Egypt.

That drew a bit of mafia parlance from Egypt’s military ruler, Field Marshal Mohamed Hussein Tantawi: “Our borders, especially the northeast ones, are inflamed. We do not attack neighboring countries but will defend our territory. We will break the legs of anyone trying to attack us or who come near the borders.”

Rhetoric for domestic consumption, to be sure, but it symbolizes the changed tenor between the two countries since last year’s revolution, in which Egyptian President Hosni Mubarak, who kept close ties with Israel, was deposed. Islamists are on the rise in Egypt, and Tantawi is keenly aware that the 1979 Egypt-Israeli peace treaty was never enshrined in the Egyptian soul.

The two sides have been careful not to escalate their language and actions into missteps that could upset the Camp David accords, which led to the treaty. Egypt’s Muslim Brotherhood, which controls nearly half of parliament, has expressed commitment to the treaty. But the revolution has unleashed new sentiments and set Egypt on a path to fix what it sees as the sins of the Mubarak era.

One of those was the 2005 agreement to supply Israel with natural gas at a discount, a deal that benefited Mubarak confidant Hussein Salem. Egypt revoked the multibillion-dollar contract this week in a payment dispute with East Mediterranean Gas (EMG), which supplied Israel. Salem, who fled to Spain after the revolution, says he was a partner in EMG until 2008. (Sam Zell, chairman of Tribune Co., parent of the Los Angeles Times, is also a shareholder.)

Egypt and Israel stressed that the row was a business, not a diplomatic, issue. Cairo has offered to renegotiate the contract, but the air is infused with agitation and suspicion.

The deal, which once accounted for about 40% of Israel’s natural gas, was plagued by violence and lack of security in the Sinai. Militants attacked or blew up gas pipelines at least 14 times over the last year, disrupting the flow to Israel and raising fears that Islamic extremism was taking hold. The Egyptian army twice dispatched soldiers to the region; Israel last week warned its citizens vacationing on the peninsula to leave because of possible terrorist threats.

But, on a deeper nationalistic level, the pipeline assaults mirrored the distaste many Egyptians had for the deal and showed how Cairo had grown less receptive to Israeli concerns. The Israelis and EMG blamed Egypt for not stemming the sabotage, which made gas delivery sporadic and caused significant financial damage.

“The Sinai is turning into a kind of Wild West which … terror groups from Hamas, Islamic Jihad and Al Qaeda, with the aid of Iran, are using to smuggle arms, to bring in arms, to mount attacks against Israel,” Netanyahu told Israel Radio. “We are acting against this reality and we are in … continuous discussions with the Egyptian government, which is also troubled by this.”

What such talks may lead to is unclear, especially with Egypt preparing for a presidential election next month. If Muslim Brotherhood candidate Mohamed Morsi wins, Islamists will dominate the legislative and executive branches of government. Morsi has long criticized Israel and has called for a review of the peace treaty.

But no matter who wins, Mubarak’s legacy of cooperation with Israel — and, to a wider extent, the U.S. — is likely to be rewritten.

The Ahram Online news website put it this way: “Following a dramatic week of events including the termination of the Egypt-Israeli natural gas deal, rising tensions highlight an uncertain political future between the neighboring countries.”

jeffrey.fleishman@latimes.com