Sunday, April 22, 2012

Egypt Cancels the Delivery of Gas to Israel

Middle East

CAIRO — Egypt’s state-owned natural gas company said Sunday that it was ending a deal to ship gas to Israel because of a payment dispute. Israeli officials responded by warning that the termination cast a new shadow over the bilateral peace treaty.
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The gas deal, signed in 2005, has become a target here in Cairo for broader resentment of the supportive relationship with Israel that was forged by Hosni Mubarak, the former Egyptian president.
Lawsuits and criminal investigations have accused Mr. Mubarak and his associates of corruption for depriving Egypt of a fair market price for the gas sold to Israel. And since Mr. Mubarak’s ouster last year, unknown attackers have bombed a gas pipeline in the Egyptian Sinai more than a dozen times, apparently to disrupt the flow to Israel.
For Israel, on the other hand, the deal had given it a crucial source of fuel. Before the disruptions, Egypt was said to have provided Israel’s electric utility with 40 percent of its natural gas, which makes up about a third of its total fuel. The Israeli Foreign Ministry has described the agreement as an “important and central element in the bilateral economic relationship.”
Mohamed Shoeib, the head of the state-owned Egyptian Natural Gas Holding Company, told The Associated Press on Sunday night that it was exercising a legal right to terminate the contract because its Israeli customers had not paid for the gas for four months. “This has nothing to do with anything outside of the commercial relations,” Mr. Shoeib said.
Some Israeli officials expressed concern over the suspension of the gas deal. In a statement reported by Israeli news media, Yuval Steinitz, the finance minister, said it was “a dangerous precedent that overshadows the peace agreements between Israel and Egypt.”
Other Israeli officials played down the potential economic impact, alluding to recent discoveries of natural gas off the coast. The minister of energy, Uzi Landau, said that Israel had been preparing for two years for the possibility of a cut in gas supplies from Egypt. “Israel is working to strengthen its energy independence,” he told Army Radio.
Egypt’s current military rulers and the Islamists who now lead the Parliament have pledged to uphold all international obligations, including the peace treaty with Israel. But since Mr. Mubarak’s ouster, American diplomats and Israeli officials have been bracing for a tempestuous period in Egyptian-Israeli relations.
After wars with Israel in 1967 and 1973, Egypt’s military government signed the 1979 Camp David peace accords without any public debate or consent. Egyptians of all political stripes overwhelmingly resent Israel because of its continued occupation of the West Bank and Gaza, which many here believe to be a violation of the accords.
In the recent parliamentary elections and the presidential campaign, Egyptians have been debating relations with Israel publicly for the first time.
Almost no one is calling for the cancellation of the treaty; all three remaining front-runners in the presidential race have pledged to respect it. But nearly every candidate at every level has pledged to take a hard look at the fairness and appropriateness of the unpopular natural gas deal.
Isabel Kershner contributed reporting from Jerusalem.

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