BICOM

On April 23^rd 2012, Ambassador Zvi Mazel spoke on a BICOM conference call with an invited audience to discuss Israel-Egypt relations, following the announcement of the cancellation of the supply of gas from Egypt to Israel. Zvi Mazel is former Israeli Ambassador to Egypt and Sweden, and is now an independent analyst at the Jerusalem Centre for Public Affairs. Below is a rapporteur’s summary of his remarks.

Implications of the announcement

• The announcement by the Egyptian company that it was freezing the gas deal came as a surprise. Of course Israelis knew that the gas deal was in trouble after 14 attacks on the pipeline carrying the gas through the Sinai [since the fall of the Mubarak regime], reflecting the Egyptian army’s inability to protect it.
• The gas deal is not just an economic deal, it has significance at the strategic level. It is of considerable importance for Israeli electricity supply and the loss of the deal is a blow to Israeli economy. It is also against Egyptian interests to cancel the deal. Egypt used to earn several hundred million dollars a year for the gas. Due to Israel and Egypt’s proximity the infrastructure costs required to transport the gas were minimal.  The announcement is thus against the interests of both countries.
• The gas was a flag – the most important business between the two countries. The Egyptians know that this deal also has political as well as economic significance, so it’s a bad indication of the state of the bilateral relationship if the SCAF (Supreme Council of the Armed Forces) does not rescind the announcement made by the Egyptian gas company. e will have to wait and see what the SCAF will do. If they do not rescind the decision it may indicate they want to give in to the Egyptian mobs who say that the gas deal is a form of corruption. It may indicate that think their position against the Muslim Brotherhood will be strengthened by cancelling the gas deal.

General state of Israel-Egypt relations

• Relations are not in great shape at present, and not as good as they were.
• Since the attack of the Israeli embassy in Cairo last year the ambassador works from a temporary office. He’s in Cairo during the week and returns to Israel at the weekend.
• However, there are still some strong points in the relationship. Israel maintains a good dialogue with the SCAF on counter-terrorism in Sinai, even though the results are patchy.
• In addition, the Qualifying Industrial Zones (QIZ) remain economically significant. These are joint economic ventures between Israel and Egypt which bring together Egyptian labour and Israeli investment. They enjoy considerable US subsidies.
• Israel understands very well the extent of the problems in Egypt now. The revolution is not going as the people wanted. The current leadership has many problems, including the challenge of Muslim Brotherhood and huge economic challenges, with the economy collapsing.

The Egyptian presidential elections

• There is a serious struggle going on between SCAF and the Muslim Brotherhood. The Brotherhood is pushing for an Islamic constitution and for the presidency.
• SCAF is resisting the influence of the Muslim Brotherhood. The constitutional council was disbanded by a special court and they are trying to form a new council, but it is not clear if this will succeed. They also managed to remove the candidacy of some popular candidates that they don’t like, including Khairat al-Shater and Hazem Salah Abu Ismail.
• We don‘t yet know what the outcome will be but if the Brotherhood succeed it could be a real problem for Israel.