How to Kill the Egyptian Economy

(Weekly Standard) Lee Smith - The sale of Sinai gas to Israel was one of the few major trade agreements between the two states and a symbol of normalized relations after decades of war. Despite the belief that the anti-Mubarak protests had nothing to do with Israel, the reality is that the peace treaty was always one of the major beefs that the opposition - Islamists, Arab nationalists, and leftists alike - had with the regime. The widespread belief that Israel and Mubarak had conspired to cheat Egypt out of gas revenues bespeaks an abiding hostility to the treaty. In the 13 months since the uprising, there have been 12 attacks on the pipeline that supplies Egyptian natural gas to Israel (and to Jordan). There were 245 days during which no gas flowed, and when it did flow, the gas came in substantially smaller quantities. After agreements were signed in 2005, Egyptian gas didn't reach Israel until 2008. In May 2009, the Egyptian government amended the gas purchase agreement to double the price, while also applying a higher price retroactively to gas that had already been supplied. Israel was now paying Egypt more than what Cairo was charging customers like Jordan, and twice what it paid for its own gas. Egypt is going begging to the Arab states, the IMF and World Bank, while it is sitting on natural gas that it refuses to profit from for political reasons. And if Egypt fails to meet its contractual obligations to Israel, it is difficult to see investors taking further risks in a political climate dominated by Islamists.

2012-03-09 00:00:00

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