Why a Major Israel-Egypt Gas Deal Isn't Bringing Cairo Closer to Jerusalem - Israel News
Prime Minister Benjamin Netanyahu celebrated the giant gas deal with Egypt in a media spectacle, shaking Energy Minister Eli Cohen's hand as though they were themselves the owners of the Israeli and American gas companies. Egypt's official newspapers, however, notably downplayed the event.
"It's the continuation of the gas deal that was signed in August," reported Egypt's Al-Ahram newspaper, not bothering to tell its readers why another ceremony was needed after the prime minister had held up the deal's confirmation. In contrast, social media carried a hot debate between those who see the deal as "another move binding Egypt's hands and legs to Israel, which is waging an extermination war in Gaza" and those who showed details of how many dozens of billions the deal would save Egypt and said "there isn't and wasn't another party to make such a deal with."
Al Ahram editor Ashraf al-Ashri had only one urgent comment to make, saying "the gas deal with Israel is a purely commercial issue and won't affect Egypt's political decisions and positions regarding Gaza."
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But the gas deals between Israel and Egypt have always been complex political and strategic issues, not merely "commercial." This deal, too, which reportedly was extracted from Netanyahu under heavy pressure from U.S. President Donald Trump and could (maybe) lead to a White House summit between Netanyahu and Egyptian President Abdel Fattah al-Sissi, who hasn't visited Washington since 2019.
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In usual circumstances, a deal of some $35 billion would be expected to be signed in Cairo or Jerusalem in the presence of Egypt's president and Israel's prime minister, or at least with the participation of their energy ministers, and would not need direct and close mediation of an American president. But the circumstances are not usual, and the deal was born from a knot of paradoxes consisting of conflicting interests and mutual threats.
The war in Gaza put Egypt before what it defined as the most dangerous threat to its national security. The perverted idea to deport some two million Gazans to Egypt and to other countries and to build an American-ruled Riviera in Gaza was scrapped, but the fear hasn't entirely dissipated, especially due to Israel's intentions of opening the Rafah pass but only for departing Gazans.
It's also important to remember that while Trump toyed with the idea of a Gazan real estate project, Israel's ambassador to the U.S., Yechiel Leiter, accused Egypt of violating the Camp David Accords, claiming it was deploying its military in the Sinai peninsula and building bases "that can be used only for offensive activity, for offensive weapons."
Leiter may have forgotten that a few years earlier, when Egypt was in a bloody war against Islamic terror organizations and especially against the ISIS branch in Sinai, Israel was the one who permitted the Egyptians to deviate from the agreement's terms, beef up its military deployment in areas that were supposed to be demilitarized and even to operate its air force. Israel also didn't rear up on its hind legs and cry out against violating the agreement when the Egyptian army flattened a three-kilometer strip between Gaza and Sinai, destroyed Hamas tunnels and coordinated the Rafah pass's opening and closing according to Israel's requests.
Official diplomatic relations are meanwhile suspended as the presentation of Israeli ambassador in Cairo Uri Rothman's letters of credence is delayed "until the end of the war." A new Egyptian ambassador is yet to be appointed. At the same time, the Egyptian and Israeli intelligence chiefs and military leaders maintain a close relationship, extending beyond hostage mediation and the implementation of the second phase of Trump's plan.
Egypt emphasizes at every opportunity its commitment to the Camp David Accords and to its strategic choice of peace. It sees itself, rightly, as a pioneer that enabled both the peace agreements with Jordan and later the Abraham agreements. But these positions don't mean a complete adoption of Israel's policy and holding back every criticism the Egyptian administration has regarding it. Hence, the assumption that Egypt's dependence on Israel created by the gas deal would suppress any Egyptian objection or criticism against it could be proved false.
In this context, we should remember that commercial deals sometimes have an "independent life" that doesn't necessarily bow to those states' foreign policies. For example, oil from Azerbaijan to Israel keeps flowing in the pipe connecting Baku to Georgia's Tbilisi and from there to Turkey's Ceyhan port, despite Turkey's pressure, because according to the agreement between the oil companies, the oil line consortium and the "host" states, sending the oil through the pipe isn't subject to rules, regulations, a political situation or other agreements that could harm the agreement's implementation. Presumably, the gas supply agreement with Egypt, whose full details have not been disclosed, also includes terms that "neutralize" the effect of "political circumstances" on its implementation. This, apparently, is the basis for Egypt's statement that the agreement won't change or influence its policy on regional issues.
Egypt signed the current and previous gas deals out of economic necessity, a decision that could threaten its stability. The large Zohar gas field contained less gas than previously estimated. Its rapid depletion, despite warnings from production companies, caused seawater to intrude and dilute the remaining gas. Combined with rising domestic consumption driven by population growth and the rapid expansion of energy-intensive industries, this pushed Egypt toward an energy crisis that began in 2022 and intensified in the summer of 2023, before the war.
That summer, the government was forced to adopt a policy of "energy austerity": It ordered a reduction in street lighting hours, implemented a two-hour daily blackout in many areas, forced shops and malls to close earlier, restricted the use of air conditioners in government offices, and even cut the gas quotas allocated to industrial facilities. Prime Minister Mustafa Madbouly's promises that these were temporary measures and that "very soon" Egypt would enjoy an abundance of gas fell apart when the war in Gaza started, and with it, the temporary interruption in the supply of gas from the Tamar field. Then the war with Iran caused another interruption in supply.
The "electricity cuts" imposed in the summer of 2023 continued into the next two summers, causing enormous economic damage and the need to import liquefied gas for the first time. Added to this was the loss of income from the Suez Canal, damaged by Houthi attacks on maritime traffic in the Red Sea – from which the canal has yet to recover. Egypt was forced to borrow billions from the International Monetary Fund, deepen its national debt and spend 87 percent of its tax income to pay debts.
The United Arab Emirates – which pledged around $35 billion for tourism projects – came to its aid, as did Saudi Arabia and Qatar, with major infrastructure and real estate investments. These funds have lifted growth and helped bring down the 6.5 percent unemployment rate. Yet with 1.5 to 2 million new job seekers entering the labor market annually, the pace of development will have difficulty keeping up with demand.
Egypt has implemented several significant economic reforms, such as currency rate mobilization and subsidies reductions, including gas, a move that previously sparked riots and protests that forced governments to abandon the policy. But Cairo still lacks an economic strategy and, above all, has difficulty implementing recommendations and demands made by the IMF and other financial bodies.
In his speeches to citizens, Sissi promises that the "difficult times" will pass and urges the public to "show patience," suggesting they and his critics compare the living conditions of Egyptian citizens to those of Gaza's residents to "understand the meaning of real suffering." But rhetoric cannot replace the rule of economic monopolies - especially the military, which controls more than half of the Egyptian economy - and of the conglomerates and billionaires who hold the bulk of private sources of profit.
In September, the government released a comprehensive 500-page strategic paper entitled "A New National Narrative for Economic Development." The Planning and Development Ministry called on the public to comment on the paper and propose improvements. But a close reading of the paper's summary reveals that long-standing clichés have merely been rephrased.
It seems that rather than embarking on a truly new path of development, genuine privatization, and the creation of new income sources, Egypt will continue to rely on the familiar adage, "Egypt is too big to fail." There will always be someone to bail out its economy.
Once an exporter of gas aspiring to be a regional hub for gas marketing, Egypt now depends on imported gas to light its streets and fuel its factories and workshops. It will take years before the nuclear reactorsunder construction with Russian funding begin supplying electricity, and it is premature to discuss plans to transition to renewable energy.
It's important to remember that, despite the significance of Israeli gas for Egypt and its role in stabilizing bilateral relations, Egypt remains an inseparable part of the Muslim Arab bloc, which has become the dominant influence on Trump's Middle East policy. This is the bloc with which Israel must contend, and in which gas, regardless of configuration, plays only a marginal role.