Egypt’s state-owned gas company says it has scrapped a controversial deal which supplies Israel with 40% of its natural gas at lower than market prices.
Egyptian Natural Gas Holding Company (EGAS) complained it had not been paid by the Israeli-Egyptian firm that buys gas from Egypt and sells it to Israel.
Israel denied the claim and warned Egypt that it was violating an economic annex of their 1979 peace treaty.
Egypt’s military rulers have not yet commented on the deal’s cancellation.
The deal was widely unpopular in Egypt, but solidly backed by former President Hosni Mubarak who was forced to step down last February after mass protests.
The termination of the gas deal between Egypt and Israel is more than just a trade dispute; it has serious political and diplomatic consequences.
The historic Camp David Accords ended 30 years of war between these neighbours but only ever led to a cold peace. Since President Hosni Mubarak, an advocate of the deal, was ousted last year, relations between the two countries have deteriorated.
The pipeline delivering Egyptian gas to Israel has been attacked repeatedly. In September, there were riots outside the Israeli embassy in Cairo after Egyptian policemen were killed on the border. Israeli forces had been pursuing militants who crossed illegally from Egypt to carry out a deadly attack. In recent weeks, the Egyptian media and parliament have criticised Coptic Christians and the Grand Mufti of al-Azhar for visiting Jerusalem.
The latest development is another reminder that ties are unlikely to improve soon. Israel is worried about the rise of Islamists in Egypt and a new confidence among its general public about expressing anti-Israeli views….