Egypt has canceled its natural gas supply deal with Israel, insisting the move has nothing to do with politics. Israel downplayed the decision, which could further deteriorate bilateral ties that have decayed markedly since the Egyptian revolution.
Egypt’s Natural Gas Holding Company announced the termination of the contract on Sunday, citing violations of contractual obligations. It denied the move was political.
The company’s head Mohamed Shoeb said Israel has not paid for its gas in four months.
“This has nothing to do with anything outside of the commercial relations.”
The Israeli Foreign Minister Avigdor Lieberman played down the scandal, telling Israel Radio on Monday, “We’re following what’s happening in Egypt and hope that everything will work out for the best.”
He reiterated that Israel has every desire to uphold the peace accords with Egypt. Lieberman also added that Egyptians share that interest.
There was a more tough reaction from Israeli officials with some of them warning that the cut off diminishes the peace treaty between the two countries.
“This is a dangerous precedent that overshadows the peace agreements and the peaceful atmosphere between Israel and Egypt,” Israeli Finance Minister Yuval Steinitz said.
Opposition head Shaul Mofaz called the move “blatant infringement of the peace treaty,” saying it puts the ties between the two countries at their lowest level since the 1979 peace treaty was signed, the Jerusalem Post reports.
Haaretz daily suggests that the announcement could have been intended to pressure Israel into calling off the lawsuit for compensation of US$8 billion over Egypt’s failure to provide gas as promised.
The move by Egypt also comes following a string of cross-border attacks at gas pipelines following the last year’s uprising.
The 2005 deal, negotiated during the rule of Hosni Mubarak, has come under heavy criticism from Egyptians who view it as a symbol of close ties the ousted leader forged with Israel.
Critics claim that Israel got the gas at below-market prices and that Mubarak cronies gained huge profits from the deal, costing Egypt millions of dollars in lost revenue.
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