Egypt terminates gas deal with Israel

Al Jazeera

Top official insists decision was not political as Israel says it overshadows the peace agreement between the two.

The head of the Egyptian Natural Gas Holding Company has said it has terminated its contract to ship gas to Israel because of violations of contractual obligations, a decision Israel said overshadows the peace agreement between the two countries.

Mohamed Shoeb, the gas company's top official, said Sunday's decision was not political. This has nothing to do with anything outside of the commercial relations,'' Shoeb said.

He said Israel has not paid for its gas in four months. Yigal Palmor, Israeli foreign ministry spokesman, denied the claim of not paying.

The 2005 Egypt-Israel gas deal has come under strident criticism from leaders of the popular uprising that toppled Hosni Mubarak, the longtime Egyptian president, last year.

Critics charge that Israel got bargain prices, and Mubarak cronies skimmed millions of dollars off the proceeds.

'Bad faith'

The sale of gas to Israel, which signed a peace treaty with Egypt in 1979, has always been controversial in the Arab world's most populous country. It was the largest trade deal between the two former foes.

Egyptian militants have blown up the gas pipeline to Israel 14 times since the uprising.

On Sunday, Israel Finance Minister Yuval Steinitz said the unilateral Egyptian announcement was of "great concern'' politically and economically.

Israeli spies target Egypt

MEMO
Abdel Bari Atwan

Ilan Grapel, 28, a U.S.  Mossad agent arrested by
Egyptian authorities.

The Egyptian revolution launched from Tahrir Square in Cairo surprised the world not only with its victory and the efforts and patience of the youth, but also in the changes it brought to the political landscape of Egypt. It has altered the balance of power and allies in the Arab world and, more importantly, is starting to reshape the relationship with Israel.

Hence, it would be naive not to expect many parties to conspire against the revolution to take it off track. Top of the list of suspects would be Israel alongside those Arab regimes which oppose democratic change and wish to see Egypt remain subject to US domination.

It was not surprising, therefore, to hear that an Israeli has been arrested and accused of spying by the Egyptian authorities. Ilan Chaim Grapel is, it is claimed, an officer in Israel's Mossad intelligence agency and he has been charged with trying to recruit young Egyptians to carry out sabotage operations and sow the seeds of sectarian strife. Spending time in Tahrir Square under a number of aliases, Grapel is accused of inciting Egyptian Muslims to attack Coptic Churches and escalate clashes between the faith groups. All, it is alleged, with the intention of destabilising Egypt and destroying the nascent national unity of purpose.

Revolutionary Egypt is a target because it is no longer humiliated before the Israeli occupier, doing America's bidding or conspiring to maintain the blockade of the Gaza Strip. Nor is it still selling natural gas to Israel at below the price it sells it to Egyptian citizens. It is natural, therefore, for the Israelis to send their spies to support a counter-revolution which wants to turn the clock back to the Egypt of corruption, repression and looting of public money.

It is no coincidence that the churches of Egypt were the target of Israeli schemes shortly before the outbreak of the revolution, when we witnessed the massacre of The Saints Church in Alexandria on New Year's Eve, for example. The man accused of ordering that attack, allegedly at Israel's instigation, is now behind bars; Major General Habib al-Adli is the former Interior Minister. Ilan Chaim Grapel frequented places of worship, including those which have seen deadly sectarianism.

Israeli fingers have long been interfering in the internal affairs of Egypt, as they have in Iraq, Lebanon and the occupied Palestinian territories, and churches have always been one of their targets in order to incite Christians against their Muslim brothers and "prove" that Muslim-Christian coexistence is impossible. The Israel Lobby plays the same game against Muslim minorities in the West, pinning the charge of terrorism against them and turning Western societies against them as a threat to security. Accusations that Islam and democracy are incompatible have also been made by the Lobby.

Egypt's revolution turned Israel's strategic calculations upside down after forty years of confidence in the subservience of the Arab regimes which abandoned their policies of resistance in exchange for a fake march towards peace. We have heard Israeli strategists talking about changes to doctrine and priorities, with the Israeli military machine again putting Egypt at the top of the list of enemies.

The transformation of Egypt from an Israeli lackey under deposed President Mubarak to an independent state putting its own interests first, has placed Israel in an embarrassing situation. It is interesting to note that this Egyptian transition will cost Israel about $20 billion, at least, to develop new defences on its southern front.

Perhaps the most striking change in Israel's strategy towards Egypt is the intensification of its espionage operations to undermine Egyptian security from inside. Just one year ago, Egyptian counter-espionage officers discovered a spy network led by a young Egyptian who had been recruited by Mossad while studying in China. His confession of spying on Egyptian installations, most notably the communications network, and the telephones of senior officers, led to the dismantling of three Mossad cells in Lebanon and Syria.

The latest discovery of an Israeli spy in Egypt reveals the vigilance of the Egyptian security services at a time when they are busy responding to the counter-revolution and the members of the ousted regime. However, it also raises the question of how many more Israeli spies are in place across Egypt; this should encourage Egyptians of all classes and creeds to be prudent and have caution as their watchword.

Israel has never truly honoured peace treaties or had respect for its allies. Who can forget that the Zionist state sent thirty agents from Mossad to assassinate Mahmoud Al-Mabhouh in Dubai, with the killers using forged British, French, German, Canadian and Irish passports? If the Israelis do not respect their main allies and supporters, is it possible for them to respect peace treaties with Arab countries?

It is incumbent upon us to alert the world that the Israelis are playing a major role in the counter-revolution in Egypt, focusing on national security and inciting the West against the new regime. This includes trying to cause a rift between the youth of the revolution and the Supreme Council for the armed forces. Efforts in this regard have been intensified after the success of Egypt's role in achieving Palestinian reconciliation and breaking the unjust siege on the people of Gaza by opening the Rafah crossing permanently, as well as opposition to any new Israeli attack on the Strip.

Revolutionary Egypt will resist such conspiracies and we have no doubt that the awareness of its people, especially the youth, represents the insurance policy to maintain the revolution and prevent any diversion or counter-revolution.

What the Israelis, Americans and some Arab countries hostile to democratic change do not understand is that Egypt has returned to its people first and to the Arabs and Muslims second, and that there is no going back. Egypt and its people can only go onwards and upwards. The victory of the revolution in Egypt remains a victory for the Arab spring, even if progress has slowed somewhat.

Obama offers Egypt $1B to continue selling under priced gas to Israel

Islamist



JERUSALEM — More than a month after saboteurs blew up an Egyptian pipeline supplying natural gas to Israel, the line is repaired but gas is not flowing and foreign shareholders of the company suspect politics to be the reason. They are threatening legal action against Egypt.

Explosion that damaged the gas pipeline in February

American and Thai shareholders in the pipeline have demanded urgent consultations to avoid resorting to binding arbitration based on trade treaties. One letter to Egyptian ministries from an American company with an Israeli chairman threatens a lawsuit of $8 billion.

In Israel, which depends on Egypt for 40 percent of its natural gas, the electric company has warned that customer rates could rise by 15 percent. Officials in the Israeli company that co-owns the gas line say the Egyptian government is afraid of popular opposition to Israel and the perception that Israel has had a sweetheart deal.

“The repair work was completed more than two weeks ago and we are waiting for the government to order the gas to start flowing, but so far the government is paralyzed,” Nimrod Novik, senior vice president of Merhav, the Israeli company, said in an interview. “Partly there is fear of more sabotage. There has been no decision not to supply gas, but nobody in the government wants to be responsible for a decision that is so unpopular in the street.”

The pipeline supplies not only Israel but also Jordan, Lebanon, Syria and some Egyptian companies. None have had their gas supply restored since the April 27 explosion, and Egypt is losing millions of dollars a day. The pipeline appears to have been sabotaged by Sinai Bedouin eager for a greater share of revenues from the pipeline rather than by known anti-Israel forces in Egypt.

Even so, it is the Israeli part of the equation that seems to be the main cause of the delay.

Since Hosni Mubarak was driven from the presidency in February, Egypt has been governed by an interim military council. Relations with Israel, unpopular but strongly upheld by Mr. Mubarak, have come under scrutiny. The new government has defied Israeli wishes by pushing for reconciliation between the two main Palestinian parties, Fatah and Hamas; reopening the border with Gaza; and announcing plans to exchange ambassadors with Iran.

The new government has promised to uphold existing treaties and commitments, and that includes the peace treaty with Israel.

But Egypt’s former energy minister and five ministry employees are in prison and accused of cheating the state of more than $700 million through the deal with Israel. A close associate of Mr. Mubarak’s, Hussein K. Salem, was a top shareholder in East Mediterranean Gas, or EMG, the company that owns the pipeline, until 2008.

The gas deal has been an integral part of the two countries’ relations and has been supported by Washington. President Obama recently offered Egypt $1 billion in loan guarantees and $1 billion in debt relief on the condition that it meets its commitments. The United States has told Egypt that its security obligations in the northern Sinai are among its commitments, an American official said.
Although gas supplies have been interrupted by two acts of sabotage in recent months, repairs were made quickly. But disputes among Egyptian government agencies — the Defense and Energy Ministries, the police and the army — over security arrangements have stopped the gas from flowing again promptly. In addition, the supply of gas to Israel has become highly politicized.

A former deputy chief of Egypt’s court of appeals, Judge Mahmoud al-Khodheiri, recently expressed a common sentiment about the gas deal in an interview with Al Jazeera. “I consider the export of gas to Israel an act of treason, and we should stop it,” he said. “I salute the people who bombed the gas pipe because this is my blood that is being transferred to the enemy.”

The American company threatening the $8 billion lawsuit is Ampal, whose chairman and chief executive officer is Yosef A. Maiman, also owner of the Israeli company Merhav, another partner in EMG. Another American company involved is EGI, controlled by Sam Zell, a Chicago-based businessman. The EGI letter that was sent to the Egyptian authorities accused them of “failing to provide EMG with full protection and security” for its investment and “refusing to resume delivery of gas to EMG.”

It asks for consultations and threatens to go to binding arbitration in Washington, which experts say could take up to six months.

On Monday, Prime Minister Benjamin Netanyahu of Israel told a parliamentary committee that Egypt was having trouble maintaining security and control in the Sinai and cited the gas explosions as an example.

Mr. Novik, the Israeli corporate official, said that the popular perception in Egypt that Israel had received cheap gas was wrong. He said the figure cited by the prosecution of $714 million that should have gone to Egypt from gas sales was an invention based on the false comparison between the price paid by Israel to Egypt and the price paid by Germany to Russia.

There is no international benchmark price of natural gas because its price depends largely on how the gas is transported and how far it travels. So while Germany pays $7 per million B.T.U.’s to Russia and Israel $3 to $4 per million B.T.U.’s to Egypt, Germany also pays $4 to $5 per unit in transport costs and fees along the way whereas Israel only pays $1. The net profit to Egypt from Israel’s payments is the same or better than that to Russia from Germany, he said.

But the transport and infrastructure costs have been lost in the public discussion in Egypt, he said, creating the impression that Israel has been getting a deal based on Mr. Mubarak’s desire to please Israel and the United States.

University bans anti-Zionist Atzmon speech

The JC

By Marcus Dysch

 

The University of Westminster has cancelled an event it was due to host featuring Israeli anti-Zionist Gilad Atzmon.

A panel discussion examining "Israel criminality in the wake of the Goldstone Retract" was due to be held in a rented room at the university on Tuesday, but was called off last week.

The event was organised by jazz musician Mr Atzmon, who hasfrequently been accused of antisemitic statements and Holocaust denial.

He has written essays questioning what he called "the Auschwitz narrative", and said burning down a synagogue could be seen as "a rational act".

A university spokeswoman said that the event had been cancelled because "necessary processes were not followed". It is believed the university was unaware of Mr Atzmon's previous controversial statements, and may have been misled about the exact nature of the event when the booking was taken.
Speakers due to appear alongside Mr Atzmon on the panel included Ghada Karmi, lecturer at the Institute of Arab and Islamic Studies, author John Rose, and former journalist Alan Hart.

Dr Karmi and Mr Rose had already signalled their intention to pull out after learning they would be expected to appear alongside Mr Atzmon.

The event had been promoted by groups including the Stop the War Coalition, the white nationalist Stormfront movement, and the Real IRA.

In 2005, left-wing Jewish and anti-Zionist groups rowed with the Socialist Workers' Party over an invitation to Mr Atzmon to appear at SWP conferences.

A panel discussion entitled "Zionism, Jewishness and Israel" featuring Mr Atzmon, Mr Hart, Palestine Telegraph founder Sameh Habeeb and writer Karl Sabbagh, instead took place off campus on Tuesday.
Earlier this month Westminster Union elected two men linked to the extreme Islamist organisation Hizb ut-Tahrir to lead the union.

Controversial gas-to-Israel deal back in the spotlight

When the public prosecutor indicted six people on corruption charges for the deal that sells Egyptian gas to Israel, it threw the spotlight back on some of Egypt’s most controversial issues: national sovereignty, corruption and Israel. It also began a process of revealing what is behind the deal, something that has never before fully been brought into the open.

Former Minister of Petroleum Sameh Fahmi and five others have been indicted for harming national interests, wasting public money and allowing other entities to benefit from it, the attorney general announced yesterday. He estimated that the country wasted at least $714 million in potential revenue from the deal to date, while independent analysts opposed to the deal put the number of losses much higher, up to $8 million per day.

Kamal Hamouda, a petroleum expert with the “No to the catastrophic gas deal with Israel” campaign, contends that the loss is in the billions. He told Al-Masry Al-Youm that due to the ministry’s failure to negotiate an equitable price for the deal $1.5 billion dollars of potential revenue has been lost, besides the kickbacks and other forms wasting public money.

Previous analysis states that the deal had a political dimension, in that it was designed to reassure the US that Egypt has a stable relationship with Israel, and that the price adjustments preserved Egypt’s economic rights.

Former president Hosni Mubarak and his sons also take center stage in the deal. Mubarak is reportedly being interrogated for his role, while other reports suggest that the Mubaraks were some of the main beneficiaries thanks to kickbacks.

Critics say that from a legal perspective there are many procedural issues that are cause enough to revaluate the deal. “As it is a scarce natural resource, any deal involving natural gas should pass through the People’s Assembly before being signed,” said Emad Gad, a researcher at the Ahram Center for Strategic Studies.

Legally, the deal has many implications that make its legitimacy on a local level dubious. Natural gas is extracted from Egypt and sold by the government -- reportedly at lower than market price -- to East Mediterranean Gas (EMG), which in turn sells it to Israel. EMG is owned by Hussein Salem, who has been missing in action since January 30, suspected to be hiding in Saudi Arabia.

The deal, which was inked in 2005 and lasts for 20 years, fixed for 15 years a maximum price of $1.25 per million British thermal units (Btu). Global gas prices in the meantime went up to $4 per million Btu, and the cost of exporting it was allegedly up to $2.56 per million Btu.

Since 2008 the deal has been a subject of public outcry in Egypt as world gas prices increased and the Egypt’s price to Israel remained the same. The fact that the gas is sold to a country that many Egyptians still consider an enemy state despite the 1979 peace treaty helps keep the issue on people’s minds.

It became even more sensitive as Egypt went through two energy crises in 2010 with price hikes for electricity and propane gas tanks.

The Supreme Administrative Court issued an order on 27 February 2010 to halt all natural gas exports to Israel. The order -- which should have been immediately binding -- also stipulated that specific details of the deal need to be revised, including the amount exported and its pricing. But the exports continue.

The gas deal to Israel has become a political playing card.  “It is one of the demands of the 25 January revolution, it must be addressed,” said former ambassador to Algeria Ibrahim Yousry.
Yousry spearheaded the campaign against the deal and submitted the notice to the public prosecutor’s office last year leading to the aforementioned ruling.

“The court ruling is clear and binding. Sameh Fahmi -- former petroleum minister -- claimed they were negotiating halting protection. There is no negotiating. It is a court order that needs to be implemented,” Yousry said.

Current Petroleum Minister Abdullah Ghorab said Egypt is trying to amend natural gas export deals due to public disapproval. Exports to Israel reportedly represent only 4% of Egypt’s gas exports.
An unnamed source says that the Ministry of Petroleum has proposed to EMG a deal to revisit the pricing, and increase the ministry’s revenue by $200 million annually.

“We already revisited the prices based on the court ruling, and the deal went through all the correct legal channels,” said former Egyptian ambassador to Tel Aviv Mohamed Bassiouny.

Regardless of the legal implications of the deal, it has obvious political and strategic dimensions that will make using it as an electoral promise difficult. Until now, neither the Egyptian government nor EMG has revealed details of the agreement.

It is also unclear whether or not the Egyptian government is liable internationally, because it sells to Israel through a third party.

“It will all depend on the details of this agreement,” said Hassan Abu Taleb, also a researcher at the Ahram Center. Abu Taleb believes that presidential candidates using the issue in their campaign platform is “merely an electoral promise, to nudge the emotions of the public. I don’t believe any candidate will be able to implement ‘cutting the gas supply to Israel.’”

Practically, if Egypt cuts the supply to EMG -- who would then not be able to supply Israel -- a system of international arbitration between the two may be needed to decide on the issue. “Almost every time the Egyptian government entered international arbitration against a private company, the private company won,” said Abu-Taleb.

Bassiouny believes that the gas deal cannot be changed since the currently-ruling Supreme Council of the Armed Forces declared in its fifth communiqué that it maintains all international deals and treaties.
“This is a deal we must respect,” Bassiouny said.

Still, many believe that the issue is purely internal, and that will keep international parties from being able to take recourse if the court ruling is followed fully. “This deal has to do with a deal between the Egyptian government and EMG.  It is a corruption case, that is where it begins and ends,” said Gad.
“As a man of the law, I don’t care about potential international pressure, I care about the law only,” Yousry said. “As a politician, I say that if there is pressure against implementing the law, then the objecting parties should make up for the financial loss incurred on Egypt by the deal.”
When campaigning for the upcoming presidential elections began a month ago, the prevalence of the gas deal as a campaigning tool highlighted its importance in the Egyptian psyche.

From an electoral perspective, the deal hits two birds with one stone. First and foremost, it is a corruption case that supposedly deals with negligent and thieving government officials, as well as greedy businessmen. Second, it involves Israel. Strong antipathy toward the neighboring state will continue to mobilize voters.

So far, presidential candidates such as the head of the Karama Party Hamdeen Sabahy, and pro-reform judge Hisham El Bastawisy have pledged to cut the gas supply to Israel if they're elected. Even Amr Moussa, the veteran diplomat, said that Egypt’s position towards Israel would change if he is elected, and that the gas deal is one issue “open for revisiting.”

As in any election worldwide, campaigns will undoubtedly include promises that cannot be implemented. The sensitive gas to Israel deal may be one such promise. However, it is one that activists appear to have serious intentions of pressuring the future government to see through.
“If they do not cancel the gas deal, then we need another 25 January revolution just for that,” Yousry said.