Egypt-Israel natural gas deal revoked for economic reasons (LA TIMES) By Edmund Sanders JERUSALEM, ISRAEL 04/24/12)
LOS ANGELES TIMES
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Egypt and Israel say political tensions played no role. But observers
say the dispute is the latest sign of souring ties and could threaten
the nations´ peace accord.
JERUSALEM ó Amid the collapse of a multibillion-dollar natural gas
agreement between Egypt and Israel that had been in place since 2005,
officials from both countries stressed Monday that the dispute was a
commercial one and did not reflect political tensions.
But observers viewed the contract spat as the latest sign of souring
relations between the two countries and said it could threaten the
long-term viability of their historic 1979 Camp David peace accord.
Tensions between the two countries have been rising since the ouster
last year of Egyptian President Hosni Mubarak, who maintained close
ties with Israel despite the relationship´s unpopularity with the
Egyptian public. Critics claimed that Mubarak gave Israel below-
market rates for the gas, which meets about 40% of Israel´s needs.
Over the last year, Israel has scrambled to offset declining
deliveries from Egypt by increasing its domestic production, but
energy officials warn that a complete termination of supplies from
Egypt may lead to power disruptions this summer.
The deal also provided much-needed revenue to Egypt, whose economy
has been sinking since its tourism industry collapsed after last
year´s violence and instability.
"The decision we took was economic and not politically motivated,"
Mohamed Shoeb, head of the state-owned company EGAS, told reporters
Monday. "We canceled the gas agreement with Israel because they have
failed to meet payment deadlines in recent months."
Israeli officials denied violating the terms of the agreement.
Israeli Prime Minister Benjamin Netanyahu said Monday that he did
not "see this cutoff of the gas as something that is born out of
But Israeli opposition leader Shaul Mofaz called Egypt´s decision to
cancel the contract "a new low in the relations between the countries
and a clear violation of the peace treaty."
The gas deal has been under scrutiny for months and shipments were
interrupted more than a dozen times because of sabotage and
explosions along the pipeline through the Sinai peninsula.
Egyptian political and religious figures have called for termination
of the contract and Mubarak is facing criminal charges over the deal,
which critics say was a symbol of corruption.
Among the investors in one of the private companies involved in the
gas deal is Sam Zell, chairman of Tribune Co., the parent company of
the Los Angeles Times. Amro Hassan of The Times´ Cairo bureau
contributed to this report. (Copyright © 2012 Los Angeles Times
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