Mubarak-Sharon tension likely to exact economic price

Published March 14th, 2001 - 02:00 GMT

For years the political status of Egypt’s President Hosni Mubarak has been unquestioned, especially in terms of Arab-Israeli peace negotiations. During the high points and low points of the process, leaders from both sides of the divide have traveled to meet with him, asking for his counsel, blessing and often assistance in pressuring the other party. 


But, for more than a month following the election victory of the right-wing Israeli leader, Ariel Sharon, there was reportedly no communication—direct or indirect—between the veteran Egyptian head of state and the man voted in as Israeli prime minister.  


Commentators said that Mubarak had long avoided contact with the man that he held accountable for the 1980s massacre of Palestinians in the Sabra and Shatilla refugee camps in Lebanon. Amr Moussa, Egypt’s foreign minister was more diplomatic in explaining the deafening silence. Sharon will be invited to Cairo, he told representatives of the news media, but only when he has something to say that will further the peace process. 


Egypt, which was the first Arab nation to sign a peace treaty with Israel in 1979, withdrew its ambassador from Tel Aviv in late 2000 in protest at the way in which Israel was attempting to quash the Palestinian uprising, which began in September. 


As it so happens, on Sunday, several days after officially being sworn in as Israeli prime minister, Sharon made his first indirect contact with Mubarak, through a message delivered to the Egyptian leader, by way of the Israeli ambassador in Cairo, Zvi Mazel, who met with Egypt's deputy foreign minister Mohammed Al-Orabi. No details about the contents of the message were provided. 


A day later, Sharon sent the former head of the Mossad spy agency to Cairo with a letter to Mubarak, reportedly explaining Sharon's position on the peace process. Shabtai Shavit is known to have enjoyed close ties with senior officials in the Egyptian intelligence services, and in particular with General Omar Suleiman, who reportedly is one of Mubarak’s candidates to replace Amr Moussa as foreign minister, when the latter takes over as secretary general of the Arab League. 


The colder political winds, blowing between the tow neighboring countries, are likely to have an economic impact. On Monday, the board of directors of the state-owned Israel Electric Corporation decided to enter into negotiations with the Yam Thetis partnership, which operates off the Israeli coast, for the procurement of 50 percent of its natural gas needs for the next 10-15 years, in a $2 billion contract.  


In a statement released by the company, IEC said it would buy 1.7-1.8 billion cubic meters of natural gas for its own power stations and those of a private energy producer, who is to set up a power station in the Negev deser, in the south of the country. Yam Thetis is owned by the US-based Semidan, and two Israeli corporations, Avner Exploration, and Delek Drilling.  


The IEC’s latest decision reversed, to a degree, it earlier intention to grant Eastern Mediterranean Gas (EMG), an Israeli-Egyptian consortium supplying gas from the Nile Delta, a $3 billion contract to provide 56 percent, or 1.7 billion cubic meters, of its natural gas needs for 10 years. IEC did not actually reduce its intake from EMG, but did reduce the latter’s role as a primary supplier. 


Explaining the decision, IEC’s director-general, Ya'akov Razon, and the chairman of the board, Eli Landau, stressed that the about-face was the result o a perception that it was necessary develop strategic reserves of natural gas off Israel's shores. But the Jerusalerm Post reported that the decision was essentially political, and came as the result of immense pressure on the IEC to change its earlier procurement policy.  


The Jerusalem Post noted that the third bidding group, British Gas-Isramco, was not even given a fair chance. British Gas and Isramco offered natural gas sources of 4-8 billion cubic meters, combining natural gas reserves off the coasts of Israel and the Palestinian Gaza Strip.  


It should be noted that the IEC chairman of the board, Eli Landau, is a close confidante and political ally of Sharon, and was appointed by him to his current post, when Sharon earlier served as minister for infrastructure in the government of Benjamin Netanyahu. 


Coincidentally, Avner, Delek Energy Systems and Delek Drilling announced this past week that they have discovered more commercially viable natural gas deposits at the "Mary 3" drilling site opposite the city of Ashkelon. The deposits were found at a depth of 1,920 meters. 


Israel’s new minister of infrastructure, Avigdor Lieberman, has not given a clear indication of where he stands regarding the purchases of gas from Egypt, stating only that he intends studying his new ministry before making a decision. But it is worth noting that Lieberman stands at the very right-wing fringe of Sharon’s national unity government, and during the recent election campaign actually suggested that the Israeli air force should bomb Egypt’s Aswan dam, in the event that Egypt takes an active military role on behalf of the Palestinians. – (Albawaba-MEBG)

© 2001 Mena Report (

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