Egypt Terminates Gas Deal With Israel
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Egypt’s state-run gas company has terminated a controversial 2005 gas deal with Israel, citing dispute over payment. Israel, which imports over 40 percent of its natural gas supplies from Egypt, warned that the abrupt termination jeopardizes a peace agreement between the two nations.
Egypt’s state-run gas company has terminated a controversial 2005 gas deal with Israel, citing dispute over payment. Israel, which imports over 40 percent of its natural gas supplies from Egypt, warned that the abrupt termination jeopardizes a peace agreement between the two nations.
Speaking to the AFP, head of Egyptian Natural Gas Holding Company, Mohamed Shoeib, said the accord was “annulled on Thursday with the East Mediterranean Gas Co (EMG) which exports gas to Israel because the company failed to respect conditions stipulated in the contract.”
Shoeib, however, stressed that the termination “had nothing to do with the repeated attacks on the pipeline” and also bore no diplomatic significance.
He said:
[quote] It is a trade dispute, not a political issue. [/quote]
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Since the ouster of Egyptian president Hosni Mubarak last year, unknown attackers have bombed a gas pipeline in the Egyptian Sinai more than a dozen times – a pipeline that is used to supply Egyptian gas to Israel and Jordan.
According to Shoeib, EMG, the Israeli-Egyptian firm that buys gas from the Egyptian state and sells it to Israel, had failed to pay it dues for the past four months.
Calling the move a matter of “great concern”, Israeli Finance minister Yuval Steinitz denied the allegations and said the cancellation of the gas deal puts Egypt in violation of an economic annex of their 1979 treaty – the first between Israel and an Arab state.
In an official statement, Steinitz said:
[quote] This is a dangerous precedent that clouds the peace agreement between Israel and Egypt. [/quote]
EMG’s partner, the Ampal-American Israel Corporation, called the termination “unlawful and in bad faith” and accused the Egyptian side of failing to supply the gas quantities it is owed.
If the decision is upheld by Egypt’s military rulers, the termination would be a blow to peaceful ties that have underpinned regional stability for more than three decades.
While the decision is unlikely to cause serious economic damage for either country, the Wall Street Journal reckons it will likely “pay huge political dividends for Egypt’s embattled interim ruling military regime and its civilian-appointed cabinet.”
The gas deal was among the chief sources of popular rage against the ousted regime of Hosni Mubarak, and one of Mubarak’s most unpopular foreign policy positions.
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