Netanyahu Downplays Egypt's Cancellation of Gas Deal With Israel

Israeli PM says termination of deal did not stem from political developments, claims Israel can be energetically independent with own gas reserves; Egypt's envoy to Israel says move was solely business dispute.

Prime Minister Benjamin Netanyahu said Monday that Egypt's decision to cancel the gas deal with Israel did not stem from any sort of diplomatic developments or decisions, but rather due to a business dispute between companies.

"The termination of the natural gas supply from Egypt is not motivated by political decisions, but is a business dispute between the Israeli and the Egyptian companies," Netanyahu said in a meeting with the heads of Israel Bonds.

Netanyahu at cabinet meeting - Reuters - 23/04/12

"Israel has natural gas reserves that will allow it to be energetically independent, not only from the Egyptian gas supply, but from any other source". Netanyahu said that Israel's reserves "will make it one of the largest natural gas exporters in the world."

Egypt's ambassador to Israel also emphasized Monday that the decision to cancel the gas deal was not a political one.

Deputy Foreign Minister Danny Ayalon met with Egypt's ambassador to Israel Yasser Rida on Monday afternoon and asked him to clarify issues regarding the cancellation of the gas deal with Israel.

The Egyptian ambassador stressed to Ayalon that the Egyptian government sees the termination of the deal as a business disagreement between two private countries, and not as a diplomatic dispute between Israel and Egypt.

Ayalon told the Egyptian ambassador that Israel expects that Egypt resolve the business dispute, as is done between friendly neighboring countries. He said that it is important to maintain normalized relations for the sake of the stability of the region.

Mohamed Shoeb, head of the Egyptian Natural Gas Holding Company, announced Sunday evening that the company will terminate its agreement to provide natural gas to Israel, after a decision had been made on Thursday due to what he termed Israels repeated breaching of the agreement.

Just Sunday, presidential hopeful Hamdeen Sabahi said that if elected he will cancel the gas deal.

Israeli security officials said that Egypt has not provided clear answers on the matter, and that during talks in Cairo Egyptian officials refused to confirm or deny the decision.

Despite Dahi's statements, it remains unclear whether the Supreme Military Council knew about the decision. It may have been an independent step taken by the Egyptian gas company as the economic situation in Cairo remains unstable.

It seems that on the eve of the Egyptian presidential elections, the situation on the ground has never been so chaotic: Egypt still does not have a constitution defining the president's authority, and it remains unclear who will lead the committee to draft such a document. On Sunday, in a bid to calm public sentiment, a senior Military Council member said the elections will take place as planned and that authority will be fully transferred to the elected official.

It is also unclear whether the decision to terminate the gas supply would affect U.S. assistance to Egypt. Congress has recently warned that its assistance depends on maintaining the peace accords with Israel, yet did not list the gas agreement as one of the conditions. U.S. assistance to Egypt amounts to approximately 1.3 billion dollars in military aid and an additional 300 million dollars in economic aid.