Egypt cancels gas deal with IsraelBy DALLIA MONIEM in Cairo | Monday, April 23  2012 at  15:09

Egypt's state-owned natural gas company last Sunday announced that it was unilaterally cancelling its agreement to sell gas to Israel over payment disputes.

"The decision we took was economic and not politically motivated. We cancelled the gas agreement with Israel because they have failed to meet payment deadlines in recent months," Mohamed Shoeib, the head of Egyptian Natural Gas Holding Company, told local media.

The immediate reaction of Israeli officials was one of deep concern at the arbitrary nature of the cancellation with Minister of Finance Yoval Steinietz telling Israeli radio that such a move could have serious political and economical implications on the Camp David peace accord and that it was “a dangerous precedent that overshadows the peace agreements between Israel and Egypt.”

The gas deal with Egypt has faced much criticism and debate and a constant source of controversy to the government since its signing during former President Hosni Mubarak's tenure.

Many critics maintain that the price of gas sold to Israel was well below international prices thereby depriving the country of much needed revenue.

Another criticism has been that by agreeing to such a deal the Egyptian government was being complicit in financially supporting Israel's conflict with the Palestinians.

Former President Mubarak is currently on trial on the charges of “conspiring with fugitive businessman Hussein Salem to export gas to Israel at below market prices.”

The former minister of petroleum Sameh Fahmy and other former officials are also on trial over the prices stipulated in the deal with Israel.

Since the popular uprising against Mr Mubarak's regime in January of last year the pipeline, which transports gas to both Israel and Jordan, has been a constant target to saboteurs with 14 explosions repeatedly interrupting supplies.

On its part the Jewish state depends on 40 per cent of its energy supplies from Egyptian gas.

Avigdor Lieberman, Israel's foreign affairs minister was reported to have said on Monday that though the cancellation of the deal was “not a good sign” it should not be seen as anything but a trade dispute.

"We want to understand this as a trade dispute. I think that to turn a business dispute into a diplomatic dispute would be a mistake...Israel is interested in maintaining the peace treaty and we think this is also a supreme interest of Egypt.”

With the rise of Islamists in Egypt's political scene there have been fears relations between the two countries would face rocky times though as of yet no leading Egyptian political party nor leading presidential candidate has called for the cancellation of the peace accords between the two countries