Five Factors Shaping the Future of Egypt-Israel Relations

The Gaza war has strained Egyptian-Israeli relations to an unprecedented level and raised questions about the future of their 1979 peace treaty that has been a cornerstone of Arab-Israeli peace. U.S. officials met recently in Cairo with their Israeli and Egyptian counterparts against a backdrop of mutually diminishing confidence between the two parties, particularly following Israel’s ground offensive in Rafah. This comes on the heels of a shooting incident between Israeli and Egyptian forces that left at least one Egyptian soldier dead, and Egypt joining South Africa’s case against Israel at the International Court of Justice (ICJ). Along with Qatar, Egypt is a key broker in the current Israel-Hamas cease-fire efforts and engages in extensive security cooperation with the U.S. and Israel.

Moving forward, the answers to five key questions will affect the future of Egyptian-Israeli relations, and in turn, the political and security dynamics across the region.

Will confidence between the parties continue to diminish?

Many Egyptians have long feared that Israel’s ultimate objective is to transfer “the Gaza problem” to Egypt through mass displacement of Gazans into Egypt and now through an effort to hand Egypt (among others) responsibility for Gaza’s future security and governance, including confronting the remaining Hamas forces after the war ends.

Egypt, understanding Israel’s need to respond to Hamas’ October 7 attack, adopted a restrained approach, particularly compared to other regional countries like Turkey and Jordan. But Cairo felt this restraint was not appreciated, nor were Egyptian sensitivities around Rafah and the Philadelphi Corridor — a strip of land running the length of the Egyptian-Gaza border that Israel controlled until its 2005 disengagement from Gaza — taken into account by Israel. Tensions reportedly grew to the point that Egyptian President Abdel-Fattah el-Sisi refused to take a call with Israeli Prime Minister Benjamin Netanyahu. Egypt’s joining the ICJ case against Israel is another strong signal of Cairo’s frustration.

Many are wondering whether the Israel-Egypt peace treaty could be in jeopardy. Indeed, as far back as January, the head of Egypt’s State Information Service warned that Israel taking control of the Philadelphi corridor would be a violation of the 1979 peace treaty. The Multinational Force and Observers (MFO) — the organization responsible for monitoring its implementation — is expected to issue a report outlining any violations of the treaty during the war.

Despite these tensions, both sides are clear in their commitment to the Israel-Egypt peace treaty, and it is not in any imminent danger.

Still, despite these tensions, both sides are clear in their commitment to the treaty, and it is not in any imminent danger. It is expected that any violation will be dealt with according to the treaty’s dispute settlement provisions, as was the case in a 1982 dispute between Egypt and Israel on the demarcation of the border in the Taba area.

After taking over the Philadelphi Corridor, Israel announced that it has discovered at least 50 tunnels in the area although it is not clear how many of them led to Sinai. This continues to be a point of serious Israeli concern.

On the economic front, Egypt has been importing natural gas from Israel since 2020 following a decrease in its own production. At the outset of the war, Israel suspended its gas exports to Egypt — later to be resumed but in smaller quantities. Plans were announced in August 2023 to increase future Israeli gas exports to Egypt, starting in July 2025 for the next 11 years, by an additional 4 billion cubic meters, which is three times the current export levels. Rolling power outages have been on the rise in Egypt causing public dismay and the government indicated that this is due to shortages in gas supplies as well as foreign currency requirements. It is not clear whether Egypt’s position regarding Gaza will have an impact on Israel cutting gas exports because the implications of such an action may be devastating to both sides, particularly Egypt.

What will happen on the Israel-Gaza-Egypt Border?

The control, security, humanitarian assistance and movement of people around the Egyptian-Gaza border is another major point of contention. In the first weeks of the war, an official spokesman for the Israeli army indicated that Palestinians should head to Egypt, which Cairo strongly criticized. Israel responded by indicating that the border crossing was closed. Egypt carried out a diplomatic campaign explaining why it could not accept refugees, resulting in a firm pushback from Western powers.

Around 100,000 Palestinians have fled from Gaza to Egypt since the beginning of the war. The fear of mass displacement was heightened during the beginning of the attack on Rafah. But, a staggering one million Palestinians fled Rafah, mainly heading north to Khan Younis and were not forced to go to Egypt, reducing tension over mass expulsion.

Israel’s operation in Rafah has been another major stressor in the relationship. For weeks, the international community — including the U.S., the EU, and Arab states — urged Israel not to attack Rafah, particularly since there was no plan to protect the 1.4 million civilians that were living there, to no avail. However, this campaign clearly affected the extent of the severity of the attack.

A secondary result of the Rafah operation was Israel taking control of the Palestinian side of the Rafah crossing and the Philadelphi corridor, leading Egypt to close the Rafah crossing. Egypt has refused to reopen it and allow humanitarian aid to pass through as long as Israeli forces maintain control over the Palestinian side of the crossing, and Israel objects to the Palestinian Authority (PA) taking control of the crossing indicating that it can go through the Kerem Shalom border crossing. The U.S. has been working to resolve this impasse and is expected to soon present a proposal for reopening the crossing.

The issue of tunnels has become particularly fraught. In a statement before the ICJ, Israel indicated that it had discovered at least 50 tunnels in the Gaza-Egypt border area, but it was not clear how many of them crossed the border into Egypt. Egypt has been working to make sure that all these tunnels are destroyed. A recent report indicated that secret military documents reveal that more than 2,000 tunnels were destroyed by Egyptian military engineers in the Rafah area between 2011 and 2015. An Egyptian official also indicated that Egypt had destroyed over 1,500 tunnels over the years. It was also reported that Egypt flooded the tunnels and relocated people living close to the border to other areas and a buffer zone was established to deal with the problem. Still, Israel publicly aired its distrust surrounding this issue.

As the war continues, the risks of friction increase as Israeli and Egyptian forces continue to operate in close proximity in a tense environment.

As the war continues, the risks of friction increase as Israeli and Egyptian forces continue to operate in close proximity in a tense environment. There have already been two dangerous incidents. The first, two weeks into the war, was an Israeli attack on the Egyptian side of the Rafah crossing that Israel claimed was accidental. And, as noted above, an Egyptian soldier was killed after an exchange with Israeli forces on the border. While both sides downplayed these incidents, there are real risks that a future incident could spiral out of control.

How will humanitarian aid access play out?

For most of the war, the Rafah crossing was the main route for providing humanitarian assistance to Gaza. But the crossing was designed only for the movement of people, and not for goods. Not a single truck has entered Gaza without Israeli approval. Not grasping this point, the Arab public has been critical of Egypt for not doing more to push aid into Gaza. For its part, Egypt has been quite critical of Israel’s efforts around humanitarian assistance for Gaza since the early days of the war, with the Egyptian president publicly criticizing Israel for hindering aid flows.

This has also been the position of numerous other countries, including the United States. In his first phone call with Netanyahu after the expanded Israeli ground operation in Gaza, Biden “underscored the need to immediately and significantly increase the flow of humanitarian assistance.” A recent U.S. State Department report said that Israel initially did not cooperate with U.S. and international aid groups to allow humanitarian aid and thus “contributed significantly” to the lack of aid, but acknowledged that has changed over time.

The humanitarian situation in Gaza remains critical. A U.N. report indicated that Israeli authorities’ restrictions and denials of planned aid movements continue to hamper the delivery of life-saving assistance to Gaza. In March, more than half of U.N.-coordinated food missions to high-risk areas requiring coordination with Israeli authorities were either denied or impeded. A more recent U.N. report indicated that the already insufficient flow of humanitarian assistance to meet the soaring needs of Gaza has dropped by 67% since May 7.

Egyptian-Israeli cooperation will be critical in addressing Gaza’s dire humanitarian situation.

Whither the Israeli-Palestinian peace process?

Despite the daunting current challenges, resolving the Israeli-Palestinian conflict is now front and center for those hoping to make the October 7 war the final war between Israelis and Palestinians. Biden has reiterated the need to move toward the two-state solution numerous times since the war started. Yet, Egypt and several Arab countries have indicated to Israel, the U.S., and European countries that progress will be predicated on action and not just rhetoric. The Arab world sees a credible linkage between necessary near-term steps and a clear diplomatic endgame toward a two-state solution as an absolute necessity.

Despite the daunting current challenges, resolving the Israeli-Palestinian conflict is now front and center for those hoping to make the October 7 war the final war between Israelis and Palestinians.

Netanyahu has rejected the idea of a Palestinian state for many years and the broader Israeli public is also increasingly skeptical of a two-state solution in the wake of the October 7 attack. However, he and his coalition partners have no alternative visions regarding how to end the conflict writ-large, or even to avoid a quagmire in Gaza. Going forward, the linkage of a political endgame and postwar reconstruction will need to be tackled, as virtually all donors will be unwilling to finance reconstruction without assurances that their contribution will not be destroyed in a few years.

If the political will is there, particularly in the U.S., regional partners would be more than ready for heavy lifting in a meaningful manner, including through the normalization track with Saudi Arabia. Egypt, as the neighbor with the most at stake in Gaza and a 45-year peace with Israel, remains a key player not just in Gaza but also the wider conflict’s next stages.

How will Gaza’s governance, security and reconstruction proceed?

For years before the war, Egypt, Jordan and other regional countries disapproved of Netanyahu’s policy of weakening the PA and allowing Hamas to be strengthened. While Israel’s objective is to defeat Hamas, these countries believe that this is not an achievable goal and that Hamas cannot be dealt with solely through force. The group has been heavily degraded militarily and can no longer govern Gaza, but there is no agreement on who will replace Hamas in Gaza. Egypt is understandably concerned about a vacuum there leading to a wave of radicalization and extremism. Cairo sees speedy recovery and reconstruction as a way to reduce this risk.

The Arab world — and much of the rest of the world — maintains that a reformed PA is the only credible option for Palestinian governance in postwar Gaza. Despite having worked with the PA for years, the Israeli government objects to this proposal. Cairo sees no real alternative other than a path in that direction. Regional leaders are stressing that Israel and the United States should commit to Palestinian self-determination in Gaza and the West Bank and support that effort to enable the region to take on heavy lifting.

Israel and Egypt have to do their utmost to ensure that their relationship is put on a constructive path.

There are also the questions of how reconstruction will take place. If the provision of humanitarian assistance has proven difficult, reconstruction — particularly the issue of “dual-use materials” — will be more so. The Biden administration’s May 2024 National Security Memorandum acknowledged that Israel “has, on occasion, stretched dual-use issues to a concerning degree.” In tackling recovery and reconstruction, new processes will be needed. The Gaza Reconstruction Mechanism established after the 2014 war is no longer fit for purpose, and Egypt is not confident that a more effective mechanism can be established in time to address Gaza’s critical recovery and reconstruction needs. The Egyptian-Israel relationship will undoubtedly be critical in shaping Gaza’s future.

Israel and Egypt have to do their utmost to ensure that their relationship is put on a constructive path. Further deterioration will have hugely negative implications for both countries and the region at large. An active U.S. role in addressing these fissures will be instrumental.

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