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Mon, March 14, 2011 | The Rubin Report | By Barry Rubin

Egypt halted natural-gas exports through a pipeline feeding Israel and Jordan after a terrorist explosion at the facility. (Febr 05, 2011)

No Problem Here? Egypt Apparently Has Already Ended Gas Shipments to Israel

There’s nothing to worry about, we are told, of course Egypt wants to get the money from gas shipments, right? Ideology and politics are not important, we are told, but are always trumped by material considerations.

Well, it looks as if Egypt has stopped gas exports to Israel, just about their only trade link. The company that supplies 45% of the gas needed to produce Israel’s electricity, has missed several promised deadlines to restore service since the pipeline was damaged in a terrorist explosion February 5.

The Egyptian government is pretending that there are technical problems but that’s nonsense. Either there will never be any gas shipments at all or Egypt will demand such a steep increase in price that this will be designed more to end the deal rather than to increase their revenue.

So Israel’s Electric Company is asking the Environmental Protection Ministry to switch to diesel and fuel oil. One day, Israel will have its own gas supply but it will take at least until 2013 to build the infrastructure to support this changeover.

We should wait to see whether there are real technical problems or this is just an excuse to take a popular step of ending the supply — both because most Egyptians view Israel as an evil enemy and also because the agreed price is lower than today’s market value.

Question: Will the Obama Administration pressure the new Egyptian government to renew shipments? What do you think?

Contracts are important because if one side feels free to break a deal when it wants to, or the government changes, that regime cannot be trusted. Today the gas deal, tomorrow the peace treaty?