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A political crisis has developed between Israel and Egypt in the wake of the August 18 terror attack north of Eilat. The attack was apparently planned and carried out by an organization active in the Gaza Strip known as the Resistance Committees. Egyptian citizens linked to jihadist groups active in Sinai may also have participated in the attack.

The terrorists, who struck at Israeli vehicles traveling on the road that runs north from Eilat and passes near the border with Egypt, wore uniforms that are similar to those of Egyptian border guards and crossed the border near an Egyptian border guard post. An IDF force operating against the terrorists with aid from a helicopter gunship crossed the border into Sinai, and in the course of the battle with the terrorists, several Egyptian border policemen were killed. The picture is still not entirely clear, but it appears that at least some of them were hurt by IDF fire.

The news that Egyptian soldiers had been killed in Sinai by an Israeli force led to tumultuous anti-Israel demonstrations in Cairo; an attempt to take over the Israeli embassy was thwarted by Egyptian security forces. The Egyptian government responded to public pressure with a vehement demand for an apology and compensation from Israel and declared that it would recall its ambassador to Israel. Yet while the demonstrations continued, the atmosphere changed within a day. The declaration about recalling the Egyptian ambassador from Israel was removed from the Egyptian government’s website, and instead there were clear statements that recalling the ambassador was never considered, and that Egypt has an interest in having its ambassador in Tel Aviv.

There are apparently two reasons for this sharp change in policy. The first is pressure on Egypt from the United States and other Western countries not to act hastily, joined by the intensive dialogue that was launched between Israel and Egypt through Israeli emissaries who traveled to Cairo to resolve the crisis. The second reason is the character of the Egyptian regime in the post-Mubarak period. It is a two-headed government that is controlled by the Supreme Military Council and by the provisional government. The latter is responsible for the ongoing technical management of domestic and foreign policy, and the Supreme Military Council intervenes when necessary. The two have different interests, and therefore, a different agenda. The Supreme Military Council, which for now is the real ruler, has clear interests in maintaining stability on the Israeli-Egyptian border, in preserving the peace treaty with Israel, and in maintaining its relationship with the Western world, especially the United States. Indeed, more than one-third of the Egyptian military budget, including the entire budget for military buildup, comes from American aid. For these reasons, the Supreme Military Council is committed to a responsible policy toward Israel and the United States. The provisional government, on the other hand, knows that its time is limited and that once it has been dissolved, the political future of its members will depend on the good will of the Egyptian public. Therefore, its priority is to satisfy public opinion.

As part of the Military Council's intervention, it appears that the government of Israel has received clear messages from the Supreme Military Council that it will find it difficult to act against public opinion if Israel “runs wild” in Gaza in response to the terrorist attack in Eilat. For this reason, the government of Israel, in spite of the fact that it too was under pressure from public opinion, was measured and cautious in its responses. In other circumstances, the fear of an erosion of Israeli deterrence and the inclination to teach the Palestinians a lesson would likely have led to a much firmer response.

Several interesting insights into Israeli-Egyptian relations in the post-Mubarak era can be gleaned from the recent crisis. First, it has once again been demonstrated that Sinai has become a hub of serious potential problems that could lead to strategic damage to Israel-Egypt relations. Sinai was a problematic area even before Mubarak's ouster and was not fully under Egypt's control, demonstrated by massive smuggling into Gaza, but the situation has deteriorated since the revolution in Egypt. The Bedouin tribes, which are alienated from the Egyptian authorities, take advantage of the situation in order to achieve greater autonomy and act as they please. They are joined by jihadist elements and prisoners who escaped from Egyptian prisons during the Egyptian revolution who find Sinai a convenient base for their activity. Israel must consider whether its existing arrangements with Egypt are appropriate for handling the growing problem in Sinai, or whether it is necessary to examine new arrangements. These would include adjusting the military appendix of the peace treaty with Egypt, whereby Egypt would station larger military forces in Sinai in order to attend to Egypt and Israel’s common interest, that is, ending the anarchy and establishing order and security.

Second, the Egyptian public has become an important new factor that cannot be ignored in the relationship between Egypt and Israel, and Israel must take this factor into account when formulating its policy. That is, the government’s decisions must be screened for their potential impact on Egyptian public opinion. Verbal attacks on Egypt, which are interpreted as an affront to Egypt’s national honor, are not the sensible way to deal with Egyptian public opinion, which is also influenced by Israel's actions against the Palestinians. This assessment is contrary to common assumptions in Israel in the wake of the Egyptian revolution, whereby the Egyptians can now be expected to focus on domestic affairs and will be less able to devote themselves to Israeli-Palestinian relations. A major implication is that now, Israel will have more serious constraints on its freedom of action in Gaza.

Third, in spite of the increasing weight of Egyptian public opinion, there has been no significant change in Egypt's basic interests, in the eyes of the government and most political officials. There is perhaps a change in the music, but not in the content. For this reason there has not been a fundamental change in the approach to Iran, and the close relations with the United States have been maintained. There is almost full agreement that Egypt must keep the peace treaty with Israel, and even with Hamas in Gaza no real change has taken place concerning procedures for exiting from Gaza into Egypt. All this indicates that there is a potential for strategic dialogue and strategic understandings between Israel and Egypt. Possible changes to the military appendix of the peace treaty between Israel and Egypt can be a good basis for such a dialogue.

Of course, there is no guarantee that the situation in Egypt will remain unchanged. Political changes following free elections might bring about changes in the definition of interests, and thus in the definition of the policy derived from these interests. However, political agreements have force, and it is difficult to change them when they become an established fact. For this reason, it is doubly important to enter into a strategic dialogue with Egypt with the goal of bringing about strategic understandings, even if it is necessary to pay a political price for the success of the dialogue.