Dissidents in Egypt have turned violent to protest gas exports amid mass domestic shortages despite announcements and agreements with Jordan and intentions with Israel to raise the sale price. This attack, the third on the Sinai Peninsula pipeline in four months, adds a further dimension to the nation re-building challenge facing transitional leaders in Cairo.
Estimates of lost revenue following the last disruption of supply ranged from $3 to $4 million per day.
Two weeks ago, images were released of Egyptian-Israeli contracts, lifting part of the long-standing mysterious aura around this gas relationship.
Experts and analysts have long conjectured that prices were well below economically sustainable levels.
The Petroleum Ministry document does not state these prices, as this was an agreement between the government and the East Mediterranean Gas Company (EMG).
The prices would be stated on the agreement between EMG and Israel, with estimates ranging from $0.70 - $6 per million British Thermal Units (mbtu). For perspective, recent prices paid by Italy and Spain are reported at $7 and $10, respectively.
However, the exact prices to EMG and onto Israel are said to fluctuate by Hosni Mubarak’s Petroleum Ministry, and will only be clear after the release of the second agreement between EMG and Israel Electric Corporation (IEC), a national company.
The deals evolved through the creation of EMG, a local company nominally separate from the government, run by Mr. Mubarak’s close friend Hussain Salem. The government sold gas to EMG at exorbitantly low prices which was then able to make huge profits selling to Israel at still discounted rates.
Mr. Salem fled the country during the revolution and has since been arrested in Spain on charges of fraud.
Lawyers and advocates repeatedly attempted to null and void this contract during Mr. Mubarak’s regime, however influence from the tight circle of leaders profiting from this deal prevented the claims from ever having an impact.
Egyptians throughout the country, not just on the Sinai, have called for either the raising of prices to sustainable market levels or complete shutdown of exports to Israel. Negotiations with Jordan saw progress in raising the prices.
The toll on Israel’s energy reliability is forever changed following the Egyptian revolution. No longer will they stand for injustices for which they pay, by way of energy shortages and unreliable domestic supply.
The transitional government, while taking steps toward rectifying 19 years’ worth of fraud under President Mubarak, has great challenges set before them.
This attack may suggest two things: a lack of patience on behalf of the Egyptian people, taking justice into their own hands; or the need to send a clear message to Cairo, demanding the interests of Egyptian people be put before those profiting from Egyptian resources.
Still, a further look must be given beyond this surface assessment to reveal that the recent increase in weapons trading across the Sinai Peninsula (location of the attack) plays a significant role in this repeat attack.
Despite remarkable shows of unity during the protests in Tahrir Square – one such inspiring image recalls Muslims praying and Christians forming a protective human shield around them and vice versa – Bedouins have long felt discriminated and isolated on the Sinai Peninsula.
Perhaps these increasingly frequent attacks will spell something much larger in the overall revolution.
Bedouins, under Mr. Mubarak, were not allowed to serve in the military or police forces. Locals cited fear amongst Cairo’s ruling elite that proximity to Israel meant they could easily be spies for foreign entities against the nation.
The importance of incorporating them in to the national fold at this critical juncture in the revolution’s re-building phase cannot be underestimated. Bedouins suffered energy shortages, and arbitrary arrests and other disgraces alongside fellow Egyptians under Mr. Mubarak.
In energy matters, the Sinai would prove a spectacular site for solar fields. Harnessing renewable energy would serve to increase Egypt’s ability to provide secure energy to its people.
Further, elevating the status of Bedouins in Egypt by locating such a major field in this thought-to-be-lawless region would be a great step forward in national integration amongst a population without many other divides.
Enlisting and recruiting Bedouins now will prove quite difficult and will entail a series of meetings with local leaders to settle on a mutually-beneficial terms. Steps have been taken by Egyptian transitional leaders who reached out to Bedouin tribal leaders, however the meetings have not proven fruitful in the eyes of the Bedouins just yet. Bedouins protested after the meeting this month claiming misrepresentation by their elders.
Only once the Sinai is secure should Egypt consider their pipeline secure.
To date, Egypt has continued exports mainly to secure valuable foreign currency with which to rebuild its social services. These export agreements must be fully re-evaluated with Egyptian interests in mind, not those of domestic or foreign leaders, nor domestic or foreign gas companies.
Israel, for its part, has already begun looking elsewhere for gas imports and, with the discovery of massive offshore gas fields, will most likely be an exporter by 2015.
The message to Cairo is simple – meaningfully involve Bedouins in Egypt’s future or risk the Sinai pulling all of Egypt away from its much sought after democratic existence.
(Mary E. Stonaker is an independent scholar, most recently with the Middle East Institute, National University of Singapore. She can be reached at marystonaker@gmail.com.)
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