On Sunday, Egypt's Natural Gas Holding Company announced the termination of its contract with Israel. Company head, Mohamed Shoeb has stated that Israel has not paid for its gas in 4 months. Shoeb stated: "This has nothing to do with anything outside of the commercial relations."
Israel purchases 40% of its natural gas supply from Egypt.
This move by Egypt also comes in the wake of cross-border attacks at gas pipelines following last year’s uprising.
says that Israel has downplayed the decision, and this could further deteriorate bilateral ties which have decayed markedly since the Egyptian revolution.
Israeli Foreign Minister, Avigdor Lieberman has tried to downplay the scandal and told Israel Radio on Monday: "We're following what's happening in Egypt and hope that everything will work out for the best."
Lieberman reiterated that Israel has every desire to uphold peace accords with Egypt and he added that Egyptians share that interest.
However other Israeli officials took a tougher stance, with some of them warning that the cut off diminishes the peace treaty between Israel and Egypt.
Israeli Finance Minister, Yuval Steinitz said: "This is a dangerous precedent that overshadows the peace agreements and the peaceful atmosphere between Israel and Egypt."
According to the Jerusalem Post
, opposition head Shaul Mofaz called the move “blatant infringement of the peace treaty,” stating that this places the ties between the 2 countries at their lowest level since the peace treaty was signed in 1979.
has suggested that this announcement could have been intended to pressure Israel into calling off the lawsuit for compensation of US$8 billion over Egypt's failure to provide the promised gas.
The original gas deal, made in 2005 was negotiated during the rule of Hosni Mubarak and came under heavy criticism by Egyptians who view it as a symbol of close ties forged by the ousted leader with Israel.
Critics have claimed that Israel got the gas at below-market prices and that Mubarak's cronies had gained huge profits from the deal, thus costing Egypt millions of dollars in lost revenue.