Israel-Egypt trade links may help limit any rupture in ties
Israel and Egypt have cooperated on a natural gas pipeline and Israeli-owned textile factories that employ thousands of Egyptians. Such links could be key to preserving a cold peace.
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Egypt exported some $300 million of natural gas to Israel last year, and the revenues are expected to triple to $1 billion by 2015. "Egypt is an important natural gas supplier, and prospectively will continue to be for decades to come," says Amit Mor, the chief of Eco Energy, a consultancy in Herzliya Pituach, Israel. "It's a beneficial project for both Eygpt's and Israel's consumers and industry.''Skip to next paragraph
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Making up for lost time
Egyptian workers have slowly returned to factories that are now trying to make up for lost time. Textile companies and other Egyptian exporters sell more than $1 billion worth or merchandise in the US free of customs under the "Qualified Industrial Zone'' program – which gives Egyptian manufacturers incentives for using Israeli raw materials.
Even so, the extent of the economic ties between the neighbors should not be overstated. Even if Israel and Egypt were to fully normalize relations, trade ties would still be limited because Israel focuses on exporting technology products to advanced economies.
The main economic benefit Israel gets from peace with Egypt is lower military spending and a more stable environment for business investment.
Is all that enough to stave off a deterioration in ties? Some believe that Israel needs to be more aggressive in building up businesses in Egypt if it wants to reduce the risk of a drop off.
"The key to normal relations is economic and financial ties,'' says Ruth Linde, a former adviser to Israeli President Shimon Peres who says Israel should focus on expanding the number of businesses in the program. "If there are only two businesses, it is easier for Egypt to anul them. If there is a critical mass it is less easy to let go."