Spurred by fears of Iranian meddling and an intensifying struggle for regional dominance, Egypt has cracked down on a covert cell within its borders that it says is run by the Iranian-sponsored group Hezbollah.
In the last week, Egyptian police have arrested 25 suspects, 13 of whom have been charged with espionage and illegal possession of weapons and explosives. A manhunt is under way for 24 more suspects believed to be hiding in the Sinai peninsula's mountainous interior.
In an unusual admission, Hezbollah chief Sheikh Hassan Nasrallah acknowledged in a speech last Friday that one of the men in Egyptian custody had been sent to conduct reconnaissance inside Egypt, though he denied the existence of a larger Hezbollah cell.
But no matter how big or small, the presence of Hezbollah on Egyptian territory is a "red line" for the government, says Nabil Abdel Fattah, a political analyst at the Al-Ahram Center for Political and Strategic Studies, a respected government-funded think tank in Cairo.
The episode has highlighted rising tensions between forces aligned with Iran and those allied with the US and Israel. Egyptian officials believe that Iran is using Hezbollah as a proxy to destabilize a regional rival and major US ally, part of its wider push to establish itself as the dominant player in the region.
"Iran, and Iran's followers, want Egypt to become a maid of honor for the crowned Iranian queen when she enters the Middle East," Egyptian Foreign Minister Ahmed Aboul Gheit said in an interview Tuesday with Asharq Al-Awsat, a pan-Arab daily. "They used Hezbollah to gain a presence in Egypt and to say to Egyptians: we are here."
Philippe Vasset, editor-in-chief of Intelligence Online, a Paris-based intelligence newsletter, says it was American intelligence officials, working alongside Israel's Mossad, that tipped Egypt off to the presence of a Hezbollah cell on its own soil.
"These services monitor Hezbollah very, very, very closely," he says.
The allegations against Hezbollah
Relations between Egypt and Iran have been poor since Cairo committed the twin sins in Tehran's eyes of signing a peace treaty with Israel, and providing sanctuary to the deposed Shah of Iran after the Iranian Islamic Revolution in 1979.
But the tone has turned particularly ascerbic after the discovery of alleged Hezbollah activity, which comes at a particularly tense time for Egypt.
In January, it received heated criticism in the Arab world for its behavior during the war between Israel and Hamas in Gaza, during which it refused to open its land border with Gaza to allow refugees to flee into the Sinai.
In March, an Egyptian newspaper reported that a string of air strikes in Sudan in January and February were launched by Israel to target Hamas supply lines carrying Iranian weapons through Egypt and into Gaza.
"Hezbollah is trying to use Egypt as a passage by going across our territory from Iran and Sudan to Gaza," says Abdel Fattah. "It is a massive violation of our sovereignty and security."
In a speech aired on multiple Arabic TV channels Friday, Mr. Nasrallah identified the Hezbollah agent as Sami Shehab, whom he says was sent to Egypt to support smuggling efforts to militants in Gaza. Nasrallah called Egyptian accusations that Hezbollah was planning attacks inside the country "fabrications."
But on Tuesday, Egypt's largest state-owned paper, Al-Ahram, reported that Mr. Shehab confessed, "Hezbollah leadership would arrange the full cost of carrying out terrorist operations in Egypt, and the targeting of Israeli tourists in particular."
The case has caused Cairo to change its rhetoric, from paying lip service to Hezbollah's "resistance" of Israel to labeling it a "terrorist" group.
"We are not the enemy they are resisting against," says Hassan Gama'ie, a law professor at Cairo University and member of the powerful Policy Committee of the ruling National Democratic Party, which advises President Hosni Mubarak. "These people are criminals, and this is not resistance."
Hezbollah's public support for Palestinians
Although Hezbollah rarely discusses in public its military assistance to the Palestinians in the West Bank and Gaza, it is no secret that the Lebanese organization has been involved in providing weapons and training for several years.
Nasrallah first admitted that his organization was offering direct assistance to the Palestinians in March 2002, at the height of the Al-Aqsa intifada, after three Hezbollah members were arrested by the Jordanian authorities for attempting to smuggle Katyusha rockets into the West Bank. Far from apologizing, Nasrallah said that "it is a duty to send arms to Palestinians from any possible place."
Nasrallah made an even more explicit statement at the funeral for Ghaleb Awali, a senior Hezbollah official killed in a car bomb assassination in Beirut in July 2004, an act believed to have been the work of Israel's Mossad intelligence agency.
Nasrallah hailed Mr. Awali as a member of the "team that dedicated their lives in the last few years to support his brothers in occupied Palestine. We do not want to hide this truth but we announce it and are proud of it."
More recently, Lebanon's Al-Akhbar newspaper in January and February published details of the assistance provided to the Palestinians in Gaza by Imad Mughniyah, Hezbollah's top military commander who died in a car bomb explosion in Damascus in February 2008.
"He worked on this task long and scrupulously, along with the leaders of the Palestinian factions who were in charge of this issue in Gaza, the West Bank, and the rest of Palestine," wrote Ibrahim al-Amine, the general manager of Al Akhbar who enjoys unparalleled access to Hezbollah.
Hezbollah has vowed to avenge Mr. Mughniyah's assassination, but Amal Saad-Ghorayeb, a Lebanese expert on the Shiite group, says Israeli civilians holidaying in an Arab country are an unlikely target.
"I don't think that Hezbollah would respond in Egypt. It would be inconsistent with Hezbollah's style," she says. Most analysts suspect that Hezbollah's preferred target would be a political or military institution.
Ms. Saad-Ghorayeb questioned the timing of the revelations by Egypt, suggesting that it was a result of the public spat between Nasrallah and the Egyptian leadership during Israel's offensive against Gaza three months ago.
"Egypt feels it is losing its regional role and is trying desperately hard to reverse these losses," she says.