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2 SHIFTING PRIORITIES Egypt and Israel’s Attempts at Peacemaking The signing of a peace treaty by Israeli prime minister Menachem Begin and Egyptian president Anwar Sadat on March 26, 1979, was truly a historic moment. After thirty years during which the Arab world refused to accept the legitimate right of the state of Israel to exist and after three bloody wars, Egypt was the first Arab state to acknowledge Israel and sign a peace treaty with it. On the one hand, this peace treaty managed to survive various challenges, from the murder of President Sadat, to the Israeli war in Lebanon, to the two intifadas. This durability is in itself an impressive achievement. On the other hand, despite initial expectations, the formal peace agreement never developed into a warm peace. After their peace treaty, Israel and Egypt signed normalization agreements , with negotiations on most of these agreements continuing until April 1982, the date of the completion of Israel’s withdrawal from Sinai. These agreements , formulated by a joint committee of experts, presented in great detail the various political, economic, and cultural issues requiring normalization. However , after an initial short period of growing interaction, most of these elaborate plans for economic cooperation never materialized. The status of relations between the two states is still closer to the category of cold peace, as defined in chapter 1. The peace treaty was initiated by leaders and governments, with little involvement of the business sector, which was not a major domestic actor at the time in either state. The broader public remained largely unconvinced regarding the peace dividends, especially in light of many unfulfilled promises. Whereas Israel perceived normalization as the natural outgrowth of the peace treaty, 33 Press-Barnathan CH2:Press-Barnathan CH2 3/31/09 2:45 PM Page 33 Egypt made a clear distinction between the two stages, holding the latter hostage to political developments on the Palestinian front.1 In fact, some scholars argue that to begin with, President Sadat did not think about peace in terms of “normal ” or “warm” peace at all but rather as an end to the war situation.2 The Israeli embassy in Cairo made many efforts to push forward the various economic aspects of the new relations, and the Israeli government earmarked a million dollars for promoting development cooperation with Egypt. But very early on it became apparent that the Egyptian regime was discouraging Egyptian business leaders from developing ties with Israel by instituting various regulations . Israel gradually stopped being invited to fairs, and trade of about $80 million in 1981 was reduced by 1990 to $12 million. By 2001, it was up again to around $67 million, and by the end of 2004, it had dropped to $44 million. The tourism sector also remained limited. In 1999, about 415,000 Israelis visited Egypt, mostly the resorts in Sinai, and that number dropped to only 130,000 in 2002. From Egypt, the number of tourists to Israel was minimal, reaching a record high of 28,000 in 1995 and dropping precipitously to 160 tourists in 2007.3 Interestingly, the one economic issue on which cooperation was pursued successfully up to this day, regardless of political circumstances, is the sale of Egyptian oil to Israel, an arrangement that was part of the peace treaty. One should note, though, that the Egyptians have refused over the years to include oil revenues in their official trade balance with Israel.4 Any cultural normalization is seen in Egypt as hinging on a resolution of the Palestinian problem, and so, despite the existence of a detailed cultural agreement (attached to the peace treaty), there is hardly any Israeli cultural presence in Egypt or vice versa, with the exception of the Israeli Academic Center in Cairo, which operates on a very low profile. Furthermore, Egyptian artists and intellectuals, as well as the culture ministry (headed for twenty-one years by Faruq Husni), are actively working to prevent any such interaction and any Israeli penetration of this kind, not only in Egypt but also in the whole Arab world.5 Only in December 2004 did a breakthrough seem to take place, with the signing of the Qualifying Industrial Zone (QIZ) agreement between Israel, Egypt, and the United States. That agreement was made after nearly twenty years without progress, and since the end of 2004, several events have raised the possibility of a breakthrough in the movement toward economic normalization between Egypt and Israel. The U.S. Congress had initiated the...

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