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How Egypt became an Israeli gas colony

09.04.2015  |  00:47
How Egypt became an Israeli gas colony

Egyptian natural gas resources are a potential goldmine for the people of Egypt, yet they have been squandered for over a decade - sold off at rock-bottom prices in an utterly corrupt deal reached between shadowy Egyptian and Israeli intelligence figures.

Egyptian natural gas resources are a potential goldmine for the people of Egypt, yet they have been squandered for over a decade - sold off at rock-bottom prices in an utterly corrupt deal reached between shadowy Egyptian and Israeli intelligence figures.

Seen in advance by MEE, Egypt's Lost Power, a new documentary by the Al Jazeera Investigative Unit broadcast on Monday at 8 GMT lays bare for the first time the true depths of the energy black hole which corrupt elites have plunged Egypt into.

The primary beneficiary has been Israel, which for years has paid some of the lowest natural gas prices in the world.

MEE has also seen, and is today publishing translations of, secret documents obtained by Al Jazeera that go to the very foundation of the deal to siphon-off Egypt's gas to Israel.

Egyptian and Israeli elites pocketed the profits. But the deal became a major bone of contention on the Egyptian street, even contributing to the January 2011 popular uprising which overthrew Hosni Mubarak.

In 2012, two of the Egyptian architects of the deal were convicted over it and sentenced to 15-years in jail - but both are currently free men.

Now, with the coronation of former army chief Abdel Fatah al-Sisi as Egyptian leader (with a 96.9 percent election victory), figures involved in the deal look set to return to Egypt.

This year, Sisi hopes to shore up his power by striking a new gas deal with Israel - this time flowing in the opposite direction. Recently discovered gas off the coast of Israel means it has a surplus it wants to sell.

And with the looming threat of several astronomical law suits related to past and present gas deals, Egypt under the compliant Sisi regime is unlikely to refuse.

ROCK-BOTTOM PRICES

The whole story underlines just how much control Egypt's deep state,

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including its intelligence agencies, has over its economy.

The US government, which refused to call the 3 July military takeover a coup, and is seeking to relax restrictions on arms sales imposed after the massacres of protesters in August, encourages these relations between Egypt and Israel.

They do so as a way of removing Egypt from the regional power balance and of shoring up Israel's dominance.

In the new Al Jazeera documentary, former Israeli energy minister Yosef Paritzky put it succinctly: "The military in Egypt are our partners in collaboration in this region... The army, the government, the intelligence see us as legit, which is very important and we should encourage this".

He also disparaged any hope for democracy in Egypt: "What do [the Muslim Brotherhood] have to do with democracy? God knows, and this, almost, stupidity to bring Western values into a country which is fully Islamic, many of which are poor, fundamental Islams [sic], is ridiculous".

‘THE PRICES WERE RIDICULOUS'

Hatem Azzam, former head of the Egyptian parliament's Energy and Industry Committee told Al Jazeera that the gas sell-off was "the most corrupt deal ever in the history of Egypt and in the history of the oil world... no such agreement... exists on the planet".

In 2012, Azzam was part of post-uprising attempts to reform the sector. With long experience in the oil and gas industries, Azzam backed attempts by Egypt's first democratically elected president, Mohamed Morsi to investigate past corruption.

Azzam explains that the scheme saw the government sell gas to Egyptian-Israeli company East Mediterranean Gas (EMG) at $1.50 per million British Thermal Unit (mmBtu).

According to energy analyst Mika Minio-Paluello (whose number crunching forms a key part of the Al Jazeera documentary), around that time gas sales to Germany were around $8-$10 per mmBTU and in the more lucrative Asian energy sector, countries like Japan paid around $12 per mmBTU.

Even former Israeli energy minister Paritzky said "the prices were ridiculous".

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