Dec 21, 2022 - World

Scoop: Egypt holding up Red Sea island deal, sources say

Tiran and Sanafir Islands
Chart: Axios Visuals

Egypt is holding up the implementation of an agreement over two strategic Red Sea islands that paved the way for Saudi Arabia to take steps toward normalizing relations with Israel, according to four Israeli officials and one U.S. source.

Why it matters: The agreement, which was composed of a series of understandings between the U.S., Saudi Arabia, Israel and Egypt, was a significant Mideast foreign policy achievement for the Biden administration.

  • The deal would finalize the transfer of the Tiran and Sanafir islands from Egypt to Saudi Arabia.

Behind the scenes: As part of the agreement, the U.S.-led multinational force of observers that have been present on Tiran for years are required to leave the islands by the end of December.

  • But Israeli officials told Axios that Egypt in recent weeks began raising reservations, mostly of a technical nature, including over the installation of cameras on the islands that were part of the agreement. The cameras are supposed to monitor activity on Tiran and Sanafir, as well as in the Strait of Tiran.
  • White House national security adviser Jake Sullivan met last week with Egyptian President Abdel Fattah al-Sisi who was in Washington for the U.S.-Africa summit. According to the U.S. and Israeli sources, Sullivan raised the issue of the Red Sea islands deal and stressed that the Biden administration wants it implemented.
  • Israeli officials said the agreement, including the withdrawal of the multinational force from the Islands, won't be implemented by the end of December due to the Egyptian reservations.
  • The Egyptian embassies in Tel Aviv and Washington and the Saudi Embassy in Washington did not respond to requests for comment.

State of play: Senior Israeli officials told Axios they believe Egypt is holding up the deal due to U.S.-Egypt bilateral issues, including American military assistance.

  • Citing human rights concerns, the Biden administration has twice frozen 10% of the roughly $1.3 billion in military aid it allocates to Egypt annually.

Flashback: Earlier this year, Sen. Patrick Leahy (D-Vt.) blocked another $75 million in assistance to Egypt.

  • When the State Department’s top Middle East diplomat, Barbara Leaf, visited Cairo last October, Egyptian officials told her they expect the administration to transfer the full amount of military assistance if it really sees relations as strategic, sources briefed on the issue said.
  • According to the sources, Leaf urged her Egyptian counterparts to work more systematically in lobbying Congress on military aid. But the Egyptian officials made clear they don’t intend to start a lobbying effort every year and stressed that when an issue is important for the administration, it knows how to get it done in Congress.
  • The White House and the Israeli Prime Minister’s Office declined to comment.

Catch up quick: Despite public protests in Egypt, the Egyptian parliament in June 2017 and the country's supreme court in March 2018 approved a deal to transfer the sovereignty of the islands back to Saudi Arabia.

  • But the deal needed buy-in from Israel because of the 1979 Israeli-Egyptian peace treaty, which required Tiran and Sanafir to be a demilitarized zone and have the presence of a multinational force of observers (MFO) led by the U.S.
  • Israel gave its approval in principle to transfer the islands back to Saudi Arabia, pending an agreement between Cairo and Riyadh on the work of the multinational forces and freedom of navigation in the strait.
  • But the deal wasn't finalized, mainly because Saudi Arabia wanted the international observers to leave the islands. This created the need for a new arrangement involving Israel, Saudi Arabia and Egypt.
  • In September 2021, the Biden administration started quietly mediating among Saudi Arabia, Israel and Egypt on this issue. A day before Biden arrived in Saudi Arabia last July, the deal was finalized.
  • According to the understanding, the MFO peacekeepers, including U.S. soldiers, were supposed to depart Tiran and move to new positions in the Sinai Peninsula and monitor the situation in the islands remotely using the cameras.

Between the lines: As part of the Red Sea deal, Saudi Arabia agreed to allow Israeli airlines to use its airspace for eastbound flights to India and China and said it would discuss direct flights from Israel to Jeddah for approved carriers for Muslim pilgrims in Israel wanting to participate in the annual hajj.

  • But the Biden administration is struggling to convince Oman to allow Israeli airlines to use its airspace.
  • Without such permission from Oman, the flight routes for Israeli airlines will remain blocked and the Saudi move becomes largely meaningless.
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