Egyptian authorities plan to follow up on the permanent opening of the Gaza Strip Rafah crossing - so ending its four-year siege - by liquidating EMG (the East Mediterranean Gas Company which is under contract to deliver Egyptian gas to Israel and supplied 40 percent of its needs in 2010.

DEBKAfile's Cairo sources report that Egypt's Oil Minister Abdallah Ghorab is taking advice from the ministry's legal advisers on ways to break the 2009 contract on order to halt gas deliveries to Israel.

This move is consistent with the policy of the military junta now ruling Egypt to distance themselves from Israel with all its ramifications. The Netanyahu government has not addressed this radical policy shift in the four months since Cairo ignored Israel's request to deny two Iranian freighters permission to sail through the  through the Suez Canal on Feb. 22 although the ships were laden with arms and could have been legally stopped.

Saturday, May 28, Cairo opened the Rafah crossing to the transit to Sinai of Gaza Strip persons – though not yet goods - without coordinating this step with Israel, although this violated the 2005 Egyptian-Israeli accords for the Gaza crossings to be manned with European monitors and supervised by Israel which were signed just before Israel completed its withdrawal from the Palestinian enclave.

An Egyptian passport control station which will be open daily catered to hundreds of Palestinians passing through on the first day.

Cairo chose the same day to cut off natural gas supplies to Israel in response to pressure from Gaza's Hamas rulers. The pipeline, built by EMG from El Arish in Sinai to Ashkelon at a cost of $460 million, was blow up near El Arish up twice this year by Hamas activists.
Officials in Cairo claimed that shutting EMG down is predicated by the corruption probe underway against the deposed Egyptian President Hosni Mubarak and his sons Gemal and Alaa who, say those officials, had confessed to taking a regular commission on Egyptian gas sales and sold it at below-market prices.

Egyptian General Petroleum Corporation, a stockholder in EMG, is to file for its liquidation and ask for information on the funds allegedly transferred to the Mubaraks. Those officials declined to say whether EMG faced charges.

Cairo sources reported that efforts had been stepped up to detain the Egyptian businessman Hussein Salem who was close to the ruling family and suspected by the Egyptian prosecutor general of managing transactions for lining their pockets including the gas deal with Israel. He is reported hiding in Switzerland or Israel. Interpol has not caught up with him. Salem is said to have sold his holdings as an EMG stockholder o Jewish-American financial interests, while continuing to act as the middleman between the Israeli and American group of investors and the Mubaraks.

Last week, DEBKAfile's sources report, Cairo informed Israel that although the damage caused the gas pipeline by the April 27 explosion had been repaired, deliveries would not resume because EMG had refused to renegotiate prices with the Egyptian suppliers.
EMG accuses Cairo of breaking an international contract to maintain the current price level until 2013. The Egyptian side replies that investigations against the former president provide grounds for renegotiating the contracts immediately and adjusting prices sharply upward.
Cairo may be using the EMG liquidation threat and a total halt on gas supplies to Israel as leverage for getting a better price for Egyptian gas.

However, DEBKAfile's sources report that, as the affair drags on and meshes with the probes against the Mubaraks, the military junta appears to be maneuvering itself into a corner from which it cannot avoid sustaining the stoppage as an integral part of its campaign to prove to the Egyptian street how seriously it is fighting the former regime and its web of corruption.
Saturday, the Cairo court fined Hosni Mubarak the equivalent of $33 million for cutting off telephone and internet connections during protest rallies against his regime. That is only the first count of the massive case the prosecution is building up against the former president which includes opening fire on those protesters.

In Cairo's overheated climate, the decline of Egyptian-Israeli relations - or even pressure from Washington on behalf of American businessmen involved in the gas deal with Israel – are unlikely to influence Cairo's new rulers who are bent anyway on cooling Egypt's peace ties with Israel.

Although they pledged to honor all of Egypt's international contacts and treaties they are now backing out of two commitments – posting a third-nation party to monitor the Gaza crossings against terrorist traffic and the commercial gas transaction with Israel.