As the world continues to be transfixed by the political soap opera unfolding in Egypt, perhaps none in the region have looked on more closely than the Israelis and Palestinians. While there is much that divides the Israeli and Palestinian leaderships, they share an enormous stake in the shape of Egypt’s future as well as a growing unease about much of what they have seen so far.

For Israeli officials, the toppling of Hosni Mubarak has led to the rise of Islamist forces hostile to Israel and an increasing security vacuum along its southern border, which casts doubt on the long-term durability of the 1979 Egyptian-Israeli peace treaty. The fall of Mubarak and the rise of the Muslim Brotherhood is equally troublesome for Palestinian officials in Ramallah, as it eliminates their most powerful Arab ally and emboldens their Hamas rivals in Gaza (Hamas being an off-shoot of the Brotherhood). The election of the Muslim Brotherhood’s Mohammed Morsi to be the first civilian president since the formation of the Egyptian republic sixty years ago has only intensified anxiety in Tel Aviv and Ramallah.

Though it is too early to say exactly what shape Egypt’s foreign policy will take, we are unlikely to see any time soon either a continuation of the accommodationist policies of Mubarak or a radical shift in Egypt’s dealings with Israel and the Palestinians. Deeper changes in Egypt’s regional posture are likely over the long-term but will depend on a host of internal and external factors, including the relative success of political and economic reforms currently underway, trends in U.S.-Egyptian ties, and developments on the Israeli-Palestinian front and other regional dynamics. Despite the inevitable cooling in Egyptian-Israeli and U.S.-Egyptian ties, however, the period ahead may not be all doom and gloom in terms of Arab-Israeli peace, provided that Israel and the United States can recognize and capitalize on an existing but narrow window before it closes.

Foreign Policy Grievances

The virtual absence of anti-Israeli and anti-American slogans throughout the eighteen-day uprising in Tahrir Square is often cited reassuringly as evidence that the Egyptian revolution was not about Israel or the United States. Such assertions are not entirely accurate, though. While popular rebellions are seldom propelled by foreign policy concerns, as opposed to domestic grievances, the Egyptian uprising and the ensuing transition cannot be de-linked entirely from Israel and the United States. The changes associated with Egypt’s ongoing political transition will have a profound impact on Egypt’s relations with both countries in the years to come.

Support for Palestine and antagonism toward Israel are deeply ingrained in Egyptian political culture and national consciousness. An issue that transcends partisan politics and commands broad national consensus across all ideological and demographic lines, the Palestinian cause is as much a matter of identity as it is a question of public policy. Beyond sympathy for the plight of Palestinians, hostility toward Israel is also fueled by Egypt’s own past sacrifices in blood and treasure; four wars with Israel led to tens of thousands of Egyptian deaths and billions of dollars in destruction. Even after three decades of formal peace, most Egyptians still view Israel as a threat to national security and as an enemy, not only of Palestinians but of all Arabs.

The Mubarak regime did little to combat such sentiment. In fact, it frequently stoked populist antipathy toward Israel as a way to boost its own domestic legitimacy. In an environment where most forms of political expression were either severely curtailed or banned altogether, the regime generally tolerated anti-Israel and pro-Palestine activities, so long as they steered clear of criticism of the regime itself. This balancing act became increasingly untenable during the 2000s and the so-called “war on terror.”

In the decade after the September 11, 2001, attacks, Mubarak made Egypt a cornerstone of two key pillars of American policy, U.S. counterterrorism efforts and the Arab-Israeli peace process—which by the close of the decade had become virtually interchangeable. Trilateral security coordination and intelligence sharing reached unprecedented levels following the victory of Hamas in the Palestinian Authority election in 2006. By making himself an indispensable asset to the United States and Israel, however, Mubarak also fueled perceptions that his regime was little more than an extension of American and Israeli policy.

Israel’s crackdown against the Palestinian uprising (the Al-Aqsa Intifada) that began in September 2000 and the 2003 U.S.-led invasion of Iraq galvanized Egyptians and other Arabs like rarely before. The proliferation of Palestine solidarity initiatives, anti-normalization and boycott campaigns against Israel, and mass demonstrations against Israel and the United States steadily increased into the latter half of the decade in response to the 2006 Lebanon war, the Gaza blockade, and the 2009 Gaza war (Operation Cast Lead). This decade’s events served as a training ground and inspiration for proto-revolutionary groups like the Kifaya! (Enough!) movement and the April 6 Youth Movement.

Thus, somewhat ironically, Palestine activism became a sort of incubator for the protest movement that eventually led to the January 25, 2011, uprising. On one level, Egyptians’ identification with Palestinian subjugation (and struggle for eventual liberation) was a vicarious expression of their own yearning for freedom. At the same time, pro-Palestinian activism along with anti-Israeli and anti-American sentiment in Egypt became surrogates for anti-regime politics—epitomizing the ever-widening divide between the ruler and the ruled.

Instead of working to level the playing field on behalf of the Palestinians in the U.S.-led peace process, as most Egyptians would have preferred, the U.S. expected Mubarak to further pressure the beleaguered Palestinian leadership into participating in (failed) negotiations and to refrain from reconciling with Hamas. Of all the issues on the Israeli-Palestinian scene, however, none was more universally unpopular or more damaging to Mubarak’s domestic standing than Gaza, which became a rallying cry for established opposition groups like the Muslim Brotherhood as well as the newly formed protest movements. By closing off the Egyptian side of the border to Gazan trade, civilian traffic, and humanitarian access, the Mubarak regime became complicit in the Israeli-imposed blockade of the Gaza Strip and the 2009 Gaza war.

Egypt’s historic peace treaty with Israel did more than just reconcile two former foes; it consummated Egypt’s strategic reorientation toward the United States. While Anwar Sadat may have signed the historic treaty, it was Mubarak who implemented it, preserved it, and made it a pillar of Egypt’s strategic posture in the region. Officially, Mubarak maintained a cool, arm’s length, and occasionally confrontational stance toward Israel, while quietly deepening security cooperation with Washington and Tel Aviv at all levels. Thus, despite the notoriously cold peace kept by Mubarak, Israeli leaders considered him a strategic prize.

Fairly or unfairly, it is impossible to separate Mubarak’s growing unpopularity and waning domestic legitimacy from his relationships with the United States and with Israel. On one hand, much of Mubarak’s behavior in the region was seen as being at the behest of both countries. And on the other hand, the invaluable political, diplomatic, and especially military support provided by the United States (largely in response to Israel’s needs) played no small role in sustaining the Egyptian dictatorship.

Israel, Palestine, and the ‘New’ Egypt

Pro-Palestinian and anti-Israel sentiment has continued to animate Egyptian politics after the uprising. Anti-Israel protests are commonplace and Tahrir demonstrations regularly feature Palestinian flags and other symbols. Israel became a convenient punching bag for populist politicians from across the ideological spectrum, while Egyptian presidential candidates competed over who was more pro-Palestinian.

Two events stand out as particularly noteworthy. The storming of the Israeli embassy in Cairo on September 9, 2011, by Egyptian protesters angry at the killing of Egyptian border guards during an Israeli operation against militants in the Sinai weeks earlier marked a turning point for all sides. The embassy attack, which prompted an emergency evacuation of the ambassador and his staff out of the country, was a signal to Israelis, Palestinians, and Americans alike that change was coming. The Muslim Brotherhood and other political parties condemned the embassy attack as an act of vigilantism unbecoming of a civilized state rather than for the sentiment behind it.

Then, in March 2012, Egypt’s first freely elected parliament voted unanimously to expel Israel’s ambassador in Cairo, a rare show of consensus in Egypt’s notoriously fractious politics and a clear signal as to where Egypt’s political class stood vis-à-vis Israel. In doing so, parliamentarians also approved a text declaring, “Revolutionary Egypt will never be a friend, partner, or ally of the Zionist entity, which we consider to be the number one enemy of Egypt and the Arab nation,” and further urging the government, “to review all its relations and accords with that enemy.” Although purely symbolic, given the parliament’s lack of authority in diplomatic matters, the vote could not have been reassuring for Israel.

Despite the harsher tone coming out of Cairo, very little has actually changed in Egyptian policy toward Israel and the Palestinians since Mubarak’s ejection in February 2011. The country’s interim rulers, the Supreme Council for the Armed Forces (SCAF), have said they will uphold Egypt’s international obligations, including the treaty with Israel—as have most Egyptian political parties, both secular and Islamist. Egypt also continues to support the Israeli-Palestinian peace process (such as it is) and a two-state settlement of the conflict, and remains the primary backer of the Ramallah-based Palestinian Authority.

The only new developments to emerge since Mubarak’s removal have been Egypt’s brokering of a Fatah-Hamas reconciliation agreement in April 2011 and the growing security vacuum in the Sinai, neither of which is irreversible. Even the highly unpopular closure of Gaza, despite some changes in the management of the Rafah border crossing, is largely the same as it was under Mubarak. More crucially, Egyptian-Israeli security coordination has continued throughout Egypt’s tumultuous political transition and despite the heightened tensions on both sides of the border.

In fact, Egypt’s overall foreign policy orientation remains remarkably similar to what it was under Mubarak, including Egypt’s close strategic partnership with the United States and its cooperation with Saudi Arabia and other Gulf states (despite the latter’s open hostility toward the Egyptian uprising). This should come as no surprise given that the military in general and the intelligence apparatus in particular have continued to control Egyptian foreign and national security policy. Islamists have had little say in governing the country during the transition much less in formulating foreign policy.

Perhaps the most fundamental change to come out of the Egyptian uprising—and which will be among the most difficult to roll back—is the increased importance of public opinion, which is now a force in domestic politics and even policy-making like never before. The weight of public opinion was evident throughout the transition. In addition to the vote to expel the Israeli ambassador, for example, there were the populist positions adopted by the unelected government installed by SCAF such as the decision to turn down International Monetary Fund loans and the uproar over the release of American non-governmental organization workers. The attitudes of ordinary Egyptians are likely to have an even more pronounced impact on politicians now that they are accountable before their constituents.

Peace Treaty Inertia

The ascendancy of the Islamists, who now hold the presidency of the Arab world’s most important country, could result in a reorientation of foreign policy in due course. But there are three reasons to expect more continuity than change in Egypt’s foreign policy over the next several years, regardless of who holds the levers of power.

In the first place, Egyptians are simply too consumed with domestic issues to pursue an ambitious foreign policy agenda at this time. Despite the supposed handover of power to an elected president on June 30, the country’s turbulent transition is anything but complete. On the contrary, the election of a highly polarizing figure like Morsi and SCAF’s rather brazen attempts to hold on to power, suggest that the democratic transition is at best just beginning and at worst put off indefinitely.

Meanwhile, with the fate of the parliament and constitution-drafting process still largely up in the air, Egypt’s three-way power struggle between the military, the Islamists, and revolutionary forces is likely to continue for some time. This uncertainty and the continued potential for instability are exacerbated by the ever-present threat of popular unrest and an economy teetering dangerously close to collapse. As a result, foreign policy matters will continue to take a backseat to domestic issues such as the economy and security. Like many unfulfilled aspirations of the Egyptian revolution, Egypt’s re-emergence as a dynamic actor in the region and a leader of the Arab world will clearly have to wait.

The absence of major differences of opinion among Egyptians, whether at the popular or political levels, also favors continuity. Despite the fractious nature of Egyptian politics, there is a fairly broad consensus across social, political, and ideological lines on foreign policy matters in general and on Israel and Palestine in particular. Several recent polls also show that, while Egyptians are generally split over whether the Camp David peace process was positive or negative for Egypt, there remains support among the main political forces—including Islamists, nationalists, leftists, and revolutionaries—for maintaining the treaty, if with greater reciprocity and balance. The main changes Egyptians would like to see in the relationship have to do with security arrangements in the Sinai, natural gas sales to Israel, and Israel’s overall treatment of Palestinians.

In the end, the most important determinant of Egyptian policy toward Israel/Palestine in the short- to medium-term remains the role of Egypt’s military. SCAF’s muscular role in politics will persist for some time. In addition to preserving their vast economic interests, the ruling generals have repeatedly sought immunity from government oversight, budgetary scrutiny, and even prosecution, while continuing to control key government functions. Whether or not such exemptions are ultimately codified in the constitution, SCAF has made it clear—most recently in its unilateral “constitutional addendum”—that it seeks to retain control over areas that bear directly or indirectly on Egypt’s foreign policy, including defense, national security, and intelligence, as well as other sovereignty portfolios such as the justice and interior ministries. It is this fact more than any other that has prevented a full-blown panic on the part of the Israelis, even after the election of a Muslim Brotherhood leader to the presidency.

Yes to Camp David, But with Changes

Egyptian policy toward Israel and Palestine in the coming years is likely to focus on three points. First, Egypt will maintain the peace treaty with Israel but will eventually seek certain adjustments—something most Egyptian political parties, secular and Islamist, have already called for. The most likely candidate in this regard relates to the status of the Sinai, a matter of intense concern for Israelis and Egyptians alike. Camp David-imposed restrictions on the ability of Egyptian forces to deploy in the Sinai are seen across the board—by SCAF, Islamists, and secular political groups alike—as an affront to Egyptian sovereignty and national pride. At the same time, there is a longstanding fear that Israel seeks to permanently push Gaza, demographically and politically, onto Egypt. For their part, Israelis fear an increasingly lawless Sinai is becoming a haven for jihadi extremists on its southern flank and for weapons’ smuggling into Hamas-controlled Gaza.

Egyptian authorities acknowledge the security problems in Sinai and have recently begun to crack down on jihadi militants there, but are equally worried about the prospect of unilateral Israeli actions in the Sinai. Despite their shared concerns regarding the region, Israeli leaders are disinclined to consider changes to the peace treaty for fear of establishing a precedent. Even so, renegotiating aspects of the treaty could be in Israel’s long-term interests, not only for addressing a key security concern but, perhaps more important, by making Egypt’s current rulers—including previously rejectionist Islamists—direct stakeholders in the treaty.

Second, Egyptian policy is likely to focus on reconciliation of Palestinian factions rather than on the ‘peace process.’ To the extent that Egypt does engage in Israeli-Palestinian affairs it will be limited to areas where its own national security is directly affected. Thus, we are likely to see less emphasis on negotiations with Israel and more emphasis on preventing Israeli-Palestinian violence and on promoting internal Palestinian reconciliation. There are practical as well as political reasons for this. The palpable absence of any meaningful peace negotiations has already led to a focus on crisis-prevention over conflict-resolution by many of the parties concerned. For their part, Egyptians will be even less inclined to deal with distractions much less crises on their eastern borders.

Even the Muslim Brotherhood, which may find itself facing new pressures from both the military and angry revolutionaries, will find it hard to do more than pay lip service to the cause of Palestine—let alone that of Hamas. Although Hamas remains the biggest beneficiary of the Brotherhood’s success, its current sense of triumphalism may be short-lived. A protracted and difficult transition in Cairo will leave Egyptians in general and the Brotherhood in particular more inclined to keep things quiet along its eastern border. More important, while a further easing of the Gaza closure is certainly possible, a full-blown opening of the border as Hamas officials have been calling for is probably not in the offing.

The Brotherhood has already signaled a move in this direction. Despite organic ties with Hamas, it has adopted a relatively neutral position regarding the latter’s feud with Fatah during the transition. This may be due to a desire to avoid confrontation with SCAF, as well as with the United States, or may be part of a calculated attempt to establish its credibility as a future interlocutor. The Brotherhood’s neutrality comes at a time when the military regime, specifically Egyptian intelligence, is playing a more evenhanded (or at least less overtly pro-Fatah) role in reconciling the two Palestinian factions. In his inaugural speech, President Morsi pledged not only to support Palestinian rights but also made clear that Palestinian national reconciliation was a prerequisite for the Palestinian people to recover its territory and sovereignty.

Calm in Gaza requires a political arrangement on both the Hamas-Israel and the Hamas-Fatah tracks. The prospect of an Egyptian-mediated reconciliation between Hamas and Fatah does not sit well with Israel, which considers Hamas a terrorist group and opposes its inclusion in Palestinian governance. On the other hand, Israel could stand to benefit from the fact that Egypt is keen on preventing war and containing conflicts along its eastern border. This was evident in Egypt’s brokering of the March 2012 Gaza truce, which ended four days of fighting between Israel and Palestinian militants, as well as the deal that ended a potentially explosive mass hunger strike by Palestinian prisoners in May 2012.

The fact that the Brotherhood may be inclined to push Hamas to reconcile with Fatah and maintain a ceasefire with Israel does not mean Hamas will necessarily comply. While the Brotherhood clearly has influence over its Islamist allies in Palestine, perhaps even inordinate sway, it is not in a position to issue orders to Hamas leaders either inside or outside Gaza. The willingness of Hamas to go along with Egyptian preferences, however, may depend on what Morsi and the Brotherhood can deliver for Hamas politically. Since a total opening of the border is unlikely at this time, Hamas may seek the assistance of Egyptian Islamists.

A third area of focus related to the Israeli-Palestinian conflict involves Egyptian relations with the United States. Although the alliance will remain intact, tensions that began well before the 2011 uprising have accelerated throughout the transition. Egyptian efforts to push for Palestinian unity or changes in the peace treaty with Israel could strain relations even further. Either way, security coordination with both the United States and Israel is likely to continue in the coming years.

In the meantime, the delicate balance the United States now maintains with Egypt’s military rulers on the one hand and its elected civilian (and thus far mainly Islamist) officials on the other is likely to grow even more complicated and uncomfortable in the years to come. Not only must each side contend with domestic constituencies that remain staunchly opposed to any U.S.-Islamist dialogue, they must also tread lightly so as not to alienate political actors in both countries. This will be particularly difficult for the U.S. administration, which must strike a balance not only between the military and an Islamist president but between these two power centers and more secular, liberal groups as well.

Looking Forward

Over the long term, we should expect to see much deeper changes in Egyptian dealings with Israel and the Palestinians, though it will take time for the gap between public sentiment and government policy to narrow. This assumes, of course, that some kind of democratic transition is still occurring—which is by no means assured, especially given recent developments, but neither is it entirely precluded. In any event, to the extent that such a shift does occur, it will most likely involve movement from both ends toward the middle. In other words, we can expect to see gradual changes in public opinion and government policy simultaneously rather than sudden, dramatic shifts in one or the other.

Both the Muslim Brotherhood and the ultra-conservative Salafis have shown a capacity for compromise, particularly the former. In fact, the Brotherhood’s discourse with regard to Israel and the Palestinians underwent a major transformation during the transition—even before it won a majority in the parliament. The apparent overhaul of the Brotherhood’s electoral program from 2010 to 2011 is especially striking. Whereas both programs contain the standard references to the “Zionist enemy,” the 2011 program of its newly created Freedom and Justice Party (FJP) is considerably more tame, dropping the most incendiary references to Israel, such as the “rapists of the Al-Aqsa Mosque,” and eliminating the section on the “Palestinian cause” altogether. Even the anti-blockade language was heavily watered down, to the point that it no longer even mentions Gaza by name.

Whether such changes are indicative of a genuine political evolution or are merely cosmetic and tactical, only time will tell. More importantly, the evolution of Egyptian policy toward Israel/Palestine, over say the next five to twenty years, will depend on numerous factors, including the results of Egypt’s economic reform.

The extent to which the military remains involved in the political sphere, and the manner in which it may eventually be eased out, will certainly affect Egypt’s long-term posture toward Israel/Palestine. Having already witnessed a major set-back in the transition to democratic civilian rule, the prospects for pushing the military from politics in the near future are not promising, though not impossible further down the road. While continued military rule may seem good for Israel in the short-term, it is ultimately unsustainable. Although a civilian-led government will undoubtedly reflect anti-Israel populism as a factor, it is also more likely to pursue a rational course of action.

The success or failure of Egypt’s economic recovery will also affect future relations with Israel and Palestine, which of course is also bound up with its own interminable transition. Economic improvement will afford Egypt the space to play a more active diplomatic role in the region and beyond, and could reduce its overall dependence on U.S./Western and Saudi/Gulf assistance. On the other hand, continued economic hardship will prolong Egypt’s diplomatic stagnation and perhaps further fan the flames of populism and xenophobia.

Egypt’s posture in regard to Israel/Palestine will of course also depend on the future of U.S.-Egypt relations. Despite recent strains, and growing calls in both Washington and Cairo for phasing out the strategic partnership, the alliance is likely to continue for the foreseeable future. Over time, however, irrespective of who rules Egypt or which party comes to power, Egyptian foreign policy is likely to become more independent and more assertive, making some sort of parting of the ways inevitable. In which case, it would be reasonable to expect the military-military aspect of U.S.-Egyptian ties to be the last to go.

The political evolution of the Muslim Brotherhood (or any successor movements or parties that may emerge from it) and other Islamist forces, including in the diplomatic realm, is likely to continue over the long term. However, this will largely depend on the success or failure of Egypt’s democratic experiment as well as Western and Israeli responses to Islamist success. Since democratic backsliding would likely have a disproportionate effect on Islamists (as with the recent dissolution of parliament), a return to autocracy, or a prolonging of military rule, is likely to radicalize them on a greater scale than other political trends. Likewise, a resumption of American hostility to Islamism of the kind witnessed in the previous decade, or an escalation in Israeli rhetoric, such as Prime Minister Benjamin Netanyahu’s references to Islamism as the “insatiable crocodile,” can only fuel anti-American and anti-Israeli sentiment.

Finally, developments on the Israeli-Palestinian front will also help shape Egypt’s outlook on the matter. The continued absence of progress toward a comprehensive resolution of the conflict will likely harden Egyptian antipathy and distrust at the public and political levels toward the United States and Israel. Moreover, a resumption of large-scale Israeli-Palestinian violence, particularly if it involves heavy Palestinian casualties, will inflame public sentiment and put pressure on Egyptian politicians to respond. Such a scenario might even re-entrench military rule (perhaps with U.S./Western acquiescence), undercut economic recovery, and radicalize large segments of the Egyptian political class. While even the most just Israeli-Palestinian peace agreement will not compel Egyptians to love Israel or Israelis, it will help to stem the growing reservoir of hostility and even hatred as well as restore Egyptian trust in the United States.

Opportunity for Peace?

The Israeli-Palestinian peace process had stagnated well before the dramatic Arab Spring. With the exception of a brief period in the final year of the George W. Bush administration, no serious negotiations have taken place between the parties throughout the preceding decade. The loss of Mubarak and the rapid rise of Islamists in Egypt and elsewhere have made a negotiated settlement less appealing to Netanyahu and more urgent for Palestinian President Mahmoud Abbas.

While an Islamist president in Egypt, a hardline government in Israel, and a divided Palestinian leadership may not seem like the ingredients for a diplomatic breakthrough, particularly against the backdrop of declining American influence and generalized turmoil in the region, the prognosis need not be completely negative. This notion is not based on an optimistic reading of present realities, but on a realistic view of future possibilities. Namely, if from an Israeli point of view the region looks bad today, there is no reason to believe it will look any better in the future, even when things settle down. Such a reading should be an incentive to more seriously explore the possibilities that exist.

Although Morsi’s election hardly represents a mandate for the Islamic project, Islamists are likely to remain key players in Egyptian politics for some time. Regardless of his Islamist ideology, the current president’s views on foreign policy, and particularly on Israel and Palestine, are squarely with those of mainstream Egyptian society. In any case, regardless of who is in power (again, assuming a democratic transition has not been foreclosed), Egyptian policies are likely to become more responsive to public opinion, not less. Likewise, as Egypt stabilizes politically and economically over time, its involvement in foreign engagements is likely to increase rather than decrease, as will the eventual easing of the military from its political role. Nor do trends elsewhere in the region favor Israeli delays in achieving a peaceful settlement with the Palestinians. Any future political configuration in a post-Assad Syria, for example, is likely to include a strong contingent from the Syrian Muslim Brotherhood, already a major force within the country’s opposition movement.

None of this is to say that a Palestinian-Israeli breakthrough is imminent or even likely, only that initiating a credible peace process between Palestinians and Israelis is possible even under present conditions. Any serious initiative on this front, however, would require substantial political will and investment on the part of the United States as well as a modicum of stability in Egypt’s transition. Although neither of these conditions currently exist, it is not inconceivable that one or both could come about by the end of 2012 or early 2013.

At a minimum, the current hiatus presents an opportunity for the United States, in conjunction with its international and regional partners, to re-think a deeply flawed and severely outdated approach to Arab-Israeli peacemaking. This will require a willingness to go beyond failed mechanisms like reliance on the Quartet—a mediation bloc consisting of the U.S., the European Union, Russia, and the UN—and a recognition that regional players, including Egypt, have a leading rather than supporting role to play. More importantly, it will also require the United States and Israel to adapt to new realities not just in Egypt but in Palestine as well. The notion that a meaningful peace deal could be reached in the absence of Palestinian unity was always questionable. In the wake of the Arab Spring, however, it is totally untenable.