Prime Minister Binyamin Netanyahu and Defense Minister Ehud Barak held intensive consultations Saturday, Aug. 20, on the sudden sharp downturn in relations with Egypt and ways to prevent its government going through with a decision announced earlier to recall its ambassador from Israel.
Netanyahu contacted the White House and Barak, US Secretary of State Hillary Clinton and Defense Secretary Leon Panetta. They replied that without an immediate Israeli apology to Cairo, there was no point in them interceding with Egyptian rulers to reverse their decision. The defense minister thereupon issued a public statement of Israeli regret for the deaths of Egyptian policemen in the course of a terrorist attack on the Israeli-Egyptian border.
He said he had ordered the IDF to investigate the incident and then conduct a joint probe with the Egyptian military to determine the circumstances of the incident. Israel attaches the highest importance to its peace accord with Egypt and its value for Middle East stability, Barak said.

By Saturday evening, Cairo had not responded to this statement or altered its decision to recall the ambassador.
In Cairo meanwhile the Israeli embassy was besieged for the second day by angry protesters demanding the ambassador's expulsion, while the Egyptian media carried hostile reports on relations with Israel.

Cairo announced that due to the strained ties, it was suspending talks with Israel on the resumption of gas supplies at revised prices.

Back now to DEBKAfile's first report on the episode earlier Saturday.

Egypt is to withdraw its ambassador to Israel to protest what it calls "breach of the peace treaty" over the deaths of five Egyptian security personnel. In its statement Saturday morning, Aug. 20, Cairo referred to an incident alleged to have occurred Thursday as Palestinian terrorists coming from Sinai attacked Israel's Eilat highway.
The cabinet emergency committee meeting in Cairo said: "Egypt will withdraw its ambassador to Israel until it receives an apology and the results of an official investigation into the killing of five Egyptian policemen near the border. Israel will be held responsible for political and legal implications of the incident which was a violation of the Camp David Treaty."

The second part of the Egyptian statement demanded an Israeli apology for the "hasty and regrettable statements about Egypt."

Israeli Defense Minister Ehud Barak at the scene of the terrorist attack commented that it reflected "the weakening of Egypt's hold in the Sinai and the broadening of activities by terror elements."

He thoughtlessly pointed at Egypt to redirect domestic criticism of the army for not adequately responding to an intelligence warning of the coming attack, which left eight Israelis dead and 40 injured.

The Cairo rejoinder: "Egypt will also take protective measures and strengthen security at the border with the necessary forces capable of deterring alleged infiltrators as well as responding to any activity by the Israeli military."

This statement contained a direct threat to set aside the decades-long peace treaty with Israel which mandates the demilitarization of Sinai as a buffer zone between the two countries.

Angry demonstrations outside the Israeli Embassy in Cairo and other towns were sparked Friday night by Barak's comment and the testimony of witnesses at the scene of the deadly multiple Palestinian attack alleging that Egyptian soldiers on the Sinai side of the border had aimed fire at Israeli targets and terrorists in Egyptian army uniform were seen near Egyptian military positions just across the unfenced border.

There were also reports that Egyptian soldiers were attacked and killed by masked men in Sinai, which is known to be infested with terrorists including al Qaeda.
But the Egyptian military rulers' step means that Cairo is suspending the Camp David peace treaty and will not consult Israel as mandated before transferring as many troops as it likes into Sinai until an Israeli investigation throws full light on the events that unfolded around Thursday's deadly terrorist attack.
DEBKAfile's Egyptian sources report that Cairo is planning to inject substantial military strength into the Sinai Peninsula in the coming hours, forcing Israel's army to confront the Egyptian army on its southwestern border for the first time in three decades.

This diplomatic misfortune is the direct consequence of a grave misjudgment by the Israeli military. Despite a timely and specific intelligence warning, the high command especially in the South failed to take seriously the possibility of a minor Palestinian terrorist group in Gaza, the Popular Resistance Committees, mounting what was the most sophisticated, coordinated terror operation Israel has ever suffered in its long experience of Palestinian violence.
The PRC did more than sow death on a major Israeli highway and disrupt life and traffic in the whole of its southern region. It has driven cracks in the Egyptian-Israeli peace which altered the face of the Middle East and held up for 32 years against attempts by most of the Arab world to overturn the epic Camp David treaty
In Cairo, Alexandria and Suez, the three Egyptian cities in the forefront of the revolution which toppled Hosni Mubarak, the Muslim Brotherhood organized anti-Israel rallies Friday and Saturday. The demonstrators shouted that Egyptian blood would not be spilled in vain and called for a strong reprisal.

The incident is fast becoming an issue in Egypt's presidential campaign among the Brothers and other contenders.
Israel's decision-makes missed the train badly on Thursday by failing to take one of two obvious courses:

1. Proposing directly to Egypt's rulers that if indeed Egyptian servicemen were hit inadvertently during the IDF operation to end the terrorist attack on its citizens, Israel apologized and would be willing to set up a joint panel with Egypt to probe the alleged incident and make sure there would be no recurrence.
2. Alternatively, Israel had every reason to be first to lodge a protest – both with Egypt and the United Nations - after 15-20 heavily armed Palestinian gunmen laid up for weeks in Egyptian Sinai carried out a series of deadly terrorist attacks on an Israeli road.

However, our sources report that in the first hours after the attack, the Israeli government and high command were too bewildered to think clearly and react rationally.

Now it is too late. Egypt's ruling generals are beyond heeding testimony, however credible, demonstrating that al Qaeda – not Israeli troops or helicopters – was responsible for the Egyptian deaths. Egged on by the Muslim Brotherhood, they have taken the first step on the road to revoking the historic Camp David peace accords.

They can only be turned back if the United States intercedes and urges them to think again and abandon this radical and hazardous course.