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Source: http://www.washingtoninstitute.org/templateC05.php?CID=3322
Reviewing Egypt's Gains from Its Peace Treaty with Israel
(Washington Institute for Near East Policy) David Makovsky - The Egyptian revolution has caused much speculation on the future of the country's peace treaty and bilateral ties with Israel. Ayman Nour, a prominent democratic activist, has called for renegotiation of the 1978 Camp David Accords, while several Muslim Brotherhood officials have declared that the treaty should be abrogated outright. In evaluating the future of Egyptian-Israeli peace, it is important to review how Egypt has benefited from the treaty over the past three decades: The 1973 war, one of several Egyptian conflicts with Israel stretching back to 1948, resulted in the deaths of approximately 8,000 Egyptians and 2,700 Israelis. No such conflicts have erupted since the 1979 treaty. Peace has earned Egypt $69 billion in U.S. military and economic aid since 1979. Cairo has been able to sharply reduce its military budget and reallocate funds to economic development projects. Egypt's military expenditures consumed approximately 2% of its gross national product in 2009, compared to more than 20% in 1976. Peace has facilitated a far-reaching relationship between the U.S. and Egyptian militaries, enabling Egypt to replace outdated Soviet hardware. One-third of Egyptian exports to the U.S. come from Qualifying Industrial Zones (QIZ) set up after 2004, which require that the exported goods include a certain percentage of Israeli inputs. Today, Egypt's QIZs employ more than 120,000 Egyptians and export $763 million worth of goods to the U.S. per year. Egypt would face astronomical costs if it abrogated the peace treaty with Israel. Its military budget would swell at the expense of economic development, and it would have to forego $1.5 billion in U.S. military and economic aid. Renouncing the treaty would also cripple the Egyptian armed forces' military ties with the U.S. Still, Egyptian-Israeli bilateral relations are likely to come under unprecedented pressure, which may involve demands for militarization of the Sinai, populist calls for suspension of gas sales to Israel, and a change in policy toward Gaza.