In the coming days, the Israeli government is expected to ratify the largest export agreement in its history: a $35 billion expansion of natural-gas supplies to Egypt from the Leviathan reservoir. Framed by proponents in Israel and the United States as a masterstroke of regional integration, the deal is predicated on a neoliberal theory of “instrumental interdependence”—the belief that binding Cairo’s economic survival to Israeli resources will purchase stability on the southern border.
However, an analysis of the current geopolitical landscape suggests this policy is decoupled from reality. While the Israeli Ministry of Energy finalizes pipelines, the Ministry of Defense is grappling with a security vacuum in the Sinai that has allowed nearly 900 drone infiltration incidents in just three months. Simultaneously, the diplomatic veneer has cracked, with Egyptian President Abdel Fattah el-Sisi publicly labeling Israel an “enemy” at the recent Doha summit. By rushing to approve this accord without stringent security conditionality, Israel risks subsidizing a regime that is increasingly hostile in rhetoric and ineffective in border governance.
The urgency behind this deal is driven by Egypt’s acute energy crisis, not Israel’s economic necessity. The collapse of Egypt’s Zohr gas field—plagued by water infiltration and mismanagement—has turned a would-be energy hub into a desperate importer, forcing the el-Sisi regime to implement rolling blackouts that threaten domestic stability.
By rushing to approve this accord without stringent security conditionality, Israel risks subsidizing a regime that is increasingly hostile in rhetoric and ineffective in border governance.
From a risk-assessment perspective, Egypt represents a volatile counterparty. Despite recent credit upgrades, it remains deep in “junk” territory (B rating) and has a history of accumulating billions in arrears to international oil companies. The deal’s structure effectively imports Egypt’s sovereign risk into Israel’s fiscal planning. If Cairo defaults—or if political pressure forces another cutoff, as seen in 2012—Israel will be left with stranded assets and a budget hole, while Egypt will have already secured the energy lifeline needed to stabilize its grid.
The most glaring flaw in the current policy is the compartmentalization of economics and security. While American diplomats and Chevron executives lobby for the deal to counter Chinese influence and stabilize the region, the security architecture of the 1979 peace treaty is fraying.
The “drone highway” operating out of northern Sinai is not a minor tactical nuisance; it is a strategic threat. The industrial scale of these incursions—delivering high-grade weapons to terror factions in Judea and Samaria—indicates either a catastrophic failure of the Egyptian security apparatus or a tacit permissiveness. Furthermore, the dispute over the Philadelphi Corridor has exposed Cairo’s unwillingness to accept verified mechanisms to prevent Hamas’s rearmament.
For Israel to sign a $35 billion economic bailout while its security demands regarding the border remain unmet is a failure of statecraft. It signals that Israel is willing to function as a utility provider to a neighbor that permits its territory to serve as a launchpad for attrition warfare.
Energy Minister Eli Cohen’s refusal to sign the deal without guarantees for the domestic market is a necessary, albeit partial, corrective. His demand that Israeli consumers receive priority pricing and supply security is sound policy, particularly given the rising demand from the tech sector and population growth.
For Israel to sign a $35 billion economic bailout while its security demands regarding the border remain unmet is a failure of statecraft.
However, the “Cohen Doctrine” must be expanded beyond price. The approval of the Leviathan expansion should be contingent on verified security benchmarks. The deal must include snap-back clauses that allow Israel to suspend exports without penalty if the drone-smuggling continues or if the Philadelphi Corridor agreements are violated.
The transition between the Biden and Trump administrations has created a window of pressure, with Israeli Prime Minister Benjamin Netanyahu eager to present the deal as a diplomatic victory. Yet strategic patience is Israel’s most valuable asset. Egypt needs this gas to keep the lights on and the factories running. Israel does not need to sell it immediately to survive.
True policy realism requires acknowledging that economic integration cannot exist in a vacuum. If gas flows north to south, security must flow south to north. Until the Egyptian government demonstrates the will and capacity to secure the Sinai border and moderate its diplomatic posture, the Leviathan valve should remain a tool of leverage, not a gift of unconditional support. To do otherwise is to finance the very instability Israel seeks to prevent.
Published originally on December 11, 2025.
