What peace treaty?

The power in Egypt still lies with the military junta, which is composed from remnants of the Mubarak regime. This government has initiated a crisis with U.S. over some American workers and funding for NGOs.

Egyptian judges have referred 16 Americans and 27 others linked to NGOs for trial, accusing them of using foreign funds to encourage disruptive protests. Among the targeted NGOs whose assets and funds have been seized are the U.S. government-funded International Republican Institute and National Democratic Institute.

Meanwhile, the Muslim Brotherhood that has won 3/4 or the lower Parliament want to show its enmity to the U.S. as well. MB lawmaker Essam el-Erian told the pan-Arabic al-Hayat newspaper that any reduction in U.S. aid to Egypt  would violate the U.S.-brokered 1979 peace agreement with Israel. In other words, while the military junta has unlawfully detained Americans the Muslim Brotherhood has the audacity to blackmail the U.S.!

Since the ouster of Mubarak, Egypt has become the patron of Hamas (taking over from Shiite Iran) and has treated Israel as an enemy. The military junta, the Muslim Brotherhood, indeed the majority of Egyptians, want to 'reevaluate' the the peace treaty. For all practical purposes the treaty is already null and void. The irony is that there's little to gain, but a paper promise.

Last Sunday a great Mideast expert Barry Rubin, who is director of the Global Research in International Affairs Center in Israel, wrote in a column explaining the Egyptian brinkmanship:
“This is only the beginning of the anti-American populism/nationalism/Islamism we are going to be seeing in Egypt from now on.”  Rubin also predicted: "The Obama administration’s bluff is already being called. If trials go forward — and some compromise might be found to save face for both sides — will the Obama administration cut off aid or is it bluffing and will back down? I’ll bet on the latter, and that will send a real message to every radical in the region."

It took only a day for this prediction to come true. Obama's budget released the next day (Monday, February 13th) proposed continuation of $1.3 billion in aid to Egypt, despite outrageous behavior of its rulers.

I wrote about a week ago that Egypt is following in the footsteps of Iran. Needless to say, I agree with Barry Rubin's projection for the trajectory of Egypt, and his assessment of the dire consequences. I don't think the Obama administration even attempted to bluff denying U.S. aid to Egypt. There's a lot of grumbling in Congress, and the U.S. State Department made some threatening noises about the funding, but it never rose to a high level that would prove the Obama administration even attempted to bluff. That would reveal that not everything is going well with the Arab spring.

Yesterday I wrote about the costs of Obama's appeasement for the region:

What can the Obama administration do, facing a failure of its policy in Egypt? Simple - the White House refuses to acknowledge the reality.

The political costs of acknowledging the utter failure of his policies prevent Obama even from bluffing to influence Egypt's behavior. He will gladly pay Egypt to avoid acknowledging the reality that his foreign policy has produce another Iran, and that Egypt is already not honoring its peace agreement with Israel.