Odd bed-fellows as Sinai instability puts old deals in doubt

The opportunity to update the Camp David Accords, and stabilise an important corner of the world, should not be lost.

Although Israel and its two Islamist-led neighbours, Egypt and Hamas's Gaza, hate to admit it, something remarkable is happening since the militant attack in Sinai this month. Former enemies are making common cause against the region's Islamist militant groups to strengthen Egypt's hold over the peninsula.

While Egypt, Hamas and Israel have all waged separate battles against militant groups, they are now indirectly coordinating their efforts. Channelled through Egypt, cooperation includes border controls and extensive intelligence exchange.

There is no guarantee of success. The insurgency that has gained ground in Sinai feeds off decades of neglect and discrimination, as well as the more recent collapse of Egypt's security regime. Economic, political and military forces from Gaza to the Arabian Peninsula have rushed into the vacuum. Anti-government forces have had two years to build up their arsenals and know-how in preparation for a showdown. Militants patrolling the traffic in Sheikh Zuwayd, a border town, the night after the Sinai attack were wearing Afghan dress.

In addition to the support of its neighbours, Egypt has several advantages. President Mohammed Morsi's election has helped to secure greater popular buy-in for the central authority. Mr Morsi's party, the Muslim Brotherhood-related Freedom and Justice Party, won the elections in North Sinai, the insurgency's heartland, as elsewhere in Egypt, and many are as anxious as the government for a restoration of security.

Early government promises to end anti-Bedouin discrimination and level some of the province's starkest inequalities have been welcomed with interest. In a few weeks, Mr Morsi and his government have had greater visibility in the province than Hosni Mubarak had in 30 years.

But if Egypt is truly to tackle the Sinai insurgency, it must address the economic drivers. However great the readiness to negotiate a new social compact with Sinai's Bedouin, the government's financial crisis has left it ill-equipped to fund development, or to compete with the informal tunnel economy spawned by Israel and Egypt's efforts to quarantine Hamas-led Gaza. For five years the Gaza siege has empowered tunnel smugglers.

More threatening to state control than the munitions and militants, the tunnel traffic is the soft power of a billion-dollar trade that Bedouin smugglers now control from the Sinai Peninsula. As tourism to Sinai diminishes and Israel severs its own trans-Sinai smuggling routes with a 240-kilometre border wall, Bedouin dependence on the informal trade to Gaza has only grown.

Simply shutting the tunnels would only inflame tensions with the Bedouin and desperation in Gaza. Instead, Egypt and Israel should ensure that the trade is channelled through state rather than non-state hands, and formally reopen their borders. They should finally implement plans long on the drawing board for a free-trade zone between Gaza and Egypt, and ensure that the crossings - not the tunnels - are key to realising Gaza's economic potential.

Formalising economic ties with Gaza will require security as well as economic arrangements. The tunnels should be shut down, something Hamas has committed to do once the crossings are open, and a regulatory authority established to guard against illicit traffic. More broadly, normal access and movement will require all sides to suspend hostilities.

Since Israel's 2008-9 winter offensive against Gaza, Hamas has maintained a de facto non-aggression arrangement with Israel. After the Sinai attack, Hamas leaders promised to prevent Egypt from being used as a backdoor to attack Israel, thereby extending the informal ceasefire to Sinai as well. Some Gazans see a potential for including Gaza, tacitly or otherwise, in the security provisions of the Israeli-Egyptian accords governing Sinai, with its foreign monitoring force to boot. After the Sinai attack, the prospect no longer seems quite so far-fetched.

Updating the Camp David Accords is long overdue. The agreements were signed 30 years ago when Sinai was largely an empty buffer, and there were only two powers that mattered. Today it is no longer a no-man's land. It has a vibrant population attracted by tourism, mineral wealth and transcontinental trade routes.

Since Israel's withdrawal from Gaza, Sinai also has a third force on its borders, Hamas. If Camp David is to hold, it should be relevant to the prevailing circumstances, not those from three decades ago. That requires bringing both Sinai's population and Hamas into the fold.

The alternative - a struggle between old security forces seeking to resurrect the status quo by quarantining and fighting new movements seeking a place in the existing order - is a recipe for more mayhem. Bedouin, Gazans and a broad array of Islamists would probably revive their alliance against the Israeli and Egyptian security establishments. The US-led monitoring force in Sinai would probably come under greater attack and leave, further eroding Camp David's architecture. Israel's cold peace with Egypt would degenerate further as its army finds itself sucked into counter-attacks. International shipping passing through the Suez Canal, the Mediterranean or the Straits of Tiran bordering the peninsula could be caught in the fray.

At a time when so much of the region is slipping into chaos, the opportunity to stabilise a strategic corner of it should not be lost.

Nicolas Pelham is the author of Sinai: the Buffer Erodes, a forthcoming report for Chatham House and the Norwegian Peacebuilding Resource Centre