Ha’aretz reports on the involvement of three Egyptians in the terrorist attack on Eilat, Israel, last week, based on a report in the Egyptian daily Al-Masry Al-Yaoum:

The report, based on a probe carried out by the Egyptian security forces, says that the three were members of an extremist Islamic group. One of them had escaped from an Egyptian prison during the revolution against Hosni Mubarak. . . .

Earlier in the week, Egypt’s Supreme Military Council, the junta running the country, met to discuss the killing of the five Egyptian security officers. Tuesday, Egypt’s foreign minister, Mohammed Kamel Amr, said that “at no point was there any intention on our part to recall our ambassador to Tel Aviv.” He added that the presence of Egypt’s ambassador in Israel serves national interests.

The Egyptian foreign minister’s statements suggest a wish to return to normalcy in relations with Israel, and the demand for an apology [from Israel for killing Egyptian soldiers and policemen in a counterstrike] has been sidelined for the time being. In Cairo the expression of sympathy by Defense Minister Ehud Barak was perceived as a step in the right direction.

Despite protests in Cairo, it is clear there is an awareness in Egypt of the possibility that some soldiers serving near the area of the attack had been involved in the shooting at Israelis.

Egyptian intelligence is also aware of cooperation between members of the Popular Resistance Committees in the Gaza Strip with Islamist activists operating in the Sinai desert.

This is troubling news, if in fact the report is accurate. Jonathan Schanzer of the Foundation for the Defense of Democracies tells me that “while this story must be verified, it should be taken seriously.” He observes, “The development itself should be viewed as very dangerous. The Egypt-Israel border could become a dangerous place. Both al-Qaeda and Hamas would like nothing more than to foment violence that imperils the fragile peace of three decades between the two countries.” It is not clear that Egypt post-Mubarak has found a way, as Schanzer puts it, “ to temper their strong populist impulses in this volatile region.”

A Middle East hand is likewise troubled by what he calls “a genuine Sinai problem.” He explains: “The Egyptian Army is concentrating on Alexandria, Cairo, and other cities. It has largely lost control of Sinai, where the old combination of Bedouin gangs (smuggling has long been just about their only form of economic activity) and Hamas smugglers is now being joined by other terrorist groups. It isn’t the border but all of Sinai that is the problem.” He suggests, “For Israel, one remedy is clearly to build a fence, just as they did to stop West Bank terrorists.”

Managing the relationship with Egypt is a tricky task. Dore Gold, former Israeli ambassador to the United Nations, warned about the potential co-operation between Egyptian and Palestinian terror groups. He e-mailed me:

Even before the August 18 attack on Southern Israel there was a huge clash in the Sinai town of al-Arish on July 29, between dozens of masked men carrying Islamist banners and police, that left five dead. According to al-Ahram (July 30) of the fifteen men arrested in that incident, ten were Palestinians. Earlier this year, Egypt’s former Interior Minister charged that Jaish al-Islam (Army of Islam), a Palestinian splinter group that broke off from the Popular Resistance Committees and which fully identifies with al-Qaeda, was becoming active in more attacks in the heart of Egypt. He specifically said that Jaish al-Islam was behind the attack on a Coptic church in Alexandria this past New Year’s Eve that left roughly twenty-five Egyptian Christians dead. In short, Egyptian and Palestinian Islamists seem to be increasingly integrated in various operations against both Israeli and Egyptian targets.

It is in the interests of the military leaders in Egypt and the Israelis to tamp down on violence and to preserve the “cold peace” on Israel’s southern border. However, the latest incident raises the question of whether Egypt has the will and the ability to keep its end of the bargain.