In firing Egypt’s chief of intelligence for his alleged failings in Sinai, President Mohamed Morsi sacked a general who has won high marks from U.S., Israeli and European intelligence officials — and who, ironically, has been one of the Egyptians pushing for a crackdown on the growing militant presence in Sinai.

This week’s shuffle is bound to raise concerns among U.S. and Israeli officials about the security policies of Morsi’s government and its seemingly mutual self-protection pact with the Egyptian generals who still hold considerable power through the Supreme Council of the Armed Forces, or SCAF.

Morsi and the military appear to have concluded that the fired intelligence chief, Gen. Murad Muwafi, was a convenient scapegoat after the attack Sunday by terrorists in Sinai that left 16 Egyptian soldiers dead. After that attack, the Egyptian military launched an armored assault in Sinai to “restore stability and regain control” in the lawless desert that had become a haven for Islamist militants.

Ironically, it was Muwafi who had told a visitor two months ago that he favored an assault in Sinai by an Egyptian armored battalion that would include 30 tanks, eight helicopters and other equipment. Such a crackdown had also been urged by U.S. and Israeli officials, but the Egyptian military delayed major action until Wednesday, after the 16 soldiers were killed.

The statements that accompanied Muwafi’s firing were surprising, given this background. The Egyptian media blamed him for ignoring an Israeli intelligence report about Sunday’s attack. Muwafi confirmed in a statement that “we received a detailed intelligence warning” and said he said he passed it to the military to take action. “It is the responsibility of intelligence to collect information and it is the job of others to learn the operational lessons on the ground based on the intelligence information,” Muwafi explained after his firing, according to a press report.

Muwafi looked the part of the traditional mukhabarat chief. He was tall and handsome, well-spoken in French and English, and ran the General Intelligence Service from a gleaming modern office set in a park in Cairo. U.S., Israeli and European officials intelligence officials saw him as one of the bright lights of the new government. This praise may have made more senior Egyptian generals jealous.

Muwafi had also been Egypt’s main interlocutor with the Palestinians. He had been working in recent months to broker a unity pact between Hamas and Fatah. Muwafi understood that Egypt had much more leverage over Hamas after the extremist group had been forced to flee its base in Syria; working with the Israelis, Muwafi had negotiated what amounted to a de facto cease-fire with Hamas in Gaza.

The new Egyptian intelligence chief will be Gen. Mohammed Shehata. He is described as an experienced officer who “knows the Palestinian file well.”

Because of Muwafi’s growing reputation with Western governments, some worried that he might position himself as another Gen. Omar Suleiman, the charismatic intelligence chief who was the closest adviser to President Hosni Mubarak and ran some of the country’s harshest counterterrorism programs. But the ruling Muslim Brotherhood didn’t appear to have that fear — at least not until this week when Morsi and the military were looking for a fall guy for the Sinai debacle.

In June, a few days before the final presidential runoff that elected Morsi, I posed the Muwafi question to a leading Muslim Brotherhood strategist named Khairat el-Shater. He said that if the Brotherhood won, it would keep Muwafi in his job because “we do not want collisions” over foreign policy.

He added that the Brotherhood recognized that certain key contacts, such as with Israel and America, had been handled largely through intelligence channels and that continuity was important. But that was then, apparently.

The Muwafi incident is just a blip on the broad radar of U.S.-Egyptian relations, and American officials generally think that the Morsi government is off to a good start. But the incident does show two things:

First, the situation in Sinai is dangerous and getting worse. U.S. intelligence believes that scores of jihadists have migrated into Sinai in recent months — some from the tribal areas of Pakistan, some from Libya and some from Egyptian prisons. Among them are people a U.S. official describes as “al-Qaeda wannabes.”

Second, the Egyptian military is preoccupied with buffing its image and fending off potential critics. In that exercise in self-preservation, the generals seem quite happy to work with Morsi and the Muslim Brothers — as in the firing of Muwafi.