A year and a half ago, an Israel Navy submarine crossed the Suez Canal on its way from Haifa to the Red Sea, where it conducted an exercise, and back. The unusual voyage reflected the growing strategic cooperation between Israel and Egypt, which aimed a menacing message at Iran. The submarine's crossing of the waterway demonstrated how quickly Israel could deploy its deterrent near Iran's shores, with the tacit support of Egypt.

Once more, the canal is being used to deliver a message of deterrence - but this time the direction is reversed. Egypt is allowing Iranian warships to cross the canal, on their way to Syrian ports. Israel was publicly critical of the passage - arguing that it is a provocative move - but Egypt ignored the pressures and granted the Iranian navy permission to pass, symbolizing the change to the regional balance of power following the fall of President Hosni Mubarak.

Egypt is signaling that it is no longer committed to its strategic alliance with Israel against Iran, and that Cairo is now willing to do business with Tehran. This is precisely what Turkey has done in recent years under Prime Minister Recep Tayyip Erdogan.

Since the uprising against Mubarak, the cold peace between Egypt and Israel has cooled even further. The delivery of natural gas to Israel, which was cut off after a terrorist attack on a station in northern Sinai, has still not been resumed.

Open gallery view PM Benjamin Netanyahu and Egyptian President Hosni Mubarak in Cairo on July 18, 2010 Credit: Moshe Milner

Sheikh Yusuf al-Qaradawi returned to Cairo after decades in exile and addressed a million strong crowd in Tahrir Square on Friday, calling for the liberation of the Al-Aqsa Mosque and the upcoming victory against Israel. In the past, the sheikh had expressed support for suicide attacks against Israelis and two years ago described the Holocaust as "God's punishment of the Jews."

The appearance of the Islamist firebrand in the square has returned hatred for Israel to the center of the public debate over Egypt's future. Until now, the argument was that the revolution concerned domestic matters, not Egypt's relations with the United States or Israel. The Muslim Brotherhood has also been trying to send messages of moderation to the West, but this is hardly comforting.

There is growing concern in Israel that Egypt will become a hostile front, adding to the feeling of international isolation which has only intensified since Benjamin Netanyahu became prime minister. The recent vote at the UN Security Council over the Palestinian resolution to label the settlements as illegal only increased this sense of isolation. With 14 states supporting this measure, Israel needed an American veto to foil it.

The Palestinians may have lost that vote, but the issue demonstrated which side in the conflict enjoys widespread international recognition.

Bolstered with Congressional support, Netanyahu forced U.S. President Barack Obama into the veto - which he had avoided using to date. The Americans argued that internationalization of the conflict cannot replace direct negotiations, and that forced decisions will only result in parties taking up more extreme positions.

It is not yet clear what Obama will try to get from Netanyahu in return: a plan for the establishment of a Palestinian state in the territories, or acceptance of an American peace plan. The U.S. president will argue that Washington needs to bolster its credibility in the Arab world and that Israel must contribute its lot to ensure that the new regimes in the area are friendly.

Now that Labor has been kicked out of the coalition, the government is breaking to the right. In the coming weeks, Netanyahu will have to maneuver between the threats issued by Foreign Minister Avigdor Lieberman and international pressure. Having lost his friend Mubarak, this will be even more difficult than in the past.