An anxious Israel watches neighboring Egypt unravel

'We are anxiously monitoring what is happening in Egypt and [elsewhere] in our region,' Israeli Prime Minister Benjamin Netanyahu told his cabinet Sunday morning.

Israeli Prime Minister Benjamin Netanyahu said he hopes Israel's peace treaty with Egypt endures the domestic turmoil, reflecting widespread worry that demonstrations and rioting against Egyptian President Hosni Mubarak have jeopardized the Jewish state's most important regional alliance.

"We are anxiously monitoring what is happening in Egypt and [elsewhere] in our region," Mr. Netanyahu told his cabinet Sunday morning. "The peace between Israel and Egypt had endured for over three decades and our goal is to ensure that these relations continue."

Calls for Mr. Mubarak's ouster and the prospect of continued chaos in Israel's neighbor has raised fear of an erosion of a key security and diplomatic partnership in the Middle Eastern geopolitical balance. Israel is also worried about a chain reaction of domestic turmoil in states like Jordan and Syria, as well as the strengthening of Hamas in Gaza and the West Bank.

A key relationship in question

Though ties with Egypt since their 1979 peace treaty have never been warm, a faltering of relations could raise concern in Israel's military about possible war on Israel's southern front, and the collapse of an alliance among Western-backed Arab regimes who share Israel's fear about the growing power of Iran.

"In the long run, [unrest in the region] could endanger Israel's peace accords with Egypt and Jordan," military analyst Amos Harel wrote in the Haaretz paper. "[The treaties] are the biggest Israeli strategic asset, after support from the United States. It could force changes in the Israeli army and weigh down the economy.''

Israeli spokesmen have instructions not to comment on the situation in Egypt for fear of influencing turmoil that appears focused on domestic complaints rather than Egypt's alliance with Israel.

Israelis know Mubarak as the leader who moved into the vacuum following the 1981 assassination of Egyptian President Anwar Sadat, who signed on the peace treaty with Israel.

Israel's nightmare scenario

Despite reports that the anti-Mubarak protests are being led by secular young Egyptians, Israel is worried that the power vacuum will enable the Muslim Brotherhood – a popular Islamist group – to seize power.

"A Muslim Brotherhood in Egypt – which presumably will not be committed to the peace treaty with Israel, or will be confrontational – is the nightmare scenario,'' sys Bruce Maddy Weizmann, a senior fellow at Tel Aviv University's Moshe Dayan Center for Middle Eastern and North African Studies. "That would be a major strategic shift in orientation."

Concerns about weapons flow to Gaza

Mubarak and Israel have cooperated in enforcing a blockade and shutting weapons tunnels into the Gaza Strip, which has been ruled by the Islamic militant group Hamas since 2007. However, reports that Egyptian security forces in Sinai are buckling amid the chaos, has stirred concern about an increased flow of weapons into Gaza. Egypt announced on Sunday that it decided to close the border with Gaza.

Israel's long frontier with Egypt's Sinai Peninsula has remained a point of instabilty. Sinai has been targeted by militant groups to launch rockets into Israel and Jordan, and Israel is currently building a fence to plug up an open border that is easily infiltrated by Bedouin groups smuggling drugs and migrants.

Israeli analysts have also questioned President Obama's messages to Egypt in recent days, suggesting that he has weakened Mubarak while emboldening demonstrators. It is unclear whether the government shares that assessment.

"What was said in Washington was giving legimitacy to the rioters to kick Mubarak out," said Eli Shaked, a former Israeli ambassador to Egypt.