Business Disputes and Political Risks

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Business Disputes and Political Risks

After reading this week’s chapters and doing some internet searching, I came across a dispute between Israel and Egypt. The dispute occurred when Egypt terminated its gas deal with Israel. The head of the Egyptian Natural Gas Holding Company has said it has terminated its contract to ship gas to Israel because of violations of contractual obligations, a decision Israel said overshadowed the peace agreement between the two countries. Al Jazeera and agencies said, that Israel relies on Egyptian natural gas for 40 per cent of its supplies to produce electricity, the chairman of a government holding firm said on Sunday. The Israeli side said the decision was "unlawful and in bad faith", accusing the Egyptian side of failing to supply the gas quantities it is owed. The dispute is under international arbitration. Israel insists it is paying a fair price for the gas. Al Jazeera's Mike Hanna, reporting from Cairo, said the row would have major political consequences. "At the base of it, this is a commercial dispute, which has in reality been under international arbitration since September last year," he said. "But when this agreement was reached in 2005, it was subject to government approvals of Israel and Egypt, many believe under pressure from the government of the US.”So although this maybe a commercial situation at the moment, this is an issue that will have immense political, international fallout in the days to come” (Al Jazeera and agencies, 2012 ). With Egypt and Israel under a peace treaty, having such conflicts such as this can make for a more serious issue. It was said, this was not political, but when money is involved, I can see how this would be hard to believe. I agree that this will have political as well as international fallout, because if Egypt will abruptly stop and breach a contracts with Israel, how does this show other countries doing business and receiving good from Egypt , they can trust business will...
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