Hamas greeted the confirmation in June of Mohamed Morsi as Egypt’s new president with jubilation. It had good reason: Hamas is the Palestinian branch of the Muslim Brotherhood, to which the Egyptian president belongs. Morsi soon vindicated its welcome by receiving Hamas leader Khaled Meshaal and his deputy Mousa Abu-Marzouq on July 20, followed six days later by Ismail Haniya, the prime minister of the Hamas government in Gaza. And on September 17, Haniya was officially received by the new Egyptian prime minister, Hesham Qandil, to discuss bilateral economic and political relations. But despite the warm initial opening, Morsi’s electoral victory may ultimately yield more costs than benefits for the Palestinian movement. 

Morsi’s natural affinity with Hamas is countered by the Brotherhood’s need to prove to its domestic critics and the international community that it is capable of ruling Egypt and of adopting a moderate foreign policy—especially toward Israel. Maintaining a balance will be difficult, as the interests of Morsi and Hamas diverge sharply on three key issues: the freedom of movement and trade between Egypt and the Gaza Strip; security in the Sinai Desert; and the Israeli-Palestinian peace process. 

Hamas could afford to challenge former president Hosni Mubarak openly on these issues, but it must be more circumspect and cooperative when it comes to Morsi—or risk severe repercussions.

Freedom of Movement and Trade

Hamas’s top priority is ensuring the free movement of people and goods through the Rafah crossing between Gaza and Egypt. The tunnels between Gaza and Sinai have enabled the Haniya government to alleviate the critical shortage of commodities and building materials caused by the Israeli blockade of the strip, imposed since 2006. But that trade is currently under threat. The Egyptian government launched a serious bid to close down the tunnels—which continuously operated under Mubarak and the military council that governed Egypt in 2011–2012—following the August 5 terrorist attack that claimed the lives of sixteen Egyptian soldiers in Sinai. 

The stakes are high for the Haniya government, which is heavily reliant on the illegal tunnel trade for revenue. Estimates that it raises around $1 billion annually in import taxes are almost certainly exaggerated, but the amount definitely runs into the hundreds of millions of dollars. For example, the government charges fifty cents on every liter of gas, with an estimated 500,000 liters brought in every day from Egypt. Eighty cents are levied on every pack of cigarettes, with approximately 300,000 packs entering Gaza daily. Every ton of construction steel is taxed at $15, with 300 tons coming in daily, while cement is taxed at $10 per ton, with 2,000 tons emerging from the tunnels every day. Annual income from these commodities alone amounts to $188 million.

Apparently the Haniya government has concluded that while it cannot preserve the tunnel trade, it can turn the tunnels’ closure to its advantage. The Egyptian Army has destroyed an estimated 120 tunnels, or 10 percent of the total number. Meanwhile, the Haniya government proposed establishing a free-trade zone on the common border as an alternative to the tunnel traffic. It also seeks to expand the Rafah crossing to allow the free movement of goods as well as people and to keep it in operation all year round. Pushing to formalize trade arrangements with Egypt makes more sense for the Haniya government than confronting Morsi in an effort to preserve the tunnel trade.

Still, allowing the transfer of goods through the Rafah crossing may pose problems for Egypt. According to the Agreement on Movement and Access signed in November 2005 by the Palestinian Authority, Israel, the United States, the European Union, and Egypt, the crossing was to be used exclusively for the movement of people and humanitarian aid, while all goods going to or from Gaza would pass exclusively through the Kerem Shalom crossing within Israeli territory. 

For Egypt to change the Rafah crossing’s status would be tantamount to abandoning the Agreement on Movement and Access, potentially allowing Israel to claim that there is no further need for it to keep its own crossings to Gaza open and that it can no longer be deemed the occupier of the territory under international humanitarian law (since it would no longer control all of Gaza’s external borders). Under Mubarak, Egyptian officials used these concerns to justify their decision to refrain from openly challenging Israel’s economic siege of Gaza. The boast by one of Hamas’s leading figures in Gaza, Mahmoud al-Zahar, on September 14 that Gaza is already “free of occupation” was intended as a taunt to the rival Palestinian Authority in the West Bank, but preempted Egyptian objections, perhaps inadvertently, while ironically seeming to confirm the Israeli argument.  

Still, the Egyptians have been cautious, arguing that the idea of a free-trade zone “requires more study” and that a decision would have to be reached by the presidency and security establishment as well as the cabinet. The fact that Egypt hopes to renegotiate its Qualifying Industrial Zones agreement with the United States and Israel may be an added reason to defer anything that appears to help Hamas and the Haniya government, which Washington might look upon unfavorably. And ironically, although Hamas now openly advocates a free-trade zone with Egypt, Morsi may not regard the possible political and legal consequences of establishing one as a cost worth paying for closing down the tunnels. 

The destruction of the tunnels was in fact suspended soon after it started, suggesting a return to the status quo, with only limited modifications. The Rafah crossing, which the Egyptian authorities sealed for several days following the August 5 attack, has been reopened. The extension of its operating hours—from seven hours daily to ten—and the increase in Egyptian border staff now allow it to process a larger number of travelers. From an average of 450 persons entering Egypt daily in 2011–2012, the number rose to 1,000 persons following Morsi’s assumption of office, and is expected to reach 1,500 under the new arrangements, which should meet normal demand for travel to, or via, Egypt. 

The one remaining sticking point is for Egypt to resolve the persona non grata status of some 50,000 members of Hamas and other Islamist movements in Gaza. An Egypt-Hamas joint committee is reviewing the list, with the expectation that the ban will be lifted for most individuals.

Security in Sinai

In return for meeting Hamas’s demands, Morsi will ask for the movement’s cooperation in securing the Sinai Peninsula. Armed groups have attacked Egypt’s gas pipeline with Israel and Jordan at least fourteen times since January 2011 and are believed responsible for the death of seven Israeli soldiers near Eilat in September 2011 as well as dozens of small incidents targeting the Egyptian police in Sinai. Hamas is in a good position to stabilize the area, based on its strong ties with and knowledge of armed factions and local tribes, both in Gaza and Sinai, in addition to its well-established security capacities.

Since taking over the Gaza Strip in 2007, Hamas has sought to promote itself as a credible governing authority, not just a militant group. It has been fighting these armed groups since it first seized power in Gaza. In August 2009, Hamas liquidated radical cleric Abdel Latif Moussa and his followers after he proclaimed an Islamist emirate in Rafah. The terrorist organization behind the April 2011 murder of Italian solidarity activist Vittorio Arrigoni has also been targeted by Hamas. Currently, Gaza security services are detaining 40 Salafi militants. So Hamas is likely to respond positively to Egyptian demands, delivering wanted criminals and cooperating with Egyptian authorities in the interest of regional security. 

And security ties have already been strengthened to a degree. At the end of August 2012, Hamas military commander Ahmed al-Jabari led a security delegation in Cairo for talks, resulting in the formation of a joint security committee with Egypt to investigate the August 5 attack and to strengthen bilateral cooperation. Jabari had previously led Hamas’s indirect negotiations with Israel, mediated by Egypt, which resulted in the release of Israeli soldier Gilad Shalit on October 18, 2011, in exchange for Palestinian prisoners. But this was his first publicly acknowledged visit to Egypt, during which he also met Egyptian government officials and Muslim Brotherhood members, reflecting the widening entente between the two sides.

Political Give and Take

Morsi has nonetheless proceeded with caution in developing political relations with Hamas. He is unlikely to risk straining relations with the United States and Israel by upgrading Egypt’s recognition of Hamas, which has applied to establish offices in Cairo, unless the movement accepts the principles of the international Quartet for Middle East peace (comprising the United States, European Union, Russia, and the United Nations): recognition of Israel, rejection of violence, and respect for previous agreements reached between the Palestine Liberation Organization and Israel. 

For Morsi, the ideal outcome is to persuade Hamas to renounce the use of violence officially and to preserve security in Sinai and along Gaza’s border with Israel, in return for Egypt’s help in consolidating the movement’s rule in Gaza and in gaining the Hamas government wider formal recognition. But this will be a difficult sell for Hamas, whose own members, as well as competing Islamist groups, still adhere to the principle of armed resistance. 

Hamas’s main demand is pragmatic and relatively straightforward for Morsi to fulfill—lifting the blockade of Gaza. But Morsi is asking Hamas to make strategic political and ideological concessions, requiring far more effort on the group’s part. Nevertheless, Hamas has the capacity and the motivation to accommodate the Egyptian president and the Muslim Brotherhood. The fact that Egypt and the Brotherhood seek good working relations with the United States and stable ones with Israel both prompts Hamas to follow suit and may enable it to do so without significant loss of face. But the outcome of the elections for the Hamas Shura Council and Political Bureau—a protracted process that began in April and ended in late September—makes this unlikely in the near term. 

Hardliners in Hamas—including several commanders of Hamas’s military wing, the Qassam Brigades—along with former prisoners in Israel who were released in the Shalit deal in 2011 and their civilian allies in Gaza have decisively gained the upper hand internally. Acknowledging this, the head of the Political Bureau, Khaled Meshaal, who has promoted distinctly moderate positions on peace with Israel and reconciliation with Fatah and the Palestinian Authority in the West Bank, announced on September 24 that he does not intend to run for reelection. In parallel, hardliners replaced several moderate cabinet ministers in the Haniya government in a reshuffle at the beginning of September. 

A New Status Quo?

The dynamics between Egypt’s Muslim Brotherhood, the United States, and its allies are shifting. It won’t be long before Hamas learns the wisdom of the saying “keep your friends close, and your enemies closer.” And in truth, it has few alternatives. Failure to demonstrate flexibility and cooperate with Morsi will have severe repercussions. Judging by precedent, these could include stringent regulations at the Rafah crossing and a decrease in Egypt’s official or public dealings with Hamas. The movement could also find it increasingly difficult to reconcile its desire to be in line ideologically with the Egyptian Muslim Brotherhood with pressures from its own rank and file not to adopt the mother organization’s moderation on political issues. 

Hamas thus has little choice but to work with Morsi, especially given the collapse of its onetime base in Damascus as a result of the raging conflict in Syria. And a relationship with Morsi promises the added incentive of the potential for economic growth and development, through which the Haniya government can hold itself up to Palestinians as a preferable model to the ailing Palestinian Authority in the West Bank. It may just be possible that Hamas will adopt Morsi’s quid pro quo of restraining violence more stringently even as its leadership becomes more hardline. 

Omar Shaban is director of Pal-Think for Strategic Studies, Gaza.