Reports that Egypt is building a steel underground wall along its border with the Hamas-run Gaza Strip have fueled speculation about what exactly Cairo intends to accomplish with the project, which British newspapers claim is being carried out with the help of the US Army Corps of Engineers.

The immediate objective is obvious: to severely disrupt the flourishing smuggling trade carried out in an extensive subterranean network of tunnels under the border. The smugglers provide everything from food to weapons for Gazans, who are largely cut off from the outside world due to an Israeli blockade.

Analysts disagree, however, about Egypt’s broader goals, which appear contradictory and are obscured by the fact that Cairo has yet to acknowledge the existence of the project. But it appears that Egypt is trying to strike a balance between remaining a key ally of the US while at the same time shoring up its position as an influential player in a neighborhood that often views Washington unfavorably.

“Egypt is walking a tightrope between its commitments to Arabs and directly to the Palestinian cause and at the same time its commitment to enhancing international security,” says Gamal Soltan, political analyst at the Al-Ahram Center in Cairo, a government-funded think tank.

But constructing a wall is a significant departure from the mere rhetoric Egypt has used to exert pressure in the past. This time, Egypt’s balancing act might backfire, especially given that fact that the Arab world was highly critical of Egypt for closing the Rafah border during the Israeli incursion on Gaza last year and cooperating with Israel on the economic blockade.

“You have operation Cast Lead basically flattening Gaza and Operation ‘Metal Wall’ on the Egyptian side strangling the Gazan population even further. These are impressions and perceptions that the Egyptian government does not need,” says Adel Iskandar, professor of media and communications at Georgetown University in Washington.

Residents on both sides of the Rafah border crossing between Egypt and Gaza have reported seeing giant drills and construction crews along the Egyptian side of the boundary, spurring a flurry of reports last week. On Dec 9. the BBC published a map of the project and reported that the completed wall would be six to seven miles long and plunge 60 feet below the ground, while others said it could go as deep as 100 feet. The wall is reportedly impenetrable, composed of bombproof steel that will be impossible to sever or burn. Though it would not completely destroy the tunneling networks, it is believed that it would stem the majority of smuggling, which has become a key source of revenue for Hamas.

Some analysts see the wall as a response to pressure from the US and Israel, which consider Hamas to be a terrorist organization, to stem smuggling along the border.

The US has in the past threatened to withhold $200 million in military aid to Egypt over concern about arms smuggling in the tunnels, angering Cairo. A compromise was reached in early 2008 under which Congress allocated $23 million of that aid toward stemming smuggling, the US Army Corps of Engineers have been involved in training Egyptian troops on advanced technology that can detect and destroy the tunnels.

Catering to American interests renders Egypt a continued player in peace negotiations and an essential ally in negotiations. Egypt, once the region’s powerbroker, also stands to show its neighbors it will not be subservient to the whims of Hamas, a small militant group and an offshoot of Egypt’s banned political opposition movement, the Muslim Brotherhood.

“It could be a political ploy with the desire of maintaining or reasserting Egypt’s legitimacy in the region at a time when perhaps the Americans are starting to assume that Egypt has a declining role,” says Prof. Iskandar.

Others see the wall as primarily directed at Hamas after months of Egyptian-mediated reconciliation talks with the rival Palestinian faction Fatah have failed to produce a solution.

“It’s quite a drastic measure,” says Nadim Shehadi, associate fellow for the Middle East and North Africa Program at the London-based Chatham House. He sees it as a pessimistic sign that Egypt is giving up on the Hamas-Fatah reconciliation talks that have failed to produce a deal under Egypt’s mediation efforts.
“It’s an indication that there’s no outlook for a resolution that would allow free passage soon,” says Mr. Shehadi.

But some say it’s not a final move, but rather a political maneuver to strengthen Egypt’s position as a mediator between the estranged Palestinian factions – a maneuver that may prove crucial to restarting negotiations.

“It’s a way ... to send a message to Hamas that they cannot enjoy the same kind of lenient Egyptian policy while at the same time refusing to cooperate with Egypt towards Palestinian reconciliation,” says Gamal Soltan, political analyst at Egypt’s government-funded Al-Ahram Center. “Egypt wants to show Hamas there are consequences for not cooperating.”