Egypt's mounting political and economic woes will cause many policy headaches for the Obama administration during the next four years. But in the short run, the Obama administration will have to confront a more immediate risk: that a major terrorist attack in the Sinai will catalyze a security crisis between Israel and Egypt, which the ruling Muslim Brotherhood may use as a pretext for downgrading Egyptian-Israeli relations and perhaps canceling the 1979 Egyptian-Israeli peace agreement altogether. To prevent this outcome, Washington should immediately press Egyptian President Mohamed Morsi to establish direct communication channels with the Israeli government to ensure that this kind of crisis will be managed responsibly.
A terrorist attack emanating from the Sinai that would endanger Egyptian-Israeli relations isn't a theoretical proposition, but an inevitability given Sinai's severe instability. The breakdown of Egypt police forces since the January 2011 anti-Mubarak uprising has rendered the 23,000-square-mile desert territory a security vacuum, which jihadi terrorist organizations -- including possibly al-Qaeda -- have rapidly filled. Some of these organizations have cells within both Sinai and Gaza, and northern Sinai has become a safe haven from which they have launched 15 attacks on the gas pipeline to Israel and Jordan in the two years since Mubarak's ouster. Meanwhile, jihadis have repeatedly attempted to use Sinai as a base for launching attacks on Israel, with the dual aim of killing Israelis and catalyzing a diplomatic confrontation between Israel and Egypt.