CAIRO — In the trendy Mohandiseen district of Cairo, 28-year-old Sharif Ramadan welcomes the opportunity to talk politics one evening in the nearly empty eyeglass store he manages.

Egyptian media had been buzzing after reports that Egypt, which recently hosted Palestinian Authority Prime Minister Ismail Haniyeh, could soon help mediate a prisoner exchange in which Cpl. Gilad Shalit — an Israeli soldier who has been held in Gaza since his capture by Palestinian gunmen in June — would be returned for hundreds of Palestinian prisoners in Israeli jails.

A successful prisoner exchange could be the beginning of a renewed understanding between the two sides, Ramadan said — if only Israel would allow it.

“Israel always uses force and pressure,” Ramadan said excitedly, repeating a common Arab analysis of the Israeli-Palestinian conflict. “Politically, Israeli policy is very much a failure.”

More than 25 years after Israel signed a peace treaty with Egypt, the Egyptian government is trying to maintain a balancing act between its “cool but correct” relationship with Israel and the fiery sentiment on the street following Israel’s recent war with Hezbollah in Lebanon, democracy activist Saad Eddin Ibrahim told JTA in his Cairo office.

During this summer’s war, there were demands to recall the Egyptian ambassador from Tel Aviv and send the Israeli ambassador home. Some called for the revocation of the Israeli-Egyptian peace treaty — calls heard in Egypt whenever Israeli-Palestinian tensions rise.

“This last war has damaged a good deal of what peace activists on both sides have been building,” said Ibrahim, a professor of political sociology at the American University in Cairo. “The Israeli establishment has successfully and notoriously built a virtual wall with the rest of the Muslim world.”

Some would question who has built the wall. Over the years the Egyptian government has steadfastly refused Israeli overtures for closer ties, and often leads the anti-Israel chorus in international forums where the Jewish state is demonized.

Egypt has benefited from the peace treaty to the tune of several billion dollars a year from a combination of factors including U.S. aid and revenues from Israeli-built oil fields in the Sinai and Suez Canal — all while continuing to stoke anti-Israel propaganda and engage in belligerent actions, some supporters of Israel contend.

“The time has come to recognize the Egypt-Israel treaty — usually portrayed as the glory and ornament of Arab-Israeli diplomacy — as the failure it has been, and to draw the appropriate lessons in order not to repeat its mistakes,” U.S. academic Daniel Pipes wrote recently in the Jerusalem Post.

Egypt continues to be one of Israel’s most hostile adversaries in the Arab world, even offering covert support to Palestinian terrorism by not cracking down on arms-smuggling networks, argues Israeli legislator Yuval Steinitz of the Likud Party. Steinitz recently stepped down as chairman of the Knesset’s Foreign Affairs and Defense Committee.

“Egypt could quite easily finish or reduce the smuggling phenomenon, and they’re not doing it,” he said, noting that Jordan has successfully cracked down on arms smugglers in recent years at Israel’s request.

For the past 15 years or so, Egypt has been beefing up its military with the help of U.S. aid, to the point where it long since achieved military superiority over any other country in Africa. Yet even though it faces no threat, Egypt continues to engage in regular military exercises and indoctrinate its forces toward a conflagration with Israel, Steinitz said.

“There can be no doubt they’re preparing for war with Israel, and they don’t deny it,” Steinitz said. “They say Israel is aggressive and crazy, and they’re preparing themselves because of that. But of course that’s ridiculous.”

The majority of Egyptians see Israel as a monolithic entity and do not believe there are Israelis working for peace, says Egyptian political analyst and journalist Ashraf Rady, who has visited Israel four times.

The tendency in Egypt to frame the conflict as a religious one between Muslims and Jews is problematic, he said. In addition, Steinitz said, secular, liberal forces that have peaceful tendencies toward Israel often are targeted in the media and accused of wanting normalization with Israel.

But Israel also is impeding peaceful relations, Rady claims. If Israel wants to make progress toward peace, “it should stop using force and then allow the peaceful developments to happen,” he said.

After the peace treaty was signed in 1979, “there were these two or three years where there was relative calm on that front,” Hisham Kassem, vice chairman and CEO of the independent Egyptian daily Al Masry Al Youm, said of public opinion vis-a-vis Israel. “Then with the invasion of Lebanon in ’82 and the outbreak of the intifada, the first and the second — that’s it, it hit rock bottom and it stayed there.”

As for government relations between the two countries, Kassem said it doesn’t go beyond the security arrangements that the two countries maintain in an effort to avoid a full-scale confrontation between Palestinian factions and the Israeli government.

Israel’s ambassador to Egypt, Shalom Cohen, describes the relationship as much friendlier and more far-reaching than do many Egyptian academics and community leaders.

“We can improve it, but it’s a warm peace. It’s not a cold peace,” Cohen told JTA recently in a Jerusalem coffee shop. “We share a lot of mutual activities — economic, military, security, tourism, you name it. We exchange notes, views, knowledge. We listen to what the Egyptians have to say.”

Egyptian assistance in trying to secure Shalit’s return is at the highest levels and demonstrates positive cooperation on sensitive issues, Cohen said.

Bilateral relations were almost frozen when the Palestinians launched their violent intifada in September 2000. Egypt withdrew its ambassador to Israel shortly after the fighting began, but when former Israeli Prime Minister Ariel Sharon withdrew Israeli troops and settlers from the Gaza Strip, the Egyptian government understood that Israel’s wish for peace with the Palestinians was genuine, Cohen said.

During the recent war with Hezbollah, the Egyptian government criticized Israeli policy, but relations were “too important for both sides to let this event destroy it,” Cohen said.

In an unexpected move, Egypt even blamed Hezbollah for starting the war by launching a cross-border attack, killing eight Israeli soldiers and kidnapping two more.

The real challenge today is to bring this level of understanding to both peoples through cultural, media and academic exchanges and activities. Cohen said the young generation must believe in the need for peace today to advocate for it as leaders tomorrow.

But the Egyptian government doesn’t encourage visits to Israel, places bureaucratic obstacles in the way of those who want to visit, and allows the state-controlled media to be exceedingly harsh against Israel.

Such behavior is due to Egypt’s desire to lead the Arab world, which requires adopting a firm position regarding unsolved Arab-Israeli issues, says Elie Podeh, head of the Department of Islamic and Middle Eastern Studies at Hebrew University in Jerusalem.

The Egyptian regime suffers from problems of legitimacy in the eyes of its people, and therefore must heed the anti-Israel and Islamic fundamentalist voices on the street, he said.

“I think they can do more to have a warm peace, but I guess they realize it’s better for them to maintain this kind of peace and not to normalize relations with Israel,” Podeh said.

As to travel, Israeli tourism in Egypt once outranked tourism from all other countries, said Ashraf Hosny, an independent Egyptian tour guide who speaks fluent Hebrew. Formerly a boon to the economy, the number of Israeli tourists has dwindled significantly in recent years due to political tensions, warnings from the Israeli government and fear of terrorist attacks.

In July 2005, a series of bombings in the Sinai resort area of Sharm el-Sheikh killed 88 and wounded more than 150 in the deadliest terrorist action in Egyptian history. In October 2004, at least 34 people, mostly Israelis, were killed in terrorist attacks in the Sinai towns of Taba and Nuweiba.

Hosny, who has led thousands of Israelis through the country since 1989, argues that terrorist attacks are the exception rather than the rule. Despite Israeli government advisories in October 2005 to avoid travel to Egypt, Hosny led a group of more than 40 Israeli men to the Sinai to revisit the army positions where they were stationed between 1967 and 1973.

The trip was a success and participants said they felt Egypt was safer than Israel in terms of security, Hosny said.

Egyptian taxi driver Ali Assad Ahmed says Israel likes war and wants to take over “the whole region around it,” but adds that any tourists — including Israelis — who want to visit Egypt are welcome.

“I want them to enjoy and be happy so they come back,” said Ahmed, 58, who fought Israel in both the Six-Day War and the Yom Kippur War. “Whoever drinks the water of the Nile must come back.”