Sources in Jerusalem expressed cautious optimism a day after Egypt's President Mohamed Morsi appointed a new national intelligence chief following the attack that killed 16 border guards in the Sinai Peninsula.
The officials said Mohamed Rafaat Shehata, who will replace Murad Muwafi, has good relations with the Israeli security establishment, and has not expressed anti-Israeli positions in public.
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They further stressed that the reshuffling of Egyptian officials is an internal issue that has nothing to do with Israel.
Egyptian newspaper al-Ahram reported on Wednesday that Morsi sacked Muwafi after the latter embarrassed him by admitting that Egypt had prior information about the attack at the border.
In a major shake-up, Morsi also dismissed the governor of north Sinai region and the commander of the presidential guards, and named new chiefs for security in Cairo and the police's large central security.
MK Israel Hasson (Kadima), who formerly served as deputy chief of the Shin Bet, said that there are three possible reasons for Muwafi's dismissal: "One might be that there was prior warning of the attack and Muwafi disregarded it, the second reason is that the public needs a scapegoat after such an event, and the third – personal appointments to better fit the Muslim Brotherhood."
Hasson noted that "in any case, Israel must asses the change with caution, as the people who fill these positions have a say vis-à-vis foreign policy as well.
"All the changes in the Middle East are reason for concern," Hasson added, "While we should not remain complacent, I also don't see a reason to panic."
Muwafi was in charge of Egypt's relations with Israel and was involved in the negotiaitons that led to the release of Gilad Shalit from captivity in Gaza.
On Wednesday, Egypt's army declared tentative victory in a crackdown on Islamist terrorists in Sinai, hours after state television reported the military killed 20 terrorists in unprecedented air strikes.
The campaign to uproot the terrorists was launched on Tuesday, two days after gunmen ambushed a border guard outpost near Israel's border, the military said in a statement.
"Elements from the armed forces and interior ministry supported by the air force began a plan to restore security by pursuing and targeting armed terrorist elements in Sinai, and it has accomplished this task with complete success," it said.
Moran Azulay contributed to this report
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