The diplomatic spat cast a cloud over an upcoming visit to Egypt by Defense Minister Ehud Barak. His talks with Egyptian President Hosni Mubarak are expected to tackle a series of security matters, including cross-border weapons smuggling to Gaza militants.
Livni infuriated Egyptian officials on Monday by accusing Egypt of doing an awful job in securing the border, saying this stands in the way of Israel's negotiations with the Palestinians because it strengthens extremists in Gaza.
"It is better for the Israeli minister to concentrate on negotiation efforts with the Palestinians, instead of speaking randomly about issues she should not be dealing with if she is not fully aware of the situation," a statement from the ministry here said.
Palestinians smuggle everything from explosives to cigarettes to human beings from Egypt into Gaza. The smuggling - especially through an extensive underground tunnel network traversing the boundary - has picked up since Israel withdrew from Gaza in 2005. Israeli officials believe Hamas has stepped up arms smuggling since it violently seized control of Gaza in June.
Egypt often acts as a mediator between Israel and Hamas. That mediation, as well as arms smuggling allegations and a recent Hamas offer for a truce are expected to be on the Mubarak-Barak talks agenda when the two meet Wednesday in the Red Sea resort of Sharm el-Sheik.
The Egyptian Foreign Ministry statement Tuesday said it rejected in both form and substance Livni's accusations, which both here and in Israel have been linked with an earlier U.S. House of Representatives proposed legislation to withhold US$200 million in military aid until Cairo takes steps to curb police abuse, reform its judicial system and stop arms smuggling into the neighboring Gaza Strip.
"Livni's remarks are not far from the U.S. Congress proposal to link the aid with Egypt's alleged lack of action toward the tunnels issue," the statement said.
In Jerusalem, an Israeli official said Tuesday that Livni's comments were an expression of the Israeli government's growing frustration with what it sees as weak Egyptian efforts to combat smuggling into Gaza, which are causing tension in relations between the two countries.
The official spoke on condition of anonymity because of the sensitivity of Egypt-Israel ties.
"Unfortunately, we feel a certain level of unease with Egypt's treatment of the border area," Arye Mekel, a spokesman for the Israeli foreign ministry, said Tuesday.
Israel is concerned that Hamas is using the subterranean tunnels under the Egypt-Gaza border to amass ammunition and explosives as it braces for another round of fighting. The Israeli military believes hundreds of tons of explosives have been smuggled into Gaza through the tunnels.
"Further ratcheting up friction between the two countries, Israel gave U.S. officials a number of incriminating videotapes showing Egyptian police officers helping weapons smugglers along the border or standing by while smugglers went about their business," Israeli defense officials said Tuesday.
"The tapes were passed on through military channels," the officials said, in an attempt to convince the U.S. to prod Egypt to take action against the smugglers. They spoke on condition of anonymity because regulations forbid them from speaking to the media.
Mekel, the Foreign Ministry spokesman, said Israel did not pass on videotapes to anyone in Congress. He would not comment on whether the tapes existed, or whether they had been given to the U.S. military.
But an Egyptian security official in the border town of Rafah on Monday - when reports of the tape appeared first in Israeli media - said the tapes were a fabrication and that it was impossible to film any video of any border activity amid some 750 border guards patrolling the frontiers around the clock.
The same official on Tuesday dismissed other Israeli media claims, on Cairo allegedly getting high-tech equipment for detecting the underground passages.
Till now, the Egyptian security service have not received any tunnel detectors and there was no notification from authorities that we will get any, he said, speaking on condition of anonymity because he was not authorized to talk to the media.