Image caption The man is suspected of inciting youths to rise up against the army after the fall of President Mubarak 
 
 Israel has denied Egyptian claims that a suspected Mossad spy was arrested in Cairo, calling them false and baseless. 
 
 Egypt's state prosecutor detained the man on Sunday on suspicion of "spying on Egypt with the aim of harming its economic and political interests", the official Mena news agency reported. 
 
 Mena said the man posed as a foreign correspondent covering anti-government protests in Cairo's Tahrir Square. 
 
 He tried to sow sectarian strife and turn people against the army, it said. 
 
 President Hosni Mubarak stepped down on 11 February, after a three-week uprising against his nearly 30-year rule. 
 
 The suspect's aim was to "spread chaos" and cause a "security breakdown" in the days following Mr Mubarak's departure, a statement issued by Egypt's public prosecutor said. 
 
 New Egypt 
 
 Israeli officials have denied the allegations. 
 
 "There is no such thing, no Israeli agent has been arrested in Egypt," foreign ministry spokesman Yigal Palmor told the BBC on Monday. 
 
 "These reports are false. So far we did not receive any information from the Egyptian authorities on an Israeli citizen who has been arrested," he added. 
 
 Following the departure of Mr Mubarak - who co-operated with Israel on security matters - tensions have flared between the two neighbours. 
 
 Cairo's new military rulers have eased restrictions at a Gaza border crossing that Mr Mubarak had kept tightly controlled. 
 
 There has also been pressure on Egypt's military council to cancel or alter a contract under which Egypt sells natural gas to Israel. 
 
 Critics say the price is too low, and that Mr Mubarak's associates took bribes to seal the deal. 
 
 Egypt resumed pumping gas on Friday after a pipeline blast halted the flow of gas to Israel. 
 
 Last month, Egyptian authorities arrested an Iranian diplomat on suspicion of spying during the popular uprising. 
 
 The diplomat - who had diplomatic immunity - was released with days and flown out of Cairo. ||||| JERUSALEM (Reuters) - The father of a man Egypt has arrested as an Israeli spy said Monday his son was a student who volunteered for a U.S. refugee agency and described Egypt's allegations as "totally delusional." 
 
 Ilan Grapel, a U.S. immigrant to Israel, was detained on Sunday in a development that could strain Israel's relations with Egypt's new leaders. 
 
 "This whole story is totally delusional as far as I am concerned ... any connection to working with the Mossad (the Israeli spy agency) is(wrong)," Daniel Grapel, Ilan's father told Israeli Channel 2 in an interview in Hebrew from his home in New York. 
 
 Ilan Grapel once wrote that he hoped to promote Israeli policies in the Arab world, according to information he and others posted on websites. Daniel Grapel said his son was working in Egypt as part of his university studies. 
 
 "He is volunteering as part of his studies and he gets (academic) credits for summer work ... He had to stay in Egypt for three months as part of the American agency that is connected with transferring refugees from Egypt," he said. 
 
 Grapel's mother, Irene, said her son had worked for Saint Andrew's Refugee Services, a non-governmental organization, in Cairo, adding that he holds U.S. and Israeli citizenship. 
 
 On his Facebook page, Grapel made no secret of his presence in Egypt, writing that he was "preaching at al-Azhar," an Islamic university in Cairo, and that he had studied at Johns Hopkins University in Baltimore, Maryland. The reference to al-Azhar later disappeared from the page. 
 
 CONSULAR VISIT 
 
 The U.S. embassy in Cairo confirmed 27-year-old Grapel had been detained Sunday. "A consular officer visited Mr Grapel on June 13 and confirmed that he was in good health," the embassy said in a statement. 
 
 Israel's ambassador to Cairo said Monday Israel was looking into the case. 
 
 A Egyptian judiciary source said Grapel had been active in Cairo's Tahrir Square, the epicenter of the revolt against Hosni Mubarak, after the former president stepped down. 
 
 A statement issued by Egypt's public prosecutor said the suspect, ordered held for 15 days, had been sent to Egypt to recruit agents "trying to gather information and data and to monitor the events of the January 25 revolution." 
 
 Ex-Israeli Defense Minister Binyamin Ben-Eliezer, a former pointman in Israel's relations with Egypt, told Israel Radio he hoped the arrest was not an attempt to "put peace into total freeze." Egypt signed a peace treaty with Israel in 1979 which ordinary Israelis refer to as "the cold peace." 
 
 Photographs of Grapel on the Facebook page, on the website of the Israel Project -- a pro-Israel group where he trained in media relations in 2008 -- and in the online newsletter of an organization that raises funds for Israeli soldiers, matched those in a video clip of the suspect released by Egypt. 
 
 Articles about Grapel's military service in Israel appeared in the New York Daily News and Israel's Haaretz newspaper in 2006. They said he had been wounded in the Lebanon war that year while serving as an Israeli paratrooper and had immigrated to Israel in 2005 from Queens, New York, at the age of 22. 
 
 "He is a very special guy. He's an Arabist," Tsiki Ood, who said he was a friend of Grapel's, told Israel Radio, describing him as an American immigrant. "He's very intelligent ... He spoke Arabic. I hope he gets out of this trouble." 
 
 After the war, Grapel spoke in the United States at fundraisers for wounded Israeli soldiers, according to the Internet newsletter of the Friends of the Israel Defense Forces organization, which also cited his injury in Lebanon. 
 
 It showed him in his paratroop uniform standing next to U.S. fundraisers and Israeli diplomats at functions in Chicago and Houston in 2006. 
 
 Two years later, Grapel took part in the Israel Project's media fellows program in Jerusalem on "educating top young leaders in how to educate the press on Israel and Iran." 
 
 In a comment that appears on the Israel Project's web page about the program, Grapel said he had been impressed by an Israeli Foreign Ministry official's briefing on conveying Israel's positions to the Arab world. 
 
 "It would be very rewarding for me if I were to be able to communicate as effectively (as the official) in such anti-Israel environments," Grapel wrote. 
 
 (Additional reporting by Ori Lewis, and Edmund Blair in Cairo; Editing by Matthew Jones)
– Yesterday Egypt arrested an alleged Israeli spy—and today it emerged that Ilan Chaim Grapel is an American who immigrated to Israel, Reuters reports. Egyptian officials say Grapel was sent to Egypt to build a team “trying to gather information and data and to monitor the events of the January 25 revolution." They say Grapel tried to incite violence among Egyptian protestors, hoping to spark a face-off with the military “and spread chaos in the Egyptian public and harm the state's political, economic, and social interests.” Grapel reportedly noted on Facebook that he was preaching at a Cairo Islamic university, a comment that was later removed. Grapel appears to be the same man who told Haaretz he moved to Israel three years before its 2006 war with Lebanon and ended up enlisting in the Israeli Defense Force. Israel, however, denies the reports. “There is no such thing, no Israeli agent has been arrested in Egypt,” an official told the BBC. “These reports are false.”