President Barack Obama’s deputies are negotiating a $1 billion aid package with Egypt’s new Islamist government, even as Egypt’s cash-strapped military revealed that it is trying to buy $1 billion worth of German submarines that could threaten Israel’s fast-growing offshore energy projects. The German government has pointedly declined to deny the incendiary revelation about Egypt’s request to buy the two submarines. Instead, the German government offered vague support for Israel, which is facing renewed threats from Iran’s nuclear program and the Muslim Brotherhood’s rise to power in Egypt. “There has been no change in the German government’s position towards Israel,...