El-Araby made the comment on Egyptian television Saturday night, Israel Radio reported Sunday.
"The Palestinians want peace but Israel has not yet met their demands," he said.
Egypt will continue to play an important role in the peace talks, Ahram Online quoted him as saying.
Under the rule of former President Hosni Mubarak, Israeli officials felt they could do anything, but this is no longer the case, the Web site quoted him saying.
The peace treaty signed with Egypt does not say Israel is entitled to special treatment and the Camp David Accords do not obligate Egypt to sell petrol or gas to Israel at low prices, he reportedly said.
Noting the number of countries with ambassadors in Tehran, he also said Cairo may renew diplomatic ties with Iran.
El-Araby called upon the Iranian government to remove the name of the late President Anwar Sadat from a street sign in Tehran and said the name of the former Shah of Iran should be removed from his tombstone in Cairo. He said such actions would be an act of good faith and did not further elaborate.