What provoked the severance of relations in the first place? Pope Benedict complaining about discrimination against Christians in the Middle East.
Ahram Online reported that the decision to suspend the dialogue was made unanimously in response to the Pope’s reference “to the discrimination endured by Coptic Christians in Egypt” after a bombing at a Coptic Orthodox church left 23 people dead.
Sheik el-Tayeb already had criticised the Pope’s remarks as “unacceptable interference in Egypt’s affairs.” In an address to diplomats, Pope Benedict recalled the December 31 bomb attack on the Coptic church in Alexandria and said the bombing was a sign of “the urgent need for the governments of the region to adopt, in spite of difficulties and dangers, effective measures for the protection of religious minorities”.
The day after the Pope’s speech, the Egyptian government recalled its ambassador to the Vatican, bringing her back to Cairo “for consultation”Source
So Muslims around the world endlessly whine about Islamophobia, but if a Christian, even after Christians have been massacred, dares to suggest that maybe it isn't quite right to do this, the Muslims cut off relations.