Suez Canal: A History of Challenges and Opportunities

Introduction and History

The Suez Canal is a remarkable engineering feat that connects the Mediterranean Sea and the Red Sea through a narrow strip of land in Egypt. The canal was built to create a shorter and more direct route for trade and travel between Europe and Asia, avoiding the long and perilous journey around the African continent. The canal also has a significant geopolitical impact, as it separates Africa from Asia and serves as a strategic choke point for naval and military operations.

The idea of digging a canal across the Isthmus of Suez dates back to ancient times, but the first serious attempt was made by the French diplomat Ferdinand de Lesseps, who obtained a concession from the Ottoman viceroy of Egypt in 1854. De Lesseps formed the Suez Canal Company and began the construction in 1859, with the help of thousands of Egyptian forced laborers and European engineers and contractors. The project faced many challenges, such as sandstorms, floods, diseases, and political opposition from the British, who feared losing their dominance over the trade routes to India and the East. Despite these difficulties, the canal was completed in 1869, after 10 years of work. The canal was inaugurated on November 17, 1869, with a grand ceremony attended by many European dignitaries and rulers.

The Suez Canal is about 193 km (120 miles) long and has a width of 77.5 m (254 feet) and a depth of 20.1 m (66 feet). It has no locks, as it follows the natural sea level of the two seas. The canal consists of several sections, including the Port Said and Suez harbors, the Ballah Bypass, the Great Bitter Lake, the Little Bitter Lake, and the Timsah Lake. The canal also has eight major bends, which require careful navigation by the ships. The canal can accommodate vessels of up to 240,000 tons of displacement, and it takes about 11 to 16 hours for a ship to transit the canal. The canal is operated and maintained by the Suez Canal Authority, a state-owned entity of Egypt, which charges tolls for the passage of ships.

The Suez Canal is one of the busiest and most important waterways in the world, as it handles about 10% of the global maritime trade. The canal carries goods such as oil, gas, coal, grains, metals, and manufactured products between Europe and Asia. The canal also provides access to the ports and markets of the Middle East and North Africa. The canal is a vital source of income and foreign exchange for Egypt, as it generates about $6 billion in annual revenues.

The Suez Canal has also been a focal point of many historical and political events, especially in the 20th century. In 1956, Egypt’s President Gamal Abdel Nasser nationalized the canal, triggering the Suez Crisis, a military intervention by Britain, France, and Israel, who sought to regain control of the canal and overthrow Nasser. The crisis was resolved by the intervention of the United Nations and the United States, who pressured the invaders to withdraw and supported Egypt’s sovereignty over the canal. The canal was closed for several months during the crisis, disrupting the global oil supply and trade. The canal was also closed for eight years during the Arab-Israeli wars of 1967 and 1973, when Egypt and Israel fought over the Sinai Peninsula and the canal zone. The canal was reopened in 1975, after the signing of the Camp David Accords, which established peace between Egypt and Israel. The canal has since remained open and secure, despite occasional threats from regional conflicts, piracy, terrorism, and environmental issues. The canal has also undergone several expansions and improvements, such as the construction of the New Suez Canal, a parallel waterway that was completed in 2015, to increase the capacity and efficiency of the canal.

What are the Challenges?

The Suez Canal is a crucial waterway for global trade, but it also faces various threats and risks that could disrupt its operations and affect its revenues. Some of the main challenges facing the canal are:

• Houthi attacks: The Houthi rebels in Yemen have been launching missile and drone attacks on Saudi Arabia and its allies, including Egypt, which supports the Saudi-led coalition in the Yemeni civil war. Some of these attacks have targeted ships passing through the Red Sea and the Bab el-Mandeb Strait, which is the southern entrance to the Suez Canal. These attacks pose a threat to the security and stability of the canal, as well as the regional and global oil supply. Egypt has deployed its naval and air forces to protect the canal and its surroundings, and has also cooperated with other countries, such as the US and Israel, to counter the Houthi threat.
• Covid-19 pandemic: The Covid-19 pandemic has had a negative impact on the global economy and trade, which has reduced the demand for oil and other commodities that are transported through the Suez Canal. The canal’s revenues declined by 3.6% in 2020, compared to 2019, as the number of ships and the cargo volume decreased. The pandemic has also affected the health and safety of the canal’s workers and operators, who have to follow strict protocols and precautions to prevent the spread of the virus. The canal’s management has taken measures to ensure the continuity and efficiency of the canal’s operations, such as implementing digital solutions, enhancing the medical services, and providing incentives and bonuses to the employees.
• Alternative trade routes: The incident in the Suez Canal proved that it is best for the regional and global trade networks to avoid dependence on a single major trade route. The blockage of the canal caused delays and losses for many shippers and customers, who had to reroute their vessels or wait for the canal to reopen. Some of the alternative routes include the Cape of Good Hope, the Panama Canal, the Arctic route, and the land bridges in Israel and Turkey. These routes have their own advantages and disadvantages, such as distance, cost, capacity, security, and environmental impact. The emergence of these alternatives could reduce the attractiveness and competitiveness of the Suez Canal, and affect its market share and revenues.

What are the Opportunities?

The Suez Canal has many opportunities for development and cooperation, both regionally and internationally. Some of the main opportunities are:

• Physical expansion: The Suez Canal Authority has the capability to expand and deepen the canal, which would allow it to increase the maritime traffic and accommodate the larger types of ships that are being constructed these days. The expansion would also reduce the waiting time and the risk of congestion and accidents in the canal. In 2015, the canal authority completed the New Suez Canal, a parallel waterway that added 35 km (22 miles) of new channels and 37 km (23 miles) of existing channels. The project cost $8 billion and was financed by Egyptian citizens through the sale of investment certificates. The project increased the canal’s capacity from 49 to 97 ships per day and reduced the transit time from 18 to 11 hours. The canal authority plans to further expand the canal by 2023, with a total cost of $5.3 billion.
• Belt and Road Initiative: The Suez Canal is a key component of China’s Belt and Road Initiative (BRI), which aims to enhance the connectivity and integration of Eurasia through infrastructure and trade projects. The BRI increases the trade volume between China and Europe through the maritime route, which passes through the Suez Canal. China is the largest trading partner of the European Union and the second largest of Egypt. China also has a strategic interest in securing its energy supplies from the Middle East and Africa, which also depend on the Suez Canal. China has invested in the development of the Suez Canal Economic Zone, which is a special industrial and commercial area that covers the canal’s corridor and its adjacent ports and cities. The zone is expected to attract more foreign direct investment, create more jobs, and diversify the canal’s sources of income.
• Eastern Mediterranean Gas Forum: The Suez Canal also plays a role in the Eastern Mediterranean Gas Forum, which is a regional platform that brings together Egypt, Israel, Cyprus, Greece, Italy, Jordan, and Palestine to cooperate on the exploration and export of natural gas in the Eastern Mediterranean. The forum was established in 2019 and aims to promote energy security, stability, and prosperity in the region. The canal provides a link between the gas fields in the Mediterranean and the markets in Asia, as well as a potential route for the construction of gas pipelines. The forum also enhances the political and economic relations among the members, especially between Egypt and Israel, who have a peace treaty since 1979.

Why safety of Suez Canal is Important?

The safety of the Suez Canal is important for several reasons:

• Economic impact: The canal handles about 10% of the world’s maritime trade and 7% of the world’s oil, making it a key artery for the movement of goods and energy between Europe and Asia. The canal reduces the journey distance by about 8,900 km (5,500 miles), saving time and fuel costs for the shippers and customers. The canal also generates about $5 billion per year for Egypt, which is a significant source of income and foreign currency for the country, especially in the wake of the political turmoil and the decline of the tourism sector. Any disruption or damage to the canal could have serious consequences for the global economy, the Egyptian state, and the millions of people who depend on the canal for their livelihoods.
• Strategic importance: The canal is a major asset for regional and international security, as it provides access to the ports and markets of the Middle East and North Africa, which are rich in natural resources and geopolitical interests. The canal also serves as a link between the gas fields in the Eastern Mediterranean and the markets in Asia, which are expected to grow in demand and supply in the coming years. The canal is also a symbol of national pride and sovereignty for Egypt, which has defended and maintained the canal against foreign intervention and threats, such as the Suez Crisis of 1956 and the Arab-Israeli wars of 1967 and 1973. The canal also enhances the political and economic relations among the countries in the region, especially between Egypt and Israel, who have a peace treaty since 1979 and cooperate on the exploration and export of natural gas in the Eastern Mediterranean.
• Environmental protection: The canal is a sensitive and fragile ecosystem, which hosts a variety of marine life and biodiversity. The canal also connects two different seas, the Mediterranean and the Red Sea, which have different salinity, temperature, and species. The canal is vulnerable to environmental risks, such as pollution, invasive species, climate change, and accidents. The canal’s management and stakeholders need to ensure the protection and conservation of the canal’s environment, as it affects the quality and sustainability of the canal’s operations, as well as the health and well-being of the people and the wildlife in the area.

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