The new Suez Canal

Editorial

The new Suez Canal

Saudi Gazette

Last updated: Saturday, August 01, 2015 6:05 PM

There will be much pomp and circumstance when hundreds of dignitaries flock to the banks of the new Suez Canal to mark the inauguration of this record-setting construction feat that crowns one year of non-stop work, generous national donations, and trusting investments by average Egyptians. The opening of the new Suez Canal, scheduled for Aug. 6, is seen as a major breakthrough for the Egyptian government in its efforts to mitigate investor fears concerning the turbulent political situation in the country over the last four years, combined with economic difficulties and insurgent activity.

The new 72-km section is an expansion of the current Suez Canal that will allow ships to pass by each other, like a two-lane highway, as opposed to a single lane. Upon completion, more ships will fit inside the canal at the same time — 97 ships a day by 2023, up from the current 45 — reducing the wait time for some ships from 22 hours to 11 hours in one of the world’s most important shipping channels. The two-way route promises to more than double the canal’s income over the next 10 years and nearly triple revenue from the Suez Canal to over $13 billion per year by 2023, instead of the current $5.3 billion from the existing canal.

Average Egyptians are the ones who dug this canal, virtually taking ownership of the mega-project. It took 10 years to build the original Suez Canal starting in 1859, and it cost Egyptians sweat and blood as thousands died in the process. It cost Egyptians a lot this time, too, but they were happy to foot the $8.5 billion bill. Five-year investment certificates at 12 percent interest sold out in eight days. The speed of fund collection and enthusiasm of the public signaled a high degree of confidence in the government and the country’s future.

However, there is skepticism about the level of income the canal will generate, with some experts doubting that global shipping in the coming years justifies Egypt’s forecasts. The canal’s future success will depend largely on the global shipping industry, which Egypt cannot control. All the money the canal promises to generate will most likely not be enough to improve the lives of average Egyptians, who are suffering rising poverty and prices, as the economy tries to recover from the financial and political turmoil between 2011 and 2013. Egypt will not be able to live off the incomes of even two canals. In a speech not long ago, Egyptian President Abdel-Fattah Al-Sisi, who spearheaded the new canal drive, said Egypt would need no less than $200-$300 billion to rebuild its economy, more than the money of the two canals combined could ever approach. But experts were wrong before when they predicted it would take five years to construct the new Suez Canal; Egypt pulled it off in just one year.

The task of portraying Egypt as stable takes on a particular urgency since the Egyptian state is fighting an ongoing battle against insurgents.

Concerns that terrorist strikes against police and army personnel in neighboring Sinai as well as militant attacks in the heart of Cairo to dampen the festivities loom. Thus, for Egypt, the completion of the project offers a chance to project an image of stability after years of unrest following the 2011 uprising that unseated president Hosni Mubarak. Since July 2013, after Islamist president Mohamed Morsi was deposed, militants have attacked military positions and recently assassinated the chief prosecutor and launched a missile at a naval vessel in the Mediterranean.

This new, improved Suez Canal is being touted as a national project and is expected to bring investor trust and foreign capital back to Egypt after years of turmoil.