Lubaba Mahjabin Prima
Cover design: Mubasher H Chowdhury
In May last year, when the container ship Evergreen got stuck in the Suez Canal and halted the interconnected global trade for almost a week, the issue of Suez Canal came to the forefront. But given that the canal is the fastest sea route between Asia and Europe, this wasn’t the first time that the canal was the center of international attraction. What then, was the economic and political significance of this canal over the years?
History and political significance:
The Suez Canal connects the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia. Construction of the canal lasted from 1859 to 1869 and took place under the regional authority of the Ottoman Empire. Later, the Egyptian government-owned the canal, but European shareholders, primarily French and British, owned the concessionary company that operated it. However, in July 1956, when President Gamal Abdel Nasser nationalized it, Israel invaded Sinai in response to that. Later, the United Kingdom and France mobilized their paratroopers and joined the war. However, due to immense political pressure from the United States, the Soviet Union, and the United Nations, the three invaders led a withdrawal. This is known as the historic Suez crisis, and it humiliated the United Kingdom and France and strengthened Nasser in the political arena. This was indeed a significant episode in the history of world politics because it signified the end of Great Britain's role as one of the world's major powers.
The most significant incident regarding the canal occurred in 1967 when the canal was blockaded for eight years. It began after the 1967 Six-Day War when Israeli forces occupied the Sinai Peninsula, including the entire east bank of the Suez Canal. Unwilling to allow the Israelis to use the canal, Egypt immediately imposed a blockade that closed the canal to all shipping. Fifteen cargo ships, known as the "Yellow Fleet", were trapped in the canal and would remain there until 1975. Later, after the Yom Kippur War of 1973, Canal Clearance Operations were launched where the canal and its lakes were cleared of mines. The canal was then reopened by Egyptian President Anwar Sadat aboard an Egyptian destroyer, which led the first convoy northbound to Port Said in 1975.
The most exciting incident about the Suez Canal is probably something that never even took place. It was a plan that the USA had in the 1960s when it decided to build an alternative canal to the Suez Canal across the Negev deserts of Israel, connecting the Mediterranean Sea and the Red Sea. The plan was to use 520 nuclear bombs to build the "strategically valuable alternative" canal. The project would cost 5 billion dollars in today's money. One has to remember that this was when the safe and peaceful use of nuclear energy was being paraded, and the USA considered this to be a perfect opportunity. However, this plan was abandoned due to fear of political backlash from the neighboring Arab nations.
The canal is the shortest route connecting Europe and Asia, and nearly 12% of global trade by volume transits through it daily. According to the Suez Canal Authority, almost 19,000 ships sailed through the canal in 2020, or 51 ships per day on average. Historically, the canal was crucial for the transportation of oil. However, the development of the increased size of tankers—the largest of which cannot use the canal—and the development of sources of crude oil in areas outside of the canal have reduced the canal's importance in the international oil trade. The major northbound cargoes mostly consist of crude petroleum, petroleum products, coal, ores, metals, fabricated metals, wood, oilseeds, oilseed cake, and cereals. On the other hand, southbound traffic consists of cement, fertilizers, fabricated metals, grains, and empty oil tankers. When the canal was blocked this March, over 100 ships were reportedly waiting for the waterway to clear. The blockage created a delay in the transport of goods which is around 400 million dollars in value. Moreover, oil prices soared in anticipation of the delay. So, it is pretty evident how necessary the canal is in today's interconnected complex supply chain.
The time saved by the passage is almost invaluable. For example, if a ship traveling from a port in Italy to India passes through the Suez Canal, it will cover 4400 nautical miles - a journey that would take about nine days at a speed of 20 knots. But the second-quickest way to complete that same journey would be via the Cape of Good Hope and around Africa, a 10,500 nautical miles long route. At the same speed, it will take three weeks to complete the journey. The longer sail time translates into escalating fuel costs, which increase the manufacturing costs of the industries involved. Moreover, there are risks of pirates on that route which jeopardizes the safety of the crew and goods. Hence, the significance of the canal is unparalleled.
Current geopolitics surrounding the canal:
Even though Egypt has ownership of the canal, the United States of America has considerable control. The US provides around 1.4 billion dollars of military aid to Egypt each year to maintain the hegemony. Egypt, in response, prioritizes their movements to the point that US Military vessels get to cut through the line in the canal.
Given the economic and political significance of the canal, a lot of other countries are trying to ramp up their efforts to build alternatives to the canal. The Evergreen incident opened up new avenues for governments to shore up support. Israel is promoting the Ben Gurion waterway as a rival to the canal. Their project aims to connect the Mediterranean Sea to the Red Sea through the Gulf of Aqaba to the Mediterranean through the Negev desert. The country claims that the distance between Eilat and the Mediterranean is similar to that of the Suez connection between the Red Sea and the Mediterranean. It hopes to gain support from Jordan and Saudi Arabia for their project.
On the other hand, there's another project high up on the arctic waters that Russia has been promoting lately as an alternative to the canal, promising adequate guarantees of safety, movement, and low cost. It is along with the northern sea link from China to European ports, the distance of which is about 40 percent shorter, cutting by 15 days sailing from Asia to Europe compared with transit via the Egyptian waterway. The Arctic route is increasingly free of ice due to climate change, and Russia is promising to send icebreakers for any vessels that become stuck. Moreover, the Iranian Ambassador to Russia has also proposed activating a shipping line that passes through Iran as an alternative to Egypt's Suez Canal. Iran claims that the proposed shipping line "shortens time" and is "cost-saving by 30 percent compared to the Suez Canal," hence making a better option to the Red sea route. However, analysts say that the North sea route cannot be a viable alternative to the Suez Canal due to having snowy waters during significant portions of the year. On the other hand, Egyptian authorities claim that the Egyptian Canal will remain the most critical global shipping corridor. In the near future, total trade passing through this waterway may reach 12 percent of the international trade volume, an increase of 2 percent over the current volume, they believe.
Only time can tell if the alternatives to the canal will be viable enough to decrease the canal's significance. But the Suez Canal has undoubtedly been the chokepoint of the world's economic and political history for many decades. In Robert Frost's words, the canal was the route more traveled by, which has made all the difference. It has sometimes has heightened tensions among nations and, at other times, built allies. It has been the symbol of war and, again, of progress. It certainly is one of the most interesting routes in the modern history of man.
Lubaba Mahjabin Prima
The author is an Economics student who believes that the world can be a significantly better place if we analyse its problems methodically and approach them with empathy for fellow humans.
Send your articles to: