Egypt gets ready to open new Suez Canal
Cairo - Egypt has started its countdown to opening an $8 billion, 72-kilometre waterway running alongside the Suez Canal, the world’s most heavily used shipping route, on August 6th after a year of intense work.
The project will allow two-way transits in the canal, which links the Mediterranean and Red seas, for the first time since its gala inauguration on November 7, 1869, four years behind schedule.
The new passage, Egypt says, will make the 190-kilometre-long canal, a strategic maritime link between Europe and Asia, by reducing transit time from 22 hours to 11.
A major ceremony, which a host of world leaders is expected to attend, is scheduled for the opening of the new waterway, the largest economic project carried out under the presidency of Abdel Fattah al-Sisi.
When Sisi unveiled the much-delayed project, he declared it would represent the “new Egypt” and would be built in one year rather than the proposed two years and that the project would be funded by Egyptians without outside financing. When the commander of the army’s engineering corps told Sisi in early 2014 that digging and dredging the new waterway would take two years, the president retorted: “This is too long. One year is enough. You will not leave this place until we come here next year to inaugurate the waterway. We have no time to waste. We’re late already.”
The Cairo government, beset by major economic problems and heavily dependent on outside aid, particularly from the Gulf states, hopes to collect $30 million in public and commercial donations to pay for the inauguration ceremony. Egyptian banks have been receiving donations but no figures have been released.
Although cash-strapped Egypt is still recovering from years of political instability largely induced by the 2011 uprising that toppled long-time dictator Hosni Mubarak, Egyptian banks reportedly managed to collect the $8 billion in funds requested for implementing the project in just eight days in 2014. In return, banks gave donors investment certificates with the unprecedented interest rate of 12%, collectable every three months. The certificates are expected to be valid for five years.
“The project comes after almost four decades of economic and political inaction,” veteran economist Ayman Ibrahim said. “It comes now to give the message that Egyptians are still alive and kicking and able to achieve success.”
National pride aside, Egyptian economists say that reducing transit time for vessels using the canal will boost revenue from the waterway, which is an important source of foreign currency. The canal currently earns Egypt $5.3 billion a year in foreign currency, but the government hopes the new waterway will boost that to $13.2 billion by 2023.
Egyptians have long dreamed of turning the Suez Canal region into a vast international industrial and service zone. Economist Reda Essa says the canal extension brings that objective closer to reality.
“The project includes a plan for turning this region into a magnet for industrialists from everywhere in the world, who will come here to launch projects, using the magnificent location of the region and available labour and production requirements,” Essa said. “This will push the Egyptian economy forward a lot.” At the top of the list of projects envisaged in the Suez Canal Axis, the official designation of the area surrounding the waterway, are shipbuilding, ship maintenance, food industries and logistical services. Officials say a growing number of international investors have shown interest in the project.
Digging and dredging the new shipping route has created 15,000 jobs for Egyptians. Suez Canal Authority Chairman Mohab Mameesh, a former commander of the Egyptian navy, estimates the project will create approximately 1 million jobs over the next few years, helping to ease high youth unemployment and improving stability.
In the fourth quarter of 2014, 12.9% of Egypt’s workforce of 27 million was unemployed, according to the state-run Central Agency for Public Mobilisation and Statistics.
More importantly, observers say, boosting commercial and industrial activity in the canal zone will encourage Egyptians to relocate to and invest in the Sinai peninsula, an arid region east of the waterway that has long been neglected by the central government and has been plagued by an Islamist insurgency for the last two years. “This is, in fact, of extreme importance for Egypt’s national security,” said Ibrahim, the economist. “Sinai has always been on the front line of national security/ and the presence of more people in it will boost security.”
Around 60,000 square kilometres in size — almost double the area of Israel, Lebanon, the West Bank and the Gaza Strip combined — the peninsula’s population is only around 400,000.
Since becoming president, Sisi has embarked on a wide-ranging economic reform plan that has involved slashing some fuel subsidies and creating a nationwide road network.
Economists say the regime wants to extend the nationalist surge engendered by the canal project, which mobilised the entire country, to help Egypt out of its current economic squeeze.