New Suez Canal helps Egypt sail to new waters
CAIRO - Egypt inaugurated a new waterway alongside the Suez Canal in a bid to shorten the time it takes for ships to pass through the channel, one of the most important routes for international trade, and attempt to generate more funds from an increase in traffic.
Work on the parallel waterway started a year ago, with thousands working day and night to finalise the project.
The new 39-kilometre-long channel, which will allow two-way traffic and reduce transit times along the Suez Canal, will strengthen Egypt’s finances by boosting the income generated by the waterway, experts said.
“By shortening transit time, the project will help international manufacturers and exporters save hundreds of millions of dollars every year,” said Mukhtar al-Sherif, an economics professor at Al-Azhar University. “This will boost Egypt’s standing as an indispensable player as far as the movement of goods is concerned.”
The new waterway is expected to increase the number of container ships and tankers crossing the Suez Canal from about 49 to nearly 100 per day by 2023, raising revenues from the canal from $5.3 billion to $13.2 billion a year.
But it is not the canal or the transit fees that Egyptian President Abdel Fattah al-Sisi’s government is keeping an eye on. Sisi wants to turn the 190 kilometres of empty land on the banks of the canal into an international service and industry hub.
Projects planned within the area include logistical services, ship maintenance, shipbuilding and hundreds of factories, which will create thousands of jobs.
International leaders including Russian President Vladimir Putin, French President François Hollande, British Prime Minister David Cameron, Italian Prime Minister Matteo Renzi and Saudi Deputy Crown Prince Mohammed bin Salman bin Abdul-Aziz are among the guests invited to attend the August 6th inauguration.
The canal project is part of efforts by the president to boost Egypt’s economy which has been badly hit by ongoing instability following the overthrow of long-time dictator Hosni Mubarak and his successor, Islamist president Muhammad Morsi who was ousted from power in July 2013 by then army chief Sisi following huge public demonstrations.
Many foreign governments severed or considered cutting relations with Egypt, the United States withheld part of its military aid to the country and the African Union froze its membership.
But two years later, with the threat of Islamic extremism rising in Syria and in Egypt’s own Sinai peninsula, Sisi’s international standing has improved. US Secretary of State John Kerry said on a visit to Cairo on August 2nd that Egypt and the United States were returning to a “stronger base” in bilateral ties. He has also praised the Suez Canal project. With foreign investment hard to come by, Sisi’s government issued state bonds to finance the $8 billion needed for the new waterway. Sisi is expected to try to employ the same method to fund other major infrastructure projects.
The Egyptian president has a lengthy list of projects planned, from a new administrative capital, expected to cost $40 billion, to massive solar energy farms he wants built in the western desert and the hundreds of thousands of acres of desert he wants to reclaim.
But economists say Sisi will not find it as easy to persuade Egyptians to invest in many of the projects due to uncertainty over returns. “It will all depend on the return from the new projects,” economics Professor Yumn al-Hamaqi said. “Egyptians invested their money in the Suez Canal project because they knew that the project will be a success.”
Other economists say, however, that Egypt’s banks, which have total deposits of $1.7 billion, can fund any new projects.