Egypt has revived the Suez Canal on a grand scale with a flourish of patriotic fervour, vowing to reignite world trade almost a century and a half after the legendary waterway first opened.
The $8.2bn construction blitz adds a second shipping lane along a 45-mile stretch, allowing traffic to move in both directions. It shaves 11 hours off the journey and increases capacity by a quarter to 99 vessels a day.
The project was rushed through in less than a year – a third of the original estimate – in an engineering coup that enlisted three-quarters of all dredgers in existence to scoop out a new passage through the Great Bitter Lake.
President Abdel Fattah al-Sisi called the enlarged canal a “gift to the world” at an opening event with global leaders in the port of Ismailia, protected by a massive security blanket to fend off possible terrorist attacks from ISIS forces in the Sinai.
While the Egyptian government was at pains to stress that the country is safe, the event was overshadowed by ISIS threats to execute a Croatian engineer seized on the streets of Cairo if the state fails to release “Muslim women” prisoners within 48 hours.
Funding for the canal was raised by the Egyptian people in just eight days, with even the poorest buying interest-bearing certificates for as little as 80p. Cairo hopes to boost canal earnings from $5.3bn to $12.3bn by 2023.
Despite the display of national esprit – what the great Arab philosopher Ibn Khaldoun termed “asabiyah” – it is far from clear whether the venture will pay for itself.
“It’s all propaganda. There was no viability study done,” said Ahmed Kamaly, an economist at Cairo’s American University.
The average number of ships last year was 47 a day, well below the maximum capacity. The growth in world trade has stalled as China comes off the boil and shifts from heavy industry to a service-led economy.
The Swiss bank UBS says the “import-component” of China’s exports has dropped to 33pc from 60pc in the mid-1990s, cutting reliance on shipped goods to drive economic growth.
The canal can no longer hope to attract booming shipments of liquefied natural gas (LNG). America plans to export LNG directly to Europe in growing volumes, effectively pushing LNG from Qatar and Asian suppliers towards markets in the Far East.
President al-Sisi has seized on the Suez venture to rally the nation and project a can-do confidence, hoping to pull the country out of a deep economic crisis with the shock therapy of free market reforms – the Arab world’s answer to Chile’s Augusto Pinochet.
He has already taken advantage of low oil prices to slash fuel subsidies and called for an “Islamic Reformation” to restore the historic dynamism of the Middle East and lift the Muslim world out of an economic cul-de-sac.
Yet the task is daunting. Egypt’s public debt is almost 90pc of GDP, near the danger level for a developing country with thin capital markets. The budget deficit is 11pc of GDP. Foreign reserves are a wafer-thin $22bn, covering four months of imports.
The economy is being kept afloat by $25bn in annual aid from Saudi Arabia and the Gulf states, a source of funding that is increasingly in doubt as the oil slump drags on.
President al-Sisi hopes to capitalize on the presence of French president Francois Hollande and other Western politicians at the Suez ceremony to legitimize his government, despite the bloody overthrow of the elected Muslim Brotherhood two years ago and human rights abuses on a systemic scale.
There is outrage across the world at the death penalty imposed on former president Mohamed Morsi and hundreds of his supporters. But global leaders are biting their tongues, reluctantly backing President al-Sisi as a defence against anarchy in the leading Arab nation.
The situation is extremely tense. The chief prosecutor was assassinated in June. It took Egyptian F-16 fighter jets hours to dislodged ISIS forces from the North Sinai town of Sheikh Zuweid in early July.
Middle East security expert Gilad Baum said the greater threat is a simmering insurgency “spreading like wildfire throughout Egypt” as Salafist activists abandon non-violent resistance and take matters into their own hands.
A new group called “Revolutionary Punishment” has launched 120 pinpoint strikes this year in a well-crafted strategy to sabotage the economy and chip away at the props of the al-Sisi regime.
“Their targets range from electricity posts and public transportation to multinational corporations, as they hope to drive off potential foreign investors. Power cuts and service halts in strategic locations, as well as drive-by shootings at branches of KFC, Vodafone, HSBC, Carrefour and elsewhere, are now taking place on a weekly basis,” he wrote in Foreign Policy Journal.
President al-Sisi told the ceremony that his country was holding the line for the whole of mankind. “Egypt this year has stood against the most dangerous terrorist ideology that would burn the world if it could. We are fighting them, and will defeat them,” he said.
The new Suez Canal scarcely compares with the original venture – a 100-mile waterway that slashed 4,200 miles off the Cape shipping route from Europe to Asia and transformed world trade.
It was built by the French diplomat Ferdinand de Lesseps in the 1860s and was at first viewed with great suspicion in London as a rival strategic move by Napoleon III to gain dominant influence in Egypt.
British prime minster Benjamin Disraeli quickly saw its value and – after a tip-off from a journalist – jumped on the chance to buy a £4m stake from the Khedive in 1875 after Egypt spiraled into financial crisis. He secured the money through the elite Rothschild banking family, presenting Parliament with a fait accompli.
Within a decade, 80pc of the shipping in the canal was carried by British vessels. It became the central artery of the British Empire, and the lifeline to India.
The canal was nationalised by the firebrand military leader Gamal Abdel Nasser in 1956, triggering a botched intervention by Britain, France and Israel that extinguished the last European pretensions to empire and marked the end of Britain’s days as a world power.
It was Washington that sealed the fate of the Franco-British venture. President Dwight Eisenhower let a speculative attack on sterling run its course, refusing to any credits to a prostrate Britain until the withdrawal of troops.
The Soviet Union took advantage of the global furore over the Suez Crisis to crush the anti-Communist uprising in Hungary.
Nikita Khrushchev chose his moment perfectly. The West could hardly take the moral high ground when it seemed to be doing the much same in Egypt. History plays its tricks.
by The Telegraph