Suez Canal: A new beginning
Suez Canal expansion marks a new era of development for North African nation.
Egypt is to unveil a major extension of the Suez Canal on Thursday, a mega-project that has emerged as a cornerstone of President Abdel Fattah El Sissi's efforts to restore national pride and revive the economy after years of unrest.
The 1869 inauguration of the canal linking the Red Sea to the Mediterranean was hailed as a leap into the modern age, and President Gamal Abdel Nasser's nationalisation of the British and French-run waterway in 1956 was seen as marking Egypt's decisive break with its colonial past. That sparked the second of four wars with Israel, including a 1973 offensive launched across the canal that Egyptians celebrate as their greatest military victory.
The government hopes for another historic moment on Thursday, when it unveils an $8.5 billion extension of the waterway funded entirely by Egyptians, without foreign aid. The media and government supporters across the board have breathlessly repeated the same message - after four years of strife and the overthrow of two presidents, Egypt is back.
"Our culture can be very sentimental, and this was the first time Egyptians have been so galvanized," said Adel Beshai, professor of economics at the American University in Cairo. "It was a brilliant idea by El Sissi - the Egyptians now own the canal."
He views the expansion as the first step in a new area of development, free of the public sector's notoriously crippling bureaucracy. The key global trade route is already one of Egypt's top foreign currency earners, and is run by a semi-independent authority with 25,000 employees that is considered one of the country's most competent bodies.
"It is opening infinite horizons. It is going to be handled outside the ossified bureaucracy that has been holding us back. What is being done there is done with extreme efficiency and a scientific approach," Beshai said.
The new extension involved digging and dredging along 72 kilometres (45 miles) of the 193-kilometre canal, making a parallel waterway at its middle that will facilitate two-way traffic accommodating the world's largest ships. With a depth of 24 metres (79 feet), the canal now allows the simultaneous passage of ships with up to 66 feet draught.
Originally planned as a three-year project, El Sissi ordered the new segments to be finished in just one, citing the pressing need for an economic boost. Work has been non-stop ever since, and at one point 43 massive dredging machines were cranking away.
The canal drew in a record $5.3 billion last year, a figure the government estimates it can raise to $13.2 billion by 2023 if it doubles the number of ships transiting daily to 97. Economists and shippers, however, say that's overly optimistic.
"It's not about capacity, it all depends on trade between East and West, growth in the world economy, especially in Europe, and how the (authority) handles its fees," said Xu Zhibin, managing director for the Egyptian affiliate of China's state-owned COSCO, one of the world's top container shippers.
The project's success also depends on the security situation. To the east of the canal, a long-running insurgency in the Sinai Peninsula has intensified since 2013. Security has been stepped up along the canal ahead of Thursday's ceremony, which is expected to be attended by El Sissi and foreign dignitaries. Military spokesman Brigadier General Mohammed Samir said extra troops have been deployed to "deal with threats and potential aggression."
Some analysts say security remains a concern for foreign investors, whose capital is needed for the next stage of the project - the expansion of the canal zone to include a logistics hub and manufacturing centres.
"In theory at least, Egypt has many of the ingredients to become a manufacturing hub," wrote William Jackson, senior emerging markets economist with Capital Economics, in a note. "We remain concerned that Egypt's security situation and poor business environment may deter investment."
That second stage, which would generate badly needed jobs for Egypt's surging population, is still being developed and would take years. El Sissi's office said the next step would focus on the East Port Said area, the expansion of its harbour and the development of an industrial zone that would cover 40 million square metres (430 million square feet) and eventually generate some 400,000 jobs.
"It will take time to see tangible investment," said Angus Blair, chairman of Mideast business consultancy Signet. "There is significant interest in the areas to get developed around the canal which, if developed well, should generate new jobs and business development."
In the meantime, the canal extension has stirred intense national fervor. Cairo's Tahrir Square is decked with lights, TV networks are running countdown clocks, and some visitors arriving at Cairo's airport have been given commemorative passport stamps calling the canal "Egypt's gift to the world."
One organiser of the opening, interviewed on popular private broadcaster Mahwar, said no one should doubt the project's grandeur. "For those who are skeptical or denying, tell me who they are so that we can drown them in the new canal's 27-metre depth," Sami Abdel Azizi said.
The TV presenter replied: "No, we will do that for you."
All about Suez Canal:
> Suez has yet to fully recover since the global financial crisis caused shipping to plummet in 2009. Though total tonnage has increased, the number of vessels using the canal remains 20 per cent below its 2008 level and just two per cent higher than a decade ago.
> Global trade volume would need to rise by around nine per cent a year for Suez to reach its traffic goal, Capital Economics said in a report on Monday, describing the target as "unlikely to say the least."
> About eight per cent of the world's cargo now passes through the canal, according to the Suez Canal Authority.
> Traveling from Singapore to New York through Suez reduces the distance by 19 per cent compared with the route via the Pacific and the Panama Canal.
> From the Arabian Gulf to Rotterdam, Suez saves 42 per cent by removing the detour around the Cape of Good Hope.
> The second canal allows two-way traffic and reduces transit time to 11 hours from 18, according to the canal operator. The expansion won't allow larger vessels to use the route.
> The new extension involved digging and dredging along 72 kilometres (45 miles) of the 193-kilometre canal. With a depth of 24 metres (79 feet), the canal now allows the simultaneous passage of ships with up to 66 feet draught.
> A shorter transit may save up to four per cent of journey costs depending on the length, the Napoli-based economic research center SRM estimates.
> The canal drew in in a record $5.3 billion last year, a figure the government estimates it can raise to $13.2 billion by 2023 if it doubles the number of ships transiting daily to 97. - Agencies
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