Suez Canal expansion amid regional war

Egypt formally opened an expansion to the Suez Canal on Aug. 6, amid pomp and spectacle. The first ship passed through the new waterway only after President Abdel Fattah al-Sisi, clad in a military uniform, made his entrance by sailing in on the same yacht that was used at the inaugural bash when the canal first opened in 1869. Performers dressed as pharaohs blared patriotic songs from the shore, as demonstrators filled Cairo's Tahrir Square to celebrate. Among the dignitaries in attendance for the lavish ceremony were King Abdullah II of Jordan and French President Francois Hollande. "The Egyptian people are rewriting history," said the chairman of the Suez Canal Authority, Adm. Mohab Mamish. "If the people long for life, then destiny must respond." The project, built in just one year and hailed in the national media as "Egypt's gift to the world," is projected to boost revenues from the Suez Canal from $5.3 billion in 2014 to $13.2 billion in 2023.

But the projections "appear to be based on implausibly optimistic assumptions about world trade," said William Jackson, senior emerging markets economist at London-based Capital Economics. When world trade value more than doubled in the first decade of the millennium, so did Suez Canal revenues. However, Jackson finds that in order for Egypt to reach its revenue target from the new canal, global trade volume would need to rise by 9% a year—higher than the 3% average seen over the past four years and the 7.5% average yearly growth seen during the boom years of 2003 to 2007. "This seems unlikely," he said.

Before its expansion, the canal was operating below its capacity of 78 vessels a day, and it could already handle all ships except the very biggest oil tankers.  Proponents say more ships will now use the canal because the new by-pass allows faster two-way traffic. Critics counter that for ships that already save as much as 10 days at sea by using Suez instead of sailing around Africa, a few hours less transit time through the canal will make little difference.

The expanded canal is also to serve as a new industrial hub and "special economic zone" where Egypt's usual restrictions on foreign investment will be lifted, according to consulting firm Dar Al-Handasah, which is overseeing the megaproject. This will please Western leaders, who have been eager for Egypt to dismantle the remaining Nasser-era restraints on corporate access to local labor and resources.

But ecologists are expressing concerns of their own—that the expanded canal will further facilitate invasive species in the Mediterranean. Jellyfish swarms now clogging the cooling systems of coastal power plants across the Mediterranean are believed to have entered the sea through the Suez Canal. And the original canal had checks on such impacts—such as the Great Bitter Lake, a highly saline expanse in the waterway that serves as a natural barrier for the migration of sea creatures from the Red Sea into the Mediterranean.

The new canal runs parallel to the old one from the Great Bitter Lake to the Mediterranean, and the new water course could decrease the salinity in the lake. Authorities also failed to implement further mitigation measures such as locks or salinity barriers. (Ahram Online, Xinhua, WP, The Economist, DW, The Telegraph, Aug. 6)

The absence of locks was inevitable due to Egypt's severe water crisis. Due to both shrinking water resources and population growth, the country's annual water supply dropped to 660 cubic meters per person in 2013 from over 2,500 in 1947, according to official figures. Egypt is already below the United Nations' "water poverty threshold," and by 2025 the UN predicts it will be approaching a state of "absolute water crisis." (The Guardian, Aug. 4)

Then there is the inevitable security question. ISIS-affiliated militias are waging a fast-growing insurgency in the Sinai Peninsula, adjacent to the canal zone. More than 10,000 security personnel were assigned to the opening celebration. "We remain concerned that Egypt's security situation and poor business environment may deter investment," said Jackson of Capital Economics. (Ahram Online, Aug. 6)

Just two days before the canal's inaugural ceremony, militants in northern Sinai shelled a house near a security checkpoint at the restive town of Sheikh Zuweid, killing an entire family of five and wounding nine of their neighbors. (AP, Aug. 4)