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Economic Potential Of Suez Canal Explained

Any blockage to the Suez Canal costs 9 9.6 billion a day. Due to the temporary blockage of the canal, Egypt is losing 14 million dollars daily.

Suez_Canal

Why Suez Canal is important economically?

Egypt earns billions of dollars in toll tax through Suez Canal. About 30 percent of global container ship traffic sails through the waterways. The canal is the big earner for Egypt’s economy contributing more than $ 5.5 billion last year.

Egypt canal is important symbolically as well as critically. Egypt has fought multiple wars for the Suez Canal. Egypt sees the Suez Canal not only as a symbol of national pride but symbolic of economic as well as strategic and economic independence. Suez Canal is the main source of foreign currency for Egypt.

The strategic importance of the Suez Canal

About 12% of the world’s trade passes through the Suez Canal. The canal not only connects the Mediterranean and the Red Sea but is also the shortest sea route between Asia and Europe. An alternative trade route is the Cape of Good Hope, located in the far south of Africa, but it takes two weeks longer than the Suez Canal.

The economic cost of blockage

According to data from the Lloyds List, any blockage to the Suez Canal costs 9 9.6 billion a day. Due to the closure of this canal, Egypt is losing 14 million dollars daily.

Syrian authorities have cautiously begun stockpiling fuel after traffic got stuck in the Suez Canal. This war-torn country is already facing power shortages and inflation. 

Where exactly the Suez Canal is located?

The canal is in Egypt, connecting Port Said on the Mediterranean Sea to the Indian Ocean via the Egyptian city of Suez on the Red Sea. The passage enables more direct shipping between Europe and Asia, eliminating the need to circumnavigate Africa and cutting voyage times by days or weeks.

The canal is the world’s longest without locks and connects bodies of water at differing altitudes. With no locks to interrupt traffic, the transit time from end to end averages about 13 to 15 hours, according to a description of the canal by GlobalSecurity.org.

How many times the canal has ever been closed?

Egypt closed the canal for nearly a decade after the 1967 Arab-Israeli war, when the waterway was basically a front line between Israeli and Egyptian military forces. Fourteen cargo ships, which became known as the “Yellow Fleet,” were trapped in the canal until it was reopened in 1975 by Mr. Nasser’s successor, Anwar el-Sadat.

A few accidental groundings of vessels have closed the canal since then. The most notable, until the most recent blockage by EverGreen, was a three-day shutdown in 2004 when a Russian oil tanker ran aground.

Also Read: How Long Will It Take To Dislodge The EverGreen Ship Blocking Watwrways in Suez Canal?

Ownership of Suez Canal

The canal, originally owned by French investors, was conceived when Egypt was under the control of the Ottoman Empire in the mid-19th century. Construction began at the Port Said end in early 1859, the excavation took 10 years, and the project required an estimated 1.5 million workers.

According to the Suez Canal Authority, the Egyptian government agency that operates the waterway, 20,000 peasants were drafted every 10 months to help construct the project with “excruciating and poorly compensated labor.” Many workers died of cholera and other diseases.

Political tumult in Egypt against the colonial powers of Britain and France slowed progress on the canal, and the final cost was roughly double the initial $50 million projected.

The crisis began in 1956 when Egypt’s president nationalized the canal after the British had departed. He took other steps that were deemed security threats by Israel and its Western allies, leading to a military intervention by Israeli, British and French forces.

The crisis briefly closed the canal and raised the risk of entangling the Soviet Union and the United States. It ended in early 1957 under an agreement supervised by the United Nations, which sent its first-ever peacekeeping force to the area. The outcome was seen as a triumph for Egyptian nationalism, but its legacy was an undercurrent in the Cold War.

Which country controls the canal now?

The British powers that controlled the canal through the first two world wars withdrew forces there in 1956 after years of negotiations with Egypt, effectively relinquishing authority to the Egyptian government led by President Gamal Abdel Nasser.

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