São Paulo – This Thursday (6th), Egypt officially inaugurated the New Suez Canal, the 35 km waterway parallel to the existing one. In addition, the 37 km existing structure was widened and the draft was deepened to allow the passage of larger vessels. The project took investments of US$ 8.2 billion and was concluded in only one year, instead of the three years previously forecasted.
The canal is an important source of revenues for the Egyptian state and its expansion is one the main bets made by president Abdel Fattah El-Sisi to boost the country’s economic growth. The government hopes that revenues of the trade route that links the Mediterranean to the Red Sea jumps from the US$ 5.3 billion registered in 2014 to US$ 13.2 billion in 2023.
This estimation is controversial. Analysts says that it’s unlikely that global trade will grow enough in the next few years to reach the targets set by Egypt. “There was no viability study done, or known of, to assess the viability of the project”, said Ahmed Kamaly, an economist with the American University in Cairo, to the news agency Reuters.
According to the website ofAl Ahram, the largest Egyptian newspaper, William Jackson, a senior emerging markets economist at Capital Economics, from London, said that global trade would have to grow at an average of 9% per year for the estimative to be achieved, a lot more than the annual average registered since the beginning of last decade. “This seems unlikely”, he said, according to the newspaper.
However, the government is fiercely defending the project’s potential, calling it “a gift from Egypt to the world”. “We are optimistic that world trade will pick up”, said the deputy director for planning and research at the Suez Canal authority, Yehia Rushdi, according to Al Ahram.
According to the news agency Bloomberg, Michael Storgaard, spokesman for Maersk Line, said that the project “was a necessity to maintain the attractiveness of the Suez Canal”. Still according to the same agency, however, the head of analysis at Lloyd’s List Intelligence, Neil Atkinson, said that “the canal would always be attractive, even without any improvements”.
The new project promises to reduce in seven hours the waiting time for a vessel to cross the canal and will allow the increase in the number of vessels that goes through daily from 49 to 97 in 2023.
National pride
Expectations around the project are so high that, according to Al Ahram, the government spent US$ 30 million only on the inauguration’s festivities. Besides boosting the economy, the idea is to raise morale in the population and the national pride.
“Egyptians needed to feel, in a year’s time, that they have gained more confidence and security”, said president Sisi in a speech at the inauguration ceremony of the project, held alongside the canal at the city of Ismaília. “Completing such an achievement within a short period of time is a source of pride for Egyptians”, he added.
The head of the Egyptian state arrived at the place of celebrations in grand style. He came aboard the yacht El-Mahrousa, the first ship to pass through the Suez Canal when the waterway was opened, in 1869.
The president of France, François Hollande, was the special guest of the event. The two countries signed this year agreements worth 5 billion euros in the military sector, according to the Al Ahram, and the results could be in part seen at the inauguration site, which had a flyby done by French Rafale fighter jets, and in the canal itself, with the sailing of a frigate that Egypt received from France last week.
Among the guests were also the prime-ministers of Russia, Dmitry Medvedev, Greece, Alexis Tsipras, and the United Arab Emirates, Mohammed Bin Rashid Al Maktoum, the kings of Jordan, Abdullah II, and Bahrain, Hamad Bin Isa Al-Khalifa, the emir of Kuwait, Sabah Al-Ahmad Al-Jaber Al Sabah, and the presidents of the Palestinian Authority, Mahmoud Abbas, Sudan, Omar Al-Bashir, Angola, José Eduardo dos Santos, Mauritania, Mohamed Ould Abdel Aziz, and Democratic Republic of the Congo, Joseph Kabila, among other heads of state and government.
To boost the celebrations and encourage the population to join, the government declared a public holiday in the country and suspended fees of trains and other public transportation, museums and public parks.
The inauguration is held in the midst of an escalation of violence in Egypt. Sisi was elected last year, after he took down his predecessor, Mohamed Morsi, the first elected Egyptian president after almost 30 years of the Hosni Mubarak regime, who resigned in 2011 during the protests of the Arab Spring.
Sisi was the armed forces chief of the Morsi government, but since he took over the government he’s been strongly repressing the Muslim Brotherhood, the group of the former president, and drove the movement underground.
“The Suez Canal wasn’t the only achievement by the Egyptians, they also said ‘no’ to terrorism”, said the president in his speech. “We have been fighting terrorism, and will definitely win [the battle]”, he added.
After the canal’s expansion, Egypt plans to develop around it a large industrial and logistics zone, to where it expects to attract investments worth US$ 15 billion.
*Translated by Sérgio Kakitani