CAIRO: Egypt today inaugurates a “new Suez Canal” waterway touted as an achievement rivalling the digging of the original, as it seeks to boost both its economy and international standing.
The ceremony, to be attended by foreign dignitaries including French President Francois Hollande, comes just over two years after President Abdel Fattah Al Sisi, the former military chief, overthrew his Islamist predecessor. Sisi broke ground on the project last August after winning a presidential election on promises of strengthening security and reviving the ailing economy.
Sisi set an ambitious target of digging the waterway in just a year despite an initial estimate it would take up to three years. Officials say the entire funding for the project was raised in six days by selling investment certificates to domestic investors. It involved 37km of dry digging and 35km of expansion and deepening of the existing canal.
The estimated $8.6bn project includes a parallel waterway flanking the existing 145-year-old waterway, the closest link by sea between Asia and Europe. By 2023 the number of ships using the canal will increase to 97 per day from the current 49, the Suez Canal Authority website said.
Preparations for today’s lavish opening are in full swing in the port city of Ismailiya. Some 10,000 policemen will stand guard across six provinces as Sisi opens the ceremony by joining a naval parade, state media said.
Newly bought French Rafale warplanes and US F-16s delivered by Washington last week will also be on display. Banners saying “New Suez Canal: From Egypt to the World” have been put up at Cairo airport, and hundreds of Egyptian flags grace the capital’s streets.
Authorities have been in overdrive to sell the project to Egyptians and the world. On the streets of Cairo, colourful flags flutter from lampposts around Tahrir Square and festive lights drape the city. More than 9,000km away, in New York’s Times Square, a billboard reads “Egypt boosts the world economy”.
Authorities have declared today a national holiday, suspended fees for public transport and posted a sermon to be delivered in mosques tomorrow which declares that “all Egyptians, here and abroad, must support this giant project”.
Suez Canal Authority chief Mohab Mameesh has declared the new waterway “safe” after conducting a trial run. The authorities hope the new waterway will more than double Suez earnings from $5.3bn expected at the end of 2015 to $13.2bn in 2023, with the number of daily vessels rising from 49 to 97 over the same period. Mameesh said about a million jobs are expected to be created around the canal over the next 15 years.
Some analysts and economists say, however, that the mega-project may fail to meet the great expectations. Some are sceptical of the official numbers and suggest that sluggish world trade makes it unlikely the project can deliver immediately on its promise.
Ahmed Kamaly, an economist with the American University in Cairo, said the projections were “wishful thinking”. “There was no viability study done, or known of, to assess the viability of the project,” he said.
For the project to reach its revenue targets, world trade would have to grow by 9 percent annually until 2023, said William Jackson of Capital Economics — higher than the 3 percent average seen over the past four years. Since 2011, Suez Canal revenue growth has failed to even keep pace with growth in world trade. While global trade volumes rose by an average of 2.9 percent from 2011-2014, Suez Canal revenue rose by just 2 percent during the same period, Jackson said.
There could be further risk from a Panama Canal expansion set to be completed in 2016 which could steal traffic from the Asia-North America route which the two canals compete for, said Michael Frodl, of US-based consultancy C-Level Global Risks.
But the canal’s largest client, Maersk Line, said that while the expansion would bring savings from fuel costs and by using larger vessels, it would not send more ships through the canal in 2015. “Last year we put 1,400 ships through the canal. We will put roughly the same number through this year,” said Mohammad Shihab, managing director of Maersk Line Egypt.
The new canal “will not change much overnight,” said Nicholas Sartini, a senior vice president for the French CMA CGM Group, the world’s third-largest shipping group, which sends an average of two vessels per day through the canal.
Egypt is investing for the longer term to have a larger canal that can accommodate increasingly larger ships, he said. If there are any immediate benefits for the expansion, they might just be political more than economic, Kamaly said.
Egypt has witnessed turbulent times since 2011 during which two presidents were overthrown and the economy seized up. “(The canal) will unite the people around a national project that people can look upon,” said Kamaly. But he questioned whether the money would have been better spent on education, health and infrastructure.
Built 146 years ago, the original canal is one of the world’s most heavily used shipping lanes and a key focus of international trade. Its expansion is a major achievement for Sisi, but Egypt needs many projects to turn around its dilapidated economy, Fawaz Gerges of the London School of Economics and Political Science said. “The administration will capitalise on this project to showcase economic growth, but it is unlikely to resolve challenges facing the economy,” he said.
Reuters/AFP
