The first thing Egyptian students learn when they take geography is that Egypt is in a central position on the world map, overlooking the Mediterranean and the Red Sea. It is this position that has enabled it to house the world's longest man-made waterway, the Suez Canal, which is the shortest marine route between the West and the East, enabling ships to save time, fuel and operating costs. The distance from London to the Arabian Gulf using the Suez Canal is 43 per cent shorter than going around the Cape of Good Hope. According to the World Shipping Council, the distance around Africa is 11,300 nautical miles (20,900km) and would take 24 days. Sailing via the Suez Canal, the journey is 6,400 nautical miles (12,000km), a 14-day trip. For centuries, and as far back as the pharoahs, there had been attempts to connect the Mediterranean and Red Sea with the Nile. But it was only in 1854 that the French diplomat and engineer Ferdinand Marie de Lesseps succeeded in enlisting the interest of the Egyptian khedive, Said Pasha, in a project to build the Suez Canal. In 1858, the Compagnie universelle du canal maritime de Suez, the Suez Canal Company, was formed. It was to dig the canal, operate it for 99 years, and then return it to the Egyptian government. The company was originally owned chiefly by French and Egyptian shareholders. But in 1875, the khedive Ismail sold Egypt's shares to Britain because he was overwhelmed with debts, having used up enormous resources on huge infrastructure projects. Ismail's foreign debt and the sale of Egypt's shares in the canal entrenched foreign involvement in Egyptian affairs, and by 1882 Egypt had become a de facto British protectorate. The British interest in Egypt emanated from its interest in the Suez Canal, which provided it with easy access to its empire in India. Even when Britain withdrew its soldiers from the rest of Egypt it continued to station troops along the Suez Canal. Egypt regained full control of the canal when then-President Gamal Abdel-Nasser nationalised it in 1956, the action triggering the Tripartite Aggression by Israel, followed by Britain and France, against Egypt. The aim of this aggression, sometimes called the Suez War, was to regain Western control of the Suez Canal. The geopolitical importance of the canal has meant that the West has long been wary that Egypt might take the decision to close the canal to international traffic, and in 1956 the canal was closed for around six months. During the 1967 War, ships were sunk in the Suez Canal, and traffic came to a standstill and remained so for eight years. The canal also was at centre stage during the 1973 War against Israel. Egyptian troops crossed the canal, broke through Israeli fortifications on the east bank, and regained control of Sinai. The canal was reopened in 1975. Since then it has undergone several operations to widen and deepen it. This year it received a major expansion, allowing it to accommodate two-way traffic. The original completion of the 160-km waterway in the 19th century took ten years of hard work in which thousands of lives were lost. The three canal cities —Port Said at the northern entrance, Ismailia towards the middle of the canal and Suez at the southern end — are shaped by their proximity to the canal. Port Said came into existence in 1859, the year digging began. Ismailia came into being the year the canal was opened. This was where settlers from around the country came to search for work connected to the canal. Suez was a small city before the canal was built and has grown exponentially since. The revamping of the canal in 2015 to allow two-way traffic saw the digging of a new 72km-long and 24metre-deep parallel canal, representing approximately the middle section of the existing 145-year-old Suez Canal. Thirty-five km of canal were dug as part of the new project, in addition to the expansion and deepening of two sections, the Great Bitter Lakes bypasses and the Ballah bypass, to a total length of 37km. The new waterway shortens the transit time through the canal from 18 to 11 hours. According to the Suez Canal Authority (SCA), it reduces the waiting time for vessels to three hours at most, instead of the previous eight to 11 hours, cutting costs and making the Suez Canal even more attractive for shipping companies. The New Canal was created at a cost of some $8 billion and was funded by the Egyptian people through investment certificates at an interest rate of 12 per cent. The funds were raised in a record six days in September 2014. Although the sale of the Suez Canal certificates succeeded with flying colours, some economists have criticised the terms for adding to the already gaping national budget deficit. The government is responsible for paying the interest rate on the certificates, as well as paying them out when they mature. Egypt's budget deficit stands at around 11.5 per cent of GDP. The target for the 2015-2016 budget is to reduce the deficit to 9.5 per cent. The New Canal allows for the doubling of the number of vessels crossing, from 49 to 97 per day, and is expected to increase the canal's revenues from the current $5 billion annually to $13 billion by 2023, according to Mohab Mamish, SCA chairman. The canal's hard currency earnings have been one of the steady sources of foreign revenues for the government since the 2011 Revolution. Other sources, including foreign direct investment and tourism, have been badly hit in the years since. Around eight per cent of global sea-borne trade currently passes through the canal. As an article entitled “Why Suez Still Matters” in the US Foreign Policy magazine put it, “For all of Ismail's shortcomings, he and his uncle, Said Pasha, understood that the creation of the canal would have a long-term, transformative effect on Egypt. The vital waterway placed the country at the centre of global commerce and of important geostrategic issues of the age.” Global trade has not, however, been faring too well in recent years. According to the World Trade Organisation (WTO), economists have lowered their forecast for world trade growth in 2015 to 2.8 per cent from the earlier forecast 3.3 per cent, and reduced their projection for 2016 to 3.9 per cent from 4 per cent. This is attributed to a number of factors that weighed on the global economy in the first half of 2015, including falling demand in China, Brazil and other emerging economies, falling prices for oil and other primary commodities, and significant exchange rate fluctuations. If these numbers turn out to be correct, the WTO says 2015 will mark the fourth consecutive year that annual trade growth has fallen below three per cent and the fourth year that trade has grown at roughly the same rate as world GDP, rather than twice as fast, as was the case in the 1990s and early 2000s. “Volatility in financial markets, uncertainty over the changing stance of monetary policy in the United States, and mixed recent economic data have clouded the outlook for the world economy and trade in the second half of the year and beyond,” the WTO said. Maritime experts say the New Suez canal has been built for the next 100 years and not just for today, meaning that the increased capacity is necessary, particularly in the light of the present congestion in the canal. Moreover, the doubling of navigation is only one part of the planned development of the Suez Canal. What is really counted on to boost growth and create jobs is the overall development of the Suez Canal region. Plans are now underway for the development of the Suez Canal Area Development Project (SCADP) which covers a number of locations within a 650-square-km area and including the three canal cities. Maritime and port activities make up the core of the project, which includes six ports: East and West Port Said, Ain Sokhna, Al-Adabiyah, Al-Arish and Al-Tor. The master plan focuses on developing East Port Said as a transshipment port and Ain Sokhna as an international and domestic port and industrial centre. Just as these cities grew when the first Suez Canal was established, it is hoped that the new projects will mark a new phase of growth, with Egyptians from across the country moving to take up work on projects in the area. The SCADP is projected to create one million jobs over the next 15 years. Some believe that this figure is too low, considering that Egypt's annual need for new jobs is 500,000. Beyond 2030, it is hoped that an additional 2.5 million jobs will be created. The jobs will serve the area's population and at the same time will attract others to the area. The cost of infrastructure that will be needed in the area are estimated at some $15 billion. The region will be governed by a slightly modified version of Law 83/2002, which applies to special economic zones. The law establishes a sole authority with full administrative powers within the designated zones. The law will only apply within the economic zones and not the entirety of the Suez Canal area. Former minister of local development Ahmed Darwish was chosen a couple of weeks ago to head the new authority. His appointment has been hailed by many as a good choice. Two further milestones have been identified for 2030 and 2050. By 2030 there will be 400 factories in the 22-square-km industrial area adjacent to East Port Said. The go-ahead for the project was given a couple of weeks ago by President Abdel-Fattah Al-Sisi when he inaugurated a project to develop an industrial, seaport and logistical complex in the eastern part of Port Said. The development of the East Port Said project, which includes the expansion of the area's harbour and the development of an industrial zone, is set for completion in two years' time.
