Contrary to expectations, business in the Suez Canal has thrived as a result of the war in Iraq. Niveen Wahish reports from Ismailia Before the Iraq war began, observers feared that the Suez Canal revenues would be hit badly by its repercussions. Ironically, Suez Canal receipts reached a record high as a result of the war. The canal brought in an unprecedented $2.3 billion in fiscal year 2002/2003, compared to a little over $1.8 billion last year. The figure was announced this week by Ahmed Fadel, head of the Suez Canal Authority (SCA), during a press conference marking the 47th anniversary of the canal's nationalisation. This year's higher revenues are owed to increased trade during the period prior to the war. "Exporters were rushing to deliver and importers wanted to buy their goods before anything happened," Fadel said. The number of container carriers passing through the canal rose by 58 per cent, that of ships carrying dry products increased by 20.6 per cent and the number of oil tankers and warships rose substantially. Meanwhile, several measures have been taken during the past decade to help maintain the competitiveness of the Suez Canal. Foremost among those is the deepening of the canals draught to accommodate larger and heavier ships. Since 1994, the draught has been deepened from 56 feet to the present 62 feet. The SCA is working on a further deepening of the draught to 66 feet by 2006. With a 66-feet draught, the canal would accommodate ships weighing up to 220,000 tons. This would allow all types of ships to pass through, with the exception of larger oil tankers. Further deepening of the canal to a 72-feet draught may follow, accommodating ships weighing up to 350,000 tons. Should this decision be made, which would also involve widening the canal, the draught would be ready by 2010. Such a move would depend on the results of feasibility studies that take into account external factors, such as the global recession, the full implementation of the General Agreement on Tariffs and Trade and oil prices. While physically developing the canal to accommodate all types of vessels, the SCA has been flexible with its tariffs. For one, passage fees have remained the same for the past several years. Moreover, since 1994, a 35 per cent discount has been granted to tankers carrying Liquefied Natural Gas (LNG), and additional discounts are granted as their cargo increases. Discounts are also given to ships doing long- haul trips. The Long-Haul Rebate Committee was set up in 1987 to examine the cost incurred by each ship for using the canal and, comparatively, what they would have paid had they used another route. A discount is calculated accordingly. Maintaining the canal's competitiveness has not been done through pricing policy alone. In 1997, the SCA signed an agreement with the Arab Petroleum Pipeline Company (APP), which owns the SUMED oil pipeline. The company is a joint venture between Egypt (50 per cent), Saudi Arabia (15 per cent), Kuwait (15 per cent), the United Arab Emirates (15 per cent) and Qatar (five per cent). The 200-mile SUMED pipeline runs from Ain Al-Sukhna, on the Gulf of Suez, to Sidi Kreir, on the Mediterranean. According to the agreement with SUMED, oil ships unload some of their cargo to be carried in SUMED's pipelines in Ain Al- Sukhna. The ships pass through the canal and pick up their load again in Sidi Kreir. "If we had gone into a price war, we would all have been losers, but with the cooperation everyone has benefited," Fadel said. While the canal has adapted to challenges so far, what the future holds remains unknown. The possible construction of a canal connecting the Red Sea to the Dead Sea to compensate for the loss of water in the latter is rumoured to be a threat to the Suez Canal. Over the past few years, the Dead Sea level has dropped to one third of what it used to be in the 1960s. The project, which was looked into during the World Economic Forum's recent meeting in Aqaba, Jordan, is to receive some $10 million for its preliminary feasibility studies from the World Bank. It is estimated to cost some $1.5 billion. Fadel denied that the new canal would affect transit in the Suez Canal. He said the canal would not be suitable for navigation and that it would only be used to replenish the Dead Sea, for generating electricity and to desalinate water. "Building this canal for navigational purposes may not be feasible," he said.
