Egypt’s New Suez Canal Opens Thursday. Will It Help The economy?

Written by Staff

From France24. Story by AFP.

Egypt on Thursday inaugurates a “new Suez Canal” waterway touted as an achievement rivaling 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.

The new 72-kilometer (45-mile) waterway, built in less than a year at a cost of $9 billion runs part of the way alongside the existing canal connecting the Red Sea and the Mediterranean.

It will cut the waiting period for vessels from 18 hours to 11.

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.

“It sends a message to the public and foreign investors that the government is capable of accomplishing something in a set calendar,” Amr Adly of the Carnegie Middle East Center told AFP. “Since (former president Mohamed) Morsi’s ouster the new regime is engaged in a political conflict to prove its legitimacy inside and outside Egypt. The ability to accomplish such an economic project is part of cementing this legitimacy.”

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 37 kilometres of dry digging and 35 kilometres of expansion and deepening of the existing canal.

Preparations for Thursday’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.

The authorities hope the new waterway will more than double Suez earnings from $5.3 billion expected at the end of 2015 to $13.2 billion in 2023.

About a million jobs are expected to be created around the canal over the next 15 years.

Analysts doubt the forecasts.

“There will be an increase in revenues, but are these figures credible?” asked Carnegie’s Adly. “It’s not just about the increase in traffic… it’s also related to external factors such as growth in global trade itself.”

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 told AFP.

“The administration will capitalize on this project to showcase economic growth, but it is unlikely to resolve challenges facing the economy,” he said.