Egypt’s Suez Canal Revenue Stream Dries Up, Decreasing by 40% due to Houthi Attacks
The conflict is making Egypt’s bleak economic situation even worse.
Egypt is be the “Land of the Nile” because of the significance of the African river.
However, in terms of waterways its Suez Canal, which is an critical link between the Mediterranean and the Indian Ocean, is a very close second in importance. I recently noted that Egypt would be significantly impacted if the piracy being conducted by the Houthis continued.
I was right . . . again. The numbers are in, and Egypt’s revenue stream from the canal is drying up.
Dollar revenues from Egypt’s Suez Canal are down 40% from the beginning of the year compared to 2023, canal authority head Osama Rabie said on Thursday, after attacks on ships by Yemen’s Houthis caused major shippers to divert away from the route.
Ship traffic was down 30% in the period between Jan. 1 and Jan. 11 compared to a year prior, Rabie said, speaking on a late night talk show.
The number of vessels to pass through the Suez Canal dropped to 544 so far this year, from 777 in the equivalent period of 2023, he said.
The Suez Canal is a key source of scarce foreign currency for Egypt, and authorities have been trying hard to boost revenues in recent years, including through an expansion of the canal in 2015. A further expansion is under way.
The conflict is making Egypt’s bleak economic situation even worse.
Suez Canal revenues are especially vital for Egypt amid the economic crisis during which the local currency has lost half its value since March 2022 while inflation tops 35 percent.
Egypt’s economy also relies heavily on tourism and on remittances from Egyptian workers abroad, which fell almost 30 percent in July-September 2023 on year, according to the central bank.
Amid the downturn, the Arab world’s most populous country has relied heavily on Suez Canal income both for its military and for social welfare spending.
At least two-thirds of the Egyptian population live on or below the poverty line.
“Canal revenues help keep the lid on the social pressure cooker,” said Tourret. “They go directly to the state, which reinvests them in the military and social welfare.”
The recent decline in shipping traffic, he said, had caused “a real shortfall. One month could be all right, but two months will be cause for concern.”
It’s not surprising that Egypt’s political leadership recently met with officials from a Danish shipping group.
Egypt’s Prime Minister Mostafa Madbouly discussed developments in the Red Sea with officials from shipping group Maersk in a video conference and ways to enhance cooperation, a statement from the Egyptian cabinet said on Wednesday.
Madbouly stressed the centrality of the security and safety of maritime navigation in the Red Sea to Egypt’s national security in light of its close connection to the Suez Canal, which is used by roughly one-third of global container ship cargo, the statement added.
…The meeting touched on the threat the Houthis pose to the security of maritime navigation in the Red Sea and Maersk’s (MAERSKb.CO) aspirations to resume its sea voyages there, the statement said.
In the wake of the U.S. and UK striking Houthi militant targets across Yemen, there are concerns countries in the Middle East will get engaged and expand the conflict zone. If the blockage of the Suez Canal continues, it is almost certain Egypt will begin to act more forcefully than a video conference meeting with shipping officials.
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Comments
So, the current Egyptian Theo-kleptocracy wants those evil infidel merchants to be more aggressive running the free-fire gauntlet of their zealot co-coreligionists … so they — the Egyptian Theo-Kleptocrats — can keep getting the rake-off on the traffic they’ve become used to?
Not sure who to root for on this one.
Well, anything that drives wedges between the different Muslim factions.
It works for our Democrat socialists.
Will Egypt act against the Hizballah?
No.
Subotai Bahadur
No, but they could still get out there and actually do something to help. The time for sitting in the sideline is now over as it’s starting to bite them in the arse.
Actually biting them in the pocketbook.
Egypt is Sunni and Hizballah (sometimes spelled Hezballah) is Shiite. So I could see Egypt acting against Hizballah.
I found the proposal to create a canal through Israel interesting, competition would lower costs and create redundancy. Maybe a good application for hydrogen bombs, since they would not leave lingering radiation.
Why doesn’t egypt help offset the cost to the US and britain for keeping the shipping lanes open? Egypt is primary beneficiary. Without suez canal the egypt economy collapses overnight leading to street riots and government collapse.
Alternatively the Nations with a huge merchant maritime fleet could step up. There are over 55,000 merchant vessels and less than 200 operate under US registration/US Flagged. The huge shipping corporations deliberately chose not to purchase US built ships to save a buck and instead deliberately chose not to operate under US registration/US Flag.
Choices should have consequences. Yet somehow the US taxpayer and our Sons and Daughters in uniform are still on the hook to defend the commercial interests of not only our economic competitors but competitors who deliberately rejected the choice to operate under the protection of the US Flag.
The USA has zero duty or responsibility to continue as the World police especially 30 years after the fall of the Soviet Empire. Our economic competitors refuse to invest their own resources into a Navy capable of protecting their own vital interests. Instead they use those scarce funds to subsidize their own economic policies and free ride on US taxpayers.
I feel terrible that Egypt is losing money on this.
Of course, the US citizens are really losing money because we have billions of dollars of defense spending going on just to help with the canal.
Don’t hold your breath waiting for a thank you.
That canal as a common interest makes for very strange bedfellows.
Maybe peak odd allies came with the “Suez Crisis” around 1956.