Posted on 12/22/2023 5:05:33 AM PST by bert
If all traffic in the Suez Canal stopped, Egypt would lose about $13 million daily, disrupting its main foreign currency income.
In light of the constant Houthi attacks on commercial vessels sailing near Yemen’s coasts, several shipping companies have announced in recent days that they will halt their ship flow through the Suez Canal until sailing in the Red Sea is safe again.
If this domino-like trend continues, Egypt could face massive foreign currency income losses and devaluation of its currency. Furthermore, if the situation continues for long enough, alternative trade routes could become more frequented.
Since the beginning of the Israel-Hamas war on October 7, the Houthi militia in Yemen has been actively participating by constantly launching rocket and drone attacks against Israel. As part of its offensive, the Houthis have also attacked several commercial vessels sailing close to its coasts in the Red Sea, even those ships that have no link to Israel.
The impact of the Houthi attacks As a result of the Houthi attacks, several large shipping companies recently announced that they would avoid using the Suez Canal.
Oil giant BP announced on Monday that it would stop its oil transports via the Suez Canal. MSC, the world’s biggest container shipping line, and French shipping group CMA CGM both announced on Saturday. Additionally, Denmark’s A.P. Moller-Maersk stated the same on Friday, and Hapag Lloyd, a German container line, said it might do the same.
Jack Kennedy, associate director and head of the MENA Country Risk Desk at S&P Global Market Intelligence, told The Media Line that the total revenues of the Suez Canal in 2023 were $9.3 billion, and if all shipping lines would decide to halt their usage of the Canal, the Egyptian government would lose approximately $13 million per day.
“The main issue here is that the transit fees are a significant source of dollar revenue for the Egyptian government,” he said, stressing that this is one of the most pressing upcoming issues for the North African state to address in 2024: how Cairo will service its extensive foreign debt.
Kennedy adds that the long-term consequences of sustained insecurity for commercial vessels to reach the Suez Canal could foment the creation and permanent use of alternative transit routes.
“The Egyptian government is likely very concerned by reported plans to establish a logistics and trade corridor from India, via the UAE, Saudi, and Jordan, to the Mediterranean via Israel,” Kennedy said. Noting that this plan is not new, he emphasized that such a trade route, if established, would inevitably reduce transits through the Suez Canal.
“A sustained period of disruption and security risk in the Red Sea approach to the Suez Canal will probably make such projects more attractive to potential member states and investors, if no less vulnerable to disruption from missile or UAV attack,” he continued.
Kennedy noted that the Biden Administration had been putting political capital on this plan before the October 7 attacks and that statements from Hamas suggest that disruption to this plan, a facet of wider normalization with Israel, was a geopolitical motivator.
Egypt’s Suez Canal Authority’s chairman, Osama Rabie, said on Sunday during a statement that his country is closely monitoring the flow of vessels in the Red Sea. The statement came after four shipping companies announced that they would avoid using the Suez Canal until the Red Sea is safe again.
Ships are seen at the entrance of the Suez Canal, Egypt March 26, 2021. (credit: MOHAMED ABD EL GHANY/REUTERS) Ships are seen at the entrance of the Suez Canal, Egypt March 26, 2021. (credit: MOHAMED ABD EL GHANY/REUTERS) Rabie mentioned that since Nov. 19, only 55 vessels have rerouted via the Cape of Good Hope route and compared it with 2,128 ships that passed through the Suez Canal in that same period. However, since this statement was issued, more shipping companies have joined the halt of ship flow through the Suez Canal for the time being.
A global issue Dr. Noha Bakr, an advisory board member of the Egyptian Center of Strategic Studies, warned that this is not only Egypt’s problem. She said that if the vessel traffic through the Red Sea and the Suez Canal halts partially or totally, it will have a great effect on global trade.
Bakr told The Media Line that such a halt can put further pressure on several world economies, affecting global supply chains and fuel security since the Suez Canal is a vital corridor for global trade. That is why she believes that the Houthi threat to the security of the Red Sea should be addressed by the international community.
The route from the Persian Gulf to Northern Europe is about 13,000 miles if a ship sails around Africa, which takes some 24 days. If the ship uses the Suez Canal, the trip is reduced to some 7,400 miles, which takes about 14 days. Such a difference in shipping time represents a huge delay in the supply of the transported goods, which could impact their availability and therefore their price.
Kennedy said that according to industry estimates, transits of the Suez Canal account for around 12% of global trade and 30% of global container traffic.
“Our data shows shipments from Asia and the Gulf to Europe or MENA by sea, which predominantly travel via the Suez Canal, represent 14.8% of global trade and 69% of all imports to Europe or MENA from Asia and the Gulf states,” he said.
He believes that it is likely that the Egyptian government will be coordinating with the United States to establish a broader maritime coalition to solve this insecurity problem in the Red Sea.
As for the Houthi motivation to attack vessels that are not linked to Israel, Kennedy believes that there is a geopolitical agenda behind it. “The Houthi—and by extension their main military backer Iran—are probably using their strike capability in the Red Sea to further exercise greater geopolitical influence in the region and on Israel’s war in Gaza,” he said.
Ok you are talking about “why”.
When it comes to Russias invasion and annexations of Ukrainian regions, it was based on pure blatant aggression. Never did Ukraine in any way pose a threat to Russia. It’s the most absurd war ever. So this war is purely imperialistic.
Ukraine even handed over ALL their nuclear missiles to RUSSIA according to the Budapest Memorandum - signed in 1994. In return America, UK and Russia promised to protect Ukraines sovereignty and full respect for its borders.
All that was raped by Russia, first in 2014 when they stole Crimea from Ukraine,
then again in 2021 when they stole another 4 regions from Ukraine.
Concerning Hamas attack on Israel, its base on two things. They want the elimination of Israel, replacing it with something called ‘Palestine’.
Iran’s constitution clearly states the annihilation of Israel, and their Hamas allies have a similar resolution concerning Israel. It goes beyond a simple “territorial dispute.
The Iraq war was actually initiated in 1991 by Saddam Hussein, who decided to invade and annex Kuwait - disrupting the the world economy when it comes to oil. The whole world reacted, including America. France sent their foreign Legion in.
Afghanistan was attacked (by America and NATO partners) when the Talibans refused to hand over bin Laden who killed 3000 American civilians in a terrorist attack in Washington and New York.
The Vietnam and Korea wars happened at the height of the cold war, when Communist Nations driven by Soviet-Russia wanted to take over the whole planet. The so called “International Socialism” had the goal of enslaving the West. The west reacted against it and tried to push back against the ever-expanding communists. France did a great work for some time, until they couldn’t take it anymore, then the USA took over that responsibility.
The Libya war (run by France and America in collaboration) went well militarily, but the aftermath was mismanaged. We should not have done that war, even though it was a very short war. However we also saved a large Libyan city from being massacred by Kadhafis advancing forces which at the time was the rationale to attack Lybia.
Then we had Trump’s attacks in Syria to stop ISIS and their murdering Islamic actions all over the place. And Trumps low intensity war against Iran targeting their highest ranking generals, etc... The rationale ? Stop fanatic Islamists.
So... In all these wars, America NEVER annexed any of those countries. America NEVER abolished Iraq’s, Afghanistan’s, Vietnams flags by replacing it with the American flag. America never forced those nations to change their language, forcing them to speak English, etc, etc...
Russia on the other hand is ANNEXING countries. They use their nuclear power status to frighten weak small countries before annexing them. Then they take that country (or parts of it), they force everyone to speak Russian, they put the Russian flag all over, banning the original flag, they change the schooling system according to Kremlin propaganda rules and narrative.
Russia has also deported thousands of Ukrainian children banning them to from ever contacting their parents anymore. The Russian state is their new mother.
Because of these abominable anti-Christian acts organized but the Kremlin, Putin is now on the most wanted list issued by the International Criminal Court (“ICC”).
The International Criminal Court said Friday, March 17, 2023 it has issued an arrest warrant for Russian President Vladimir Putin for war crimes because of his alleged involvement in abductions of children from Ukraine.
We now just hope that Russia will not be appeased by the West to such a degree that he will be encouraged to take and annex even more sovereign nations...
Could well be claptrap, but I assure you I am no Neo isolationist. Please note that I have not said the U.S. should play no role in dealing with the Houthi nor have I said that we must.
I was merely pointing out that Egypt does have a vital national interest in what the Houthi are doing. I have not heard of Egypt’s being a part of ‘international coalition’ of navies trying to protect Red Sea shipping. But you are right, I do not know what Egypt is doing/ not doing—do you?
From the Jerusalem Post.......
“That is why the US has gathered fairly quickly an international coalition to fight the Houthi scourge”
https://www.jpost.com/middle-east/article-779068
It still doesn’t explain why the U.S. should have any obligation to protect someone else’s civilian ships.
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