Hundreds of thousands of Egyptian peasants lost their lives during the digging of the Suez Canal in the late 19th century, and its extravagant inauguration ceremony in 1869 was the start of Egypt’s indebtedness.
Former president Gamal Abdel-Nasser’s decision to nationalise the Suez Canal triggered a war in the 1950s, and Egyptians gathered LE60 billion in less than a week to fund its expansion in 2015.Al Ahram Weekly sheds light on the importance of the Canal for Egyptisns
What is the Suez Canal?
The Suez Canal is a man-made waterway that extends from Port Said on the Mediterranean Sea in the north to Port Tewfik on the Gulf of Suez on the Red Sea in the south. Its connecting the Mediterranean Sea to the Red Sea makes it the shortest maritime route between Asia and Europe and the fastest crossing from the Atlantic Ocean to the Indian Ocean. The sea-level canal is also the longest in the world without locks, with a normal transit time from end to end of about 13 to 15 hours.
It is one of the main foreign-currency earners for Egypt, yielding around $5 billion in revenues annually. In 2020, over 18,500 vessels passed through the waterway, with a daily average of 51.5.
Why is the canal important to world trade?
Nothing is more telling of the Suez Canal’s significance to world trade than the fact that the world powers have fought over it since it was inaugurated in 1869.
Around 12 per cent of world trade passes through the waterway, which saves eight to 10 days in the trip from the Arab Gulf to London, for instance. According to the US financial service Bloomberg, without the Suez Canal a supertanker carrying Middle-Eastern crude oil to Europe would have to travel an extra 6,000 miles around Africa’s Cape of Good Hope, adding some $300,000 in fuel costs.
Ships passing in both directions of the canal carry all kinds of goods, including oil, cereals, grains, ores, coal and coke, and even instant coffee. Because it has no locks, even aircraft-carriers can pass through it. In 2019, around 1.03 billion tons of cargo passed through the canal.
When did the idea of the canal emerge?
There are different theories about canals dug by the pharaohs to link the Mediterranean with the Red Sea through the Nile and its branches in ancient times. But it was most probably Senausret III of the ancient Egyptian 12th Dynasty who ordered the dredging of the oldest-known canal in 1874 BCE. Inscriptions in tombs note that these canals aimed at transporting ships and stone. However, the ancient canal was obstructed by silting due to the receding of the Red Sea and then cleaned and reopened several times in following centuries.
How did the idea of the modern Suez Canal materialise?
During the French invasion of Egypt in 1798, the French general Napoleon Bonaparte asked his engineers to study the idea of linking the two seas with a waterway. This stemmed from his desire to find a way to sail directly from the Mediterranean to the Indian Ocean and so to dispute the English monopoly of the East Indian trade through the route around the Cape of Good Hope.
But the plan was shelved, as it was incorrectly concluded that there was a 30-foot difference in the two sea levels, making a canal a risk of flooding to the Nile Delta. New studies on the possibility of digging a waterway between the two seas were conducted in 1834 and 1846 by French engineers, but Mohamed Ali Pasha, the then ruler of Egypt, was not interested in the project.
In 1854, the French diplomat Ferdinand de Lesseps succeeded in convincing the khedive Said, Mohamed Ali’s son and successor, to sign an act of concession for the construction of a canal. In 1858, the Compagnie Universelle du Canal Maritime de Suez (Universal Company of the Maritime Suez Canal) was formed with the authority to cut a canal and to operate it for 99 years, after which ownership would return to the Egyptian government.
The company’s shares were mainly owned by the French and by Egyptians.
How was the Suez Canal built?
Construction began in 1859 and took 10 years instead of the initially planned six due to a cholera epidemic in 1865 and the death of Said Pasha. It cost $100 million, twice the initial estimate. In addition to the high financial costs of the project, 20,000 peasants were sent to the digging site every 10 months. Thousands lost their lives during the digging.
An extravagant celebration was held to inaugurate the canal in 1869 attended by 6,000 people including many heads of state such as the empress Eugenie of France, the emperor of Austria, the prince of Wales, the prince of Prussia, and the prince of the Netherlands. The parties continued for weeks, and the celebration also marked the opening of the old Cairo Opera House.
The canal entered service in 1869, but its Egyptian owners faced financial difficulties shortly afterwards and were forced to sell a 42 per cent stake in the canal to the UK.
How has the ownership structure of the canal changed?
After the sale of the khedive Ismail’s shares in the canal to the UK, Egypt was unrepresented on the board of directors of the Suez Canal Company until 1949, when it was reinstated as a board member and allotted only seven per cent of the canal’s gross profits.
In 1956, former president Gamal Abdel-Nasser nationalised the canal. The move angered both France and the UK, which joined forces with the Israelis and staged an invasion of Sinai and the Canal Zone. The crisis ended after the US intervened. Since the nationalisation, the canal has been owned and operated by the Suez Canal Authority.
What is the New Suez Canal?
In 2015, President Abdel-Fattah Al-Sisi inaugurated the New Suez Canal in a ceremony attended by French, Russian, Arab, and African leaders. The new canal waterway is 35km long and is parallel to the old passage. Some 37km of the existing canal was also deepened and widened, bringing the total to 72km of two-directional traffic.
The Suez Canal Authority expected the expansion to almost double the daily average number of vessels passing through the canal to nearly 97 and to push annual revenues to $13.23 billion by 2023. To fund the project, it raised more than LE60 billion in 2014 by offering five-year certificates to bank customers at a 12 per cent interest rate.
When was the canal last closed in recent history?
The canal was closed for a year following the Tripartite Aggression in 1956. In 1967, Egyptian and Israeli forces faced off across the waterway during the Six-Day War, and for eight years until the 1973 October War the canal was closed to international trade. It was not until 1975 that the canal was cleared of sunk ships and reopened.
In 2016, two separate incidents saw ships blocking the canal, leading to a two-day shutdown in one of the two incidents. In July 2018, the canal was shut for several hours when a Greek ship stopped abruptly, leading to a five-ship collision.
*A version of this article appears in print in the 1 April, 2021 edition of Al-Ahram Weekly