Egypt vexed by Israel, UAE plans for 'rival Suez Canal'

Egypt vexed by Israel, UAE plans for 'rival Suez Canal'
Egypt is worried over reported plans to construct a rival shipping lane that could usurp the Suez Canal, through which 10 percent of the world's trade volume passes.
3 min read
02 October, 2020
The Suez Canal is an important part of Egypt's economy [Getty]
Warming economic ties between Israel and the United Arab Emirates have forced a wedge between Abu Dhabi and ally Cairo amid talk of plans to build a rival Suez Canal.

Around 10 percent of the global trade volume passes through Egypt's Suez Canal, the fastest shipping route between Europe and Asia.

The Suez Canal has remained a vital lifeline for the Egyptian economy during the Covid-19 pandemic, with maritime traffic and revenues actually having risen in the first four months of 2020 before taking a dip in the second quarter.

A burgeoning economic partnership between Israel and the UAE could threaten Egypt's important role in global trade, however.

The two countries, who officially normalised ties last month, are reportedly discussing the construction of a new shipping canal passing between a Mediterranean port - likely in Ashdod - and Eilat, Israel's port on the Red Sea.

Such a canal would provide a secondary shipping route between the Mediterranean and the Gulf, minimising Egypt's profit from maritime trade - particularly the lucrative oil industry. Since the expansion of the Suez Canal in 2015, oil tankers make up nearly a fifth of traffic through the shipping lane.

The new shipping route is only possible because Egypt ceded Tiran and Sanafir, two Red Sea islands, to Saudi Arabia in 2017, Egyptian government sources said. The transfer of sovereignity means ships would be able to pass through the Red Sea to the Mediterranean without bypassing Egyptian waters.

The proposal has caused anger within the Egyptian government, sources told The New Arab's Arabic-language sister site, particularly as Cairo has gone to great strides to align its foreign policy with that of Abu Dhabi.

High-level contacts have reportedly been launched with Saudi Arabia in a bid to have Riyadh block such the proposal.

"We realise that the matter is still in the consultations process, but Abu Dhabi's response is basically a stab in the back," one Egyptian source said.

One of the first partnerships to be born from the US-brokered normalisation pact between the UAE and Israel was an agreement between Dubai state-owned DPWorld and Israel's Doverpower to develop Israeli ports and free zones.

The deal also included plans for a new shipping lane between Eilat in the Gulf of Aqaba and Dubai's Jebel Ali Port.

That agreement also represents another challenge to the Suez Canal, Al-Monitor reported this week.

Even if a rival canal is not built through Israel, normalisation agreements with Gulf states allow for the possibility of extending an existing railway line between Ashdod and Eilat to transport goods overland, Wael Kaddoura told Al-Monitor.

Kaddoura previously served as a member of the Board of Directors of the Suez Canal Authority (SCA).

A spokesman for the SCA told Al-Monitor: "The SCA is studying the impact of [the normalisation agreement] on the navigation movement in the canal. Nothing is clear yet because the potential projects have yet to materialise on the ground. The SCA will issue a statement as soon as it has a clearer vision of the situation."

"The SCA has solutions that make it a strong competitor, namely in terms of marketing and pricing plans," spokesman George Safawat said.

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