Two years of Egypt’s $8.2 billion ‘gift to the world’

CAIRO: Two years after Egypt launched its “gift to the world,” opinion is divided on the $8.2 billion New Suez Canal.
Enthusiasts say the project has already injected nearly $3 billion into the economy. Critics say any genuine economic boost is much farther down the line. Others say the real benefit is not financial at all, but political, emotional and psychological.
What is not in doubt is that the Suez Canal is the fastest shipping route between Europe and Asia and one of the Egyptian government’s main sources of foreign currency, and that the expansion is an astonishing feat of engineering achieved at eye-watering speed.
On Aug. 5, 2014, President Abdel Fattah El-Sisi declared that Egypt would add a second 35 km shipping lane to the 164 km canal, as well as deepening and expanding a 37 km section of the existing waterway. This would allow ships to pass in both directions at the same time, and increase the capacity from 49 to 97 ships a day. And it would be completed, the president said, in one year.
On Aug. 6, 2015, true to his word, El-Sisi inaugurated the new branch of the canal with a glittering celebration, welcoming international leaders aboard a yacht while helicopters and fighter jets flew overhead.
There are also plans to develop the surrounding area into an industrial and commercial hub with new ports and shipping services.
The expansion was financed entirely by Egyptians, who bought investment certificates to pay for it. At the time of the launch, banners calling the project “Egypt’s gift to the world” filled the streets and songs cheering for Egypt were all over the radio.
On the anniversary, canal authority spokesman Tarek Hassanein said the Egyptian people were the true owners of the project. “Egyptian hands impressed the whole world in one year,” he said.
What, however, is the bottom line? The canal authority says the waterway’s revenue from January to July was $2.94 billion. According to Reuters, in July last year revenues stood at $429 million.
Pro-government Egyptian newspapers on Sunday were filled with reports on how the canal expansion was successful, and the “era of bearing fruit” had just begun.
“The New Suez Canal project has made many positive contributions to the Egyptian economy,” said Justin Dargin, a leading Middle East energy expert.
Other analysts believe optimism is premature. “It is hard to judge how much it has added to so far net of its costs,” said Paul Sullivan, a professor of economics at Georgetown University in Washington.
“Over time, in combination with the investments developing around it ... with such infrastructure investment Egypt has a real chance to turn a corner toward a better future.
“The benefits for a while will be more political and emotional, but over time the possible economic benefits could be very large.”
Saeed Sadek, a political sociology professor at Future University in Cairo, said: “The benefits of the project are both political and psychological. El-Sisi himself has said that he wanted with this project to unify Egypt and raise public morale.
“We understand that to see the revenues from this project and its effects on the national economy is something that will take years.
“Nevertheless, the Suez Canal will remain the most vital shipping route in the region.”