Egypt: Qatar’s Suez Canal Bid
Published Monday, March 11, 2013
With the weakening of a Dubai port company in the Suez Canal, Qatar sees an opening to exert influence on this major trade artery.
Major General Ahmed Wasfi, Second Field Army Commander in Egypt, toured the Suez Canal on 9 March 2013, following statements by the head of the Suez Canal Commission that the canal is a red line that should not be crossed. These acts reconfirm the critical importance of the canal, considered one of the most important shipping lanes in the world.
The Importance of the Suez Canal
The Suez Canal’s importance on political, economic, and military levels is due to its location. It is considered the most important maritime trade artery between East and West since it is the shortest route for Gulf oil to Europe and the US.
The Canal has been one of Egypt’s long-time strategic weapons, starting with its nationalization in 1956. Egypt also used it as leverage in the 1973 war with Israel. The canal is the most important source of national income, estimated in 2011-2012 to be around $5 billion.
It should come as no surprise that today the canal looms large over many of the serious discussions concerning the future of Egypt and the entire region. It is a source of hope for the Muslim Brotherhood government, which sees in the canal an economic savior, best embodied through the Sharq al-Tafria project.
The project seeks to transform the canal’s axis and the Sharq al-Tafria area into an international logistics zone. The zone will provide services to ships passing through the canal. In addition to the collection of tolls, it will bring in tariffs on everything a ship or tanker might need.
It will be accompanied by a variety of other food and industrial projects. Prior to the revolution, the World Bank estimated it would generate $50 billion per year, but the initial developments were delayed due to higher powers.
Qatar and the UAE in the Competition
The Suez Canal is a recurring talking point in statements by foreign officials, as was evident in the recent visit by US Secretary of State John Kerry. But it is also the backyard of a regional conflict. There is increased talk of a possible conflict between Qatar and the UAE concerning the implications of the Sharq al-Tafria project.
Qatari investment in Egypt in on the rise. The Gulf country’s economic reach inside Egypt was apparent in recent statements by Qatari Prime Minister Hamad Bin Jassim. “Qatar will not let Egypt collapse economically,” he said. Qatar provided Egypt with aid and a deposit of around $5 billion. However, this all pales in comparison to rumors that the Qataris wish to acquire a large portion of UAE’s investments in the Suez region.
According to Suez journalist, Sayyid Noun, the area is home to the largest industrial zone in the region, with a capacity of 480 factories and companies. It is also a source of attraction for many Egyptian and non-Egyptian investments. He indicates that Ain Sukhna, a tourist resort and coastal industrial center, has a large container port controlled by Dubai Ports World (DP World).
Noun explains that Qatar wishes to push DP World out of the area by exploiting the current turbulence. He indicated that many of the workers’ problems in Suez have escalated following a series of strikes.
“Qatari investments in Suez and its surroundings are now a phenomenon. Opportunities are opening up for investments and the purchase of factories and companies by Qatari businessmen,” Noun said.
He maintains that Qatar’s acquisition of the logistical project in Suez and Sharq al-Tafria might face opposition from the different sides in Suez. The street will not easily accept the news since many believe that Qatar wants to “strangle the Canal.”
The UAE, on the other hand, is anxious about Qatar’s ability to control the project. This would be the knockout punch to the UAE’s plan for omnipresence in strategic locations around the world. This plan had suffered several blows in recent years.
Most recently, DP World had to abandon its full share in Dubai and Aden Port Development Company (DAPDC) after four years of running the Yemeni ports in Aden.
Journalist and economic researcher Mahmoud Kamal does not believe the UAE has the ability to sabotage the waterway development project due to sour relationships with the Egyptian side and the weakened grip of the UAE on Egypt’s economy. According to Kamal, lack of vision, political practicalities, and the balance with the army are more prominent conditions for finalizing the project.
“The Egyptian Ministry of Planning indicated, through the words of one of its economic advisors, that the Egyptian government is yet to conduct a feasibility study for the project, which would allow it to make a decision about the project and the various proposals from several parties,” Kamal said.
The project and the Suez Canal itself has been a constant headache for Israel, which is always trying to find ways to compete. Last year, the occupying entity announced a railway project, which would link Tel Aviv on the Mediterranean with Eilat on the Red Sea as an alternative to the Suez Canal. It will be a bridge connecting Asia and Europe, in addition to the transportation of Israeli natural gas, after the discovery of large quantities in the Mediterranean.
This article is an edited translation from the Arabic Edition.