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

A photo taken with a smartphone on March 26, 2015 shows an Egyptian navy FFG-7 frigate passing through the Suez Canal, by the Egyptian city of Ismailia, 100 kilometers northeast of Cairo, on it's way to the Red Sea. (AFP)
Updated 08 August 2017

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.”


How the FSO Safer is an impending danger to the Red Sea and Yemen

Updated 21 September 2020

How the FSO Safer is an impending danger to the Red Sea and Yemen

  • Houthi refusal of passage to experts to carry out repairs has raised specter of a floating time bomb
  • Saudi Arabia has called for a meeting for Arab environment ministers to discuss ways to avoid a catastrophe

AL-MUKALLA, Yemen: Until the Iran-backed Houthi militia seized Yemen’s western port city of Hodeidah in late 2014, foreign and local experts had been regularly visiting a 45-year-old oil tanker moored in the Red Sea.

It was a practice that ensured that the FSO Safer, abandoned just a few kilometers off Yemen’s coast, did not touch off a disaster by exploding or sinking and spilling oil. But having witnessed the devastation caused by the Aug. 4 blast in Beirut and taken its lessons to heart, the Arab world cannot afford to ignore the imminent danger posed by Houthi stalling tactics.

Expressing concerns about the condition of the vessel, Saudi Arabia has called for a meeting for Arab environment ministers on Monday. According to a statement issued on Sunday by Kamal Hassan, assistant secretary-general and head of the Economic Affairs Sector at the Arab League, the aim of the special session is to discuss ways and mechanisms to activate Resolution No. 582, which was adopted by the Council of Arab Ministers Responsible for Environmental Affairs in Oct. 2019.

The objective is to “find an appropriate solution to avoid an environmental catastrophe due to the failure to maintain the oil ship Safer anchored off the Ras Issa oil port in the Red Sea since 2015.”

When the Houthi militia gained control of Hodeidah, the FSO Safer was carrying 1.1 million barrels of oil, or almost half of its capacity, according to local officials. No sooner had the fighters tightened their grip on the city than technical experts fled the area, realizing that it had become too dangerous for them to stay on.

Over the past two years, the FSO Safer has attracted regional as well as international attention on and off, thanks in part to the regular appearance on social media of photos of rusting pipes and water leaking into the engine rooms, raising the specter of a floating powder keg.

INNUMBER

45 Age of oil tanker FSO Safer

1.1m Barrels of crude oil in tanker

During the same period, Yemeni government officials, environmentalists and foreign diplomats have sounded the alarm over possible outcomes that could both exacerbate the humanitarian crisis in Yemen and take a heavy environmental toll on the Red Sea littoral states.

The UN has suggested sending a team of experts to Hodeidah to assess the damage to the FSO Safer, but the Houthi militia, who want to pocket the proceeds from sale of the oil, have rejected the proposal. The oil in the FSO Safer’s storage tanks was once estimated to be worth $40 million, but its value now may be less than half of that as crude prices have fallen a lot since the onset of the coronavirus pandemic, according to reports.

The internationally recognized government of Yemen has repeatedly accused the Houthi militia of using the decaying tanker as a bargaining chip, citing demands such as the resumption of salaries for public servants in areas under its control, removal of government forces from Hodeidah, and more relaxed inspection of ships bound for the port.

An oil spill would devastate the livelihoods of nearly four million Yemeni people, with fishing stocks taking 25 years to recover. (AFP)

In July, the government requested the UN Security Council to convene an urgent session to discuss the Safer issue amid concern that time was running out. In almost all their meetings with foreign envoys and diplomats, Yemeni officials bring up the matter of the tanker and the attendant risk of an environmental disaster in the Red Sea. For the past several months, Western and Arab diplomats, UN officials, aid organizations and experts too have underscored the urgency of breaking the deadlock in order to avert a human, economic and environmental catastrophe.

In July, the UN described the rusting tanker as a “ticking time bomb,” adding that the tanker’s cargo of oil could cause an environmental disaster four times bigger than the 1989 Exxon Valdez spill off Alaska. Last week, the UN Secretary-General Antonio Guterres added his voice to the growing concern over the deadlock by appealing to the Houthi militia to give UN experts access to the oil tanker.

As for the Trump administration, its views were conveyed via a tweet by the US mission to the UN that said: “The US calls on the Houthis to cease obstruction and interference in aid ops and fuel imports. We urge the Houthis to cease their assault on religious freedom and to permit UN technical teams immediate, unconditional access to the Safer oil tanker.”

In comments to Arab News in June, Michael Aron, the British ambassador to Yemen, said unless the Houthi leadership allowed experts to address the FSO Safer’s problems, the potential damage to the environment is far greater than that caused by the recent spillage of 20,000 tons of fuel in Russia’s Siberia. “The threat to the environment in the Red Sea is enormous, and will impact on all the countries who share this coastline,” he said.

Independent researchers too say the condition of Safer is deeply concerning. In a paper for the Atlantic Council in 2019 entitled “Why the massive floating bomb in the Red Sea needs urgent attention,” energy experts Dr. Ian Ralby, Dr. David Soud and Rohini Ralby said the potential consequences of an oil-tanker disaster in the area include an end to the two-year ceasefire in Hodeidah and an aggravation of Yemen’s humanitarian crisis.

“The risk of explosion increases by the day, and if that were to happen, not only would it damage or sink any ships in the vicinity, but it would create an environmental crisis roughly four and a half times the size of the Exxon Valdez oil spill,” the three scientists said. Other experts have speculated that just a stray bullet from an exchange of fire between rival factions could trigger off an explosion of the FSO Safer’s oil cargo.

Yemeni NGO Holm Akhdar says 126,000 people working in the fishing industry could lose their jobs in the case of a disaster.

“Even worse, given the complexity of this war, an errant bullet or shell from any one of the combatants could trigger a blast as large as Beirut’s August 4th disaster, prompting a historic oil spill,” Dave Harden, managing director of Georgetown Strategy Group, wrote in an op-ed in The Hill last month. He added: “Clean-up efforts would be daunting — given the insecurity of being in a war zone and the additional health risks from COVID-19.”

Similar concerns have been expressed by local government officials and fishermen in Hodeidah. Waleed Al-Qudaimi, deputy governor of Hodeidah, said that any spillage from the FSO Safer would create a humanitarian crisis as severe as the one caused by the Houthi insurgency.

“It (the oil spill) will add an additional burden that will affect Yemen for the next decades, deprive thousands of people of their jobs and destroy marine biodiversity in Yemeni waters,” he said. Al-Qudaimi appealed to the international community to keep up pressure on the militia to allow maintenance work to be carried out.

For a country reeling from a combination of conflict, humanitarian crisis, plunging currency and crumbling economy, repairs to an abandoned oil tanker off its coast might not carry the ring of urgency normally associated with a major disaster.

But now that the world knows what happened when Lebanese officials ignored warnings for years over a cache of highly explosive material stored in a Beirut port warehouse, the importance of resolving the FSO Safer issue cannot be overstated.

 

Twitter: @saeedalBatati