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.”


Protests sweep Lebanon for a second day

Updated 29 min 15 sec ago

Protests sweep Lebanon for a second day

  • The unusually wide geographic reach of the protests has been seen as a sign of deepening anger with politicians
  • Lebanon’s economic growth has been hit by regional conflict and instability

BEIRUT: Protesters across Lebanon blocked roads with burning tires on Friday and marched in Beirut for a second day of demonstrations targeting the government over a deep economic crisis.
In Lebanon’s biggest protest in years, thousands of people gathered outside the government headquarters in central Beirut on Thursday evening, forcing the cabinet to backtrack on plans to raise a new tax on WhatsApp voice calls. Tear gas was fired as some demonstrators and police clashed in the early hours.
Fires lit in the street in central Beirut were smoldering on Friday morning. Pavements were scattered with the glass of several smashed shop-fronts and billboards had been torn down.
Protesters blocked roads in the north, the south and the Bekaa Valley, among other areas, the National News Agency (NNA) reported. Schools were closed on the instructions of the government.
Two foreign workers choked to death from a fire that spread to a building near the protests in Beirut, the NNA said.
This was the second wave of nationwide protests this month.
In a country fractured along sectarian lines, the unusually wide geographic reach of these protests has been seen as a sign of deepening anger with politicians who have jointly led Lebanon into crisis.
The government, which includes nearly all of Lebanon’s main parties, is struggling to implement long-delayed reforms that are seen as more vital than ever to begin resolving the crisis.
The Lebanese newspaper an-Nahar described it as “a tax intifada,” or uprising, across Lebanon. Another daily, Al-Akhbar, declared it “the WhatsApp revolution” that had shaken Prime Minister Saad Hariri’s unity government.
Seeking ways to boost revenues, a government minister on Thursday announced plans to raise a new fee of 20 cents per day for calls via voice over Internet protocol (VoIP), used by applications including Facebook-owned WhatsApp.
But as the protests spread, Telecoms Minister Mohamed Choucair phoned into Lebanese broadcasters on Thursday evening to say the proposed levy on WhatsApp calls had been revoked.
Shattered by war between 1975 and 1990, Lebanon has one of the world’s highest debt burdens as a share of its economy. Economic growth has been hit by regional conflict and instability. Unemployment among those aged under 35 runs at 37 percent.
The kind of steps needed to fix the national finances have long proven elusive. Sectarian politicians, many of them civil war veterans, have long used state resources for their own political benefit and are reluctant to cede prerogatives.
The crisis has been compounded by a slowdown in capital flows to Lebanon, which has long depended on remittances from its diaspora to meet financing needs, including the state’s deficit.
The financial crunch has added to the impetus for reform but the government’s steps have yet to convince foreign donors who have offered billions in financial assistance conditional on changes.
The strains have emerged recently in the real economy where importers have been unable to secure dollars at the pegged exchange rate.
The cabinet is due to meet on Friday at the presidential palace in Baabda in what a minister has said would be the final session to discuss the 2020 state budget.