Piracy may mean less traffic for Suez Canal

Manar Ammar
6 Min Read

CAIRO: After the capture of the Saudi supertanker by Somali pirates, countries and corporations around the world, especially those benefiting from the Red Sea-Suez Canal maritime route, are scrambling to find solutions.

Egypt, of course, is on top of that list.

The Suez Canal could see its traffic dwindle as vessels seek alternative routes. Its revenues are one of the pillars of the Egyptian economy, contributing 3.3 percent of gross domestic product in fiscal year 2007/2008.

It’s considered the third major source for foreign currency following tourism and remittance from Egyptians working abroad.

The gateway to the Arabian Sea and linking Asia to Europe, the Suez Canal is often used by oil shipping vessels.

Due to the hazards of sailing through the Gulf of Eden, shipping companies are considering changing routes via South Africa’s Cape of Good Hope, which will mean Egypt loses a vital source of income.

A recent emergency meeting of six Arab countries trying to forge a joint strategy against piracy in the Gulf of Aden failed to garner substantial results.

The countries in the meeting were those who with Egypt share the Red Sea – Yemen, Saudi Arabia, Sudan and Jordan. A representative from Somalia’s transitional government also attended the meeting behind closed doors in Cairo.

Norway’s Frontline, one of the world’s biggest oil tanker owners ferrying much of the Middle East’s crude oil exports to world markets, is “definitely considering instructing its fleet to avoid the Gulf of Aden and the Suez Canal because of piracy, its acting chief executive officer told Reuters last week.

“We haven’t done it yet. We are definitely considering it. It’s possible, Martin Jensen told Reuters.

“Of course, like many in the industry, we are instructing all our ships to call as close to Yemen and as far from Somalia as possible, said Jensen, adding he was concerned that Somali pirates were attacking deep in international waters.

Insurance is another factor that would influence the decision to re-route. With increasing piracy, sea navigation insurance companies will have to raise more funds for the insurance of the ships taking the troubled route.

The Chatham House, a foreign policy think tank, released a report confirming that insurance for shipping through the Gulf of Aden have increased 10-fold. The report said that due to the piracy and the high coast of insurance “shipping could be forced to avoid the Gulf of Aden/Suez Canal and divert around the Cape of Good Hope.

This week, Mohamed Abdel Wahab, the Suez Canal spokesman, told the state-run Al-Ahram that the navigation movement has not been affected, until now, with the Somali piracy. The canal has not received any official notification from shipping companies canceling their scheduled trips through the Canal.

October marks the canal’s lowest monthly revenue in six months according to reports. Revenues from the Suez Canal reached $467.5 million in October, down from $469.6 million in September but up from $422.6 million in October 2007, the government said on Wednesday.

Abdel Wahab confirms that the low revenues are due to the global economic crisis.

Earlier Egyptian officials had said they are not concerned with the piracy because “most passing ships are the big ships that are committed to the safe navigation course and the pirates with their small boats can’t board them . they are too weak, state-run Akbhar Al-Youm had quoted The Suez Canal Authority’s Chief Captain Ahmed Ali Fadel as saying

Mocking a rush by NATO, the European Union, the United States and others to protect shipping lanes off Somalia, pirates simply sailed further to seize the Saudi oil supertank, the Sirius Star carrying more than a quarter of Saudi Arabia’s daily oil exports 450 nautical miles (830 km) off Kenya’s coast.

Using larger “mother ships to increase their reach, the heavily-armed pirates usually pull up either side of a target in speedboats and board, firing guns or even rocket-propelled grenades just over the bridge if the captain tries to escape.

“This is definitely an escalation of what we’ve seen in the past, said Roger Middleton, a Horn of Africa specialist at the Chatham House think-tank in London, of the Sirius Star seizure.

“There just isn’t the naval capacity to cover the area they now threaten. So a military solution is not the answer.

Last week, Egyptian officials expressed concern about the new turn of events. Foreign Ministry spokesman Hossam Zaki said Egypt would consider all possibilities in dealing with the crisis.

Egypt relies heavily on revenue from traffic using the Suez Canal, and “some vessels are (now) taking alternative routes, Egypt’s official MENA news agency quoted Zaki as saying.

“The Egyptian national security establishment works intensively on all options, examines what measures could be taken in this regard, and decides whether a diplomatic and political solution will be preferred.

“All options are open, he added.

The Friday meeting didn’t come out with clear solution to the problem while “expressing anxiety at the situation, blaming “the deteriorating political and humanitarian situation of Somalia, reported the press.

Political analysts note that solving the 17-year-old conflict on Somali land is key to ending piracy. -Additional reporting by agencies.

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