Inauguration of the Suez Canal Development Project Amid Hopes and Doubts

The Suez Canal development project, one of the significant initiatives of Abdel Fattah el-Sisi, the President of Egypt, is set to be inaugurated on Thursday, August 6, with much celebration and fanfare. Reuters' analytical report recalls that some experts and economists say this grand project may not meet expectations. The execution of this project was announced last year by Abdel Fattah el-Sisi and is compared to major achievements such as the nationalization of the Suez Canal by Gamal Abdel Nasser in 1956 or the construction of the Aswan Dam. The project, estimated to cost around $8.2 billion, includes the construction of a 35-kilometer waterway parallel to the old Suez Canal, which was built about 145 years ago and connects Asia and Europe. It also involves deepening and widening 37 kilometers of the current canal. These changes are expected to reduce travel time for smaller ships by about seven hours and facilitate the passage of larger cargo ships. The Suez Canal Authority estimates that after these changes, its revenue will increase and reach about $14 billion in 2023, compared to around $5 billion in 2014. At the same time, it is expected that the number of ships passing through this waterway daily will increase from 49 to 79. However, some experts express doubts about the official statistics and believe that due to a slowdown and decrease in international trade volume, it is unlikely that the existing expectations regarding the economic returns of this project will be met quickly. Ahmed Kamali, an economist at the American University in Cairo, believes that the Egyptian government's assessments and forecasts are overly optimistic, adding, 'There has been no precise research that we are aware of regarding the success and economic returns of this project.' William Jackson from Capital Economics argues that achieving the economic returns predicted by the Egyptian government requires global trade volume to grow by 9% annually by 2023, while this figure has been around 3% over the past four years. Another point is that since 2011, the revenue from the Suez Canal has even been lower than the global trade growth rate. From 2011 to 2014, global trade volume grew by about 3% annually, but according to William Jackson, the increase in Suez Canal revenue during this period was about 2%. Michael Fradell from an American investment risk assessment firm states that the completion of the Panama Canal expansion in 2016 could jeopardize Suez Canal revenues in the future, as the Panama Canal can attract a larger volume of commercial shipping between Asia and North America. Reuters adds that the Egyptian government has tried to promote the success of this project to the people of Egypt and the world. Streets in Cairo have been decorated with colorful flags and lights for this occasion. Even in Times Square in the heart of New York City, billboards have been installed with the phrase: 'Egypt is boosting the world's economy.' The Egyptian government has declared Thursday a public holiday, public transportation will be free on this day, and it is planned that during the Friday prayers this week, the slogan will be raised that 'all Egyptians, both inside and outside the country, should support this grand project.' However, the largest customer of the Suez Canal, Maersk shipping company, states that although the development of this waterway has created conditions for the use of larger vessels and thus will save fuel consumption, it does not intend to pass more ships through this waterway this year. The manager of this company in Egypt said, 'Last year, about 1,400 of our ships passed through this waterway, and this year the same number will apply.' A senior official from the French company CMA, the third-largest shipping company in the world, stated that the development of the Suez Canal will bring significant changes in the short term. Ahmed Kamali, an economist in Cairo, believes that if this project achieves any success in the short term, it will be more political than economic. He adds, 'The people of Egypt have gone through tumultuous years since the overthrow of Hosni Mubarak's government in 2011, and this project may unite part of the population around a grand national plan.' However, the question remains whether it would have been better to spend this money on areas like health, education, and employment that directly impact the lives of ordinary people.