Commerce April 2010

Exodus

Less traffic through the Suez Canal means less of everything else for Egyptians—including hope.
Cris Bouroncle/AFP/Getty Images

At the southern tip of the Suez Canal, at Port Tawfiq, the waterway opens up and freighters toting thousands of red, blue, and gray containers speed south toward the Red Sea, past crumbling apartment blocks on one shore and a long stretch of dunes on the other. The old men on the boardwalk used to see 40 or 50 ships float by daily. Now the numbers are ebbing—and with them, Egyptians’ hopes for a better future.

“It’s closer to 17 to 20 a day,” says Ahmed, 76, who spent most of his life catching tuna from a tiny trawler in the Gulf of Suez. (He declined to give his last name because a mukhabarat, or intelligence agent, was smoking nearby, handgun tucked into his jeans.)

According to the Suez Canal Authority, 17,228 ships passed through the 101-mile canal in 2009, compared with 21,415 in 2008, and 20,384 in 2007. The decline is mostly due to the global economic downturn and low oil prices. “The falling cost of fuel means it wasn’t as expensive to go around Africa,” says Simon Kitchen, a senior economist at the Egyptian investment bank EFG-Hermes, based in Cairo. “You’re paying for an extra 20 days’ fuel, but you’re not paying the canal fee.” (The average fee paid per ship comes close to $250,000.)

And then there are the pirates. In 2009, the International Maritime Bureau reports, pirates staged at least 20 successful hijackings in the Gulf of Aden, through which all ships traveling to or from the canal must pass, plus nearly 100 failed attacks.

Although the slowdown threatens Egypt’s economy—2 to 3 percent of gross domestic product comes from canal revenues—what’s more serious is the political impact. The $4.3 billion in canal fees the government received last year helped subsidize staples like bread; less revenue means less money to buy off the masses, and government officials fear a repeat of the bread riots that gripped northern Egypt in 2008.

But the Suez Canal also symbolizes something more to Egyptians. “The canal has become so woven into modern Egyptian identity,” says Zachary Karabell, the author of Parting the Desert: The Creation of the Suez Canal. “It’s a real aspect of modern Egyptian nationhood.”

Nearly 4,000 years ago, the pharaohs built a canal linking the Nile and the Red Sea. It operated intermittently until 767 A.D., when the Abbasid caliph al-Mansur closed it to cut off the supply of goods to insurgents in the Nile Delta and Medina. For more than 1,000 years, no corridor connected the Mediterranean and the Red Sea. Then, in 1869, the modern canal opened along a new route, designed by the French diplomat Ferdinand de Lesseps, that traced a straight line through the desert, slashing the time and energy needed for transport. Since then, the canal has been repeatedly linked in the popular memory with assertions of Egyptian independence or military might.

Abdel-Moneim Morsi, the owner of the New Dolphin Restaurant, a seafood spot popular with the Suez elite, recalled secretly crossing the canal as a first sergeant in the Egyptian Army during the 1973 war with Israel. The army had installed pontoon bridges, and within hours the Egyptians had retaken a western swath of the Sinai Peninsula. “We were victorious,” Morsi says. “We felt great happiness. This was our land—the canal, the desert.”

But the Israelis soon counterattacked, gained control of the canal, and forced an embarrassing cease-fire. Today, a tenuous peace persists between Egypt and Israel, but everywhere in Egypt, anger is growing at the Israelis, the Palestinians, the world. The relatively high growth rates the country saw from 2005 to 2008 did little for the vast majority of Egyptians, who are poorly educated and hobbled by skyrocketing inflation.

The visible decline in canal traffic has exacerbated their fears. Glancing at a Maersk Line carrier chugging past, Mohammed Fattouh says his falafel and espresso business was down 40 percent this year. “Something,” he says, “is wrong with our country.”

Peter Savodnik is a writer in New York.
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Peter Savodnik’s book, The Interloper, about Lee Harvey Oswald’s years in the Soviet Union, will be published next year.

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