ArabianBusiness.com - Middle East Business News
Tuesday, 24 November 2009 09:14 UAE time

YOUR DIRECTORY /

| Share |

Piracy jeopardising Suez revenues

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Saturday, 22 November 2008
BRAZEN PIRACY: Traffic through the Suez Canal is being impacted by piracy off the coast off the coast of Somalia. (Getty Images)

Increasingly brazen piracy off the coast of Somalia is jeopardising traffic heading to and from the Suez Canal, a strategic shipping route and key earner for Egypt's economy.

After more than 90 hijackings this year, the final straw came on Nov. 15 when pirates hijacked a Saudi supertanker with 25 crew and a cargo worth $100 million.

They are now demanding a ransom of $25 million.

Story continues below
advertisement

Some shipping companies have announced they will reroute shipping via South Africa's Cape of Good Hope instead of through the Suez Canal.

Egypt counts on the waterway as an important source of revenue, but emerged empty-handed after hosting an emergency meeting on Friday for Arab Red Sea states to discuss the threat.

"It is very important for Egypt to secure [the canal]. It's one of the most important sources of national income. It's very serious for Egypt," said Imad Gad, an analyst with Al-Ahram Centre for Strategic and Political Studies.

Friday's Cairo meeting, convened at the request of Egypt and Yemen, came up short on specifics about how the threat should be handled.

"Arab countries don't know how to face the situation. Their only option is to work with the real power," Gad said, referring to US, Russian and NATO ships that have been sent to help safeguard shipping in the region.

The Red Sea states said in a final statement at the end of the meeting that they welcomed the support of other countries, as long their sovereignty and territorial waters were respected.

They blamed political turmoil in Somalia for the piracy phenomenon, saying a political solution is vital if the increasingly brazen attacks are to end.

"They must give more attention to Somalia," said Gad. "If they want to diplomatically act against security in Somalia, the source of the problem, it will take time, a minimum of six months to one year."

Such a relatively long-term fix, even if it were to be successful, would not meet Egypt's short-term needs, he added.

Roughly 18,000 ships pass every year through the 190-kilometre waterway, constructed in 1869 to link the Mediterranean Sea with the Indian Ocean. This traffic accounts for 7.5 percent of world commerce annually.

Every day, earnings from shipping top up Egypt's coffers with $15 million, and projected revenue for 2008 is $5 billion.

The canal has become an important passageway for goods from China and India, with its traffic considered an important indicator of global economic health. The piracy threat also worries Egypt because of the world financial crisis.

In October the canal recorded its lowest monthly revenue in six months, canal official Mahmud Abdel Wahab told newswire AFP. "It had nothing to do with piracy," he said.

But with the fall in oil prices, the cost of taking an alternate route to avoid potential pirate attack is beginning to make sense to shippers.

However the waterway can still count on revenue from increased military traffic to counter the pirate threat, which may help to offset some losses.

| Share |


READERS' COMMENTS

Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.

Click here to post a comment


Add your Comment
All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *
(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments


Please click post only once - your comment will not be published immediately.


MORE FROM ARABIANBUSINESS.COM

SHARE PRICE CHECK

 EMAIL ALERTS

  1. Suez Canal Authority (SCA)

  2. Transportation


Tell us your story

READER COMMENTS

  1. Dubai developers see negative press reports decline 09
    24 Nov ' 09 at 07:48
    How much can one read/write abt one particular event. That’s the only reason the negative writing has gone down no one is interested...   More  »
  2. Why I h8 junk txts 08
    24 Nov ' 09 at 08:16
    This is a simple solution to avoid being woken up at night. Most mobile phones offer this option. Sorry, I don't have any solution to...   More  »
  3. 'Worrying' diabetes tests raise doubt on UAE's health 04
    24 Nov ' 09 at 08:52
    It is high time for us to buy the shares in the Pharmaceutical Cos. which are manufacturing drugs for diabetic.It is not the education...   More  »

Read all user comments >

Gitex 2009

MORE FROM ARABIANBUSINESS.COM