News You Really Need To See: “Suez Upgrade May Not Ease Egypt’s Economic Journey”

“Suez Upgrade May Not Ease Egypt’s Economic Journey”

The New York Times, August 7, 2015, p.A10

“‘Egypt Rejoices,’ the television networks and newspapers declared, announcing ‘Egypt’s gift to the world.’  Businesses were closed, the streets of Cairo were empty, and the airwaves were full of patriotic songs and music videos — all featuring adoring images of President Abdel Fattah el-Sisi interspersed with footage of cargo sailing toward the sea.  With a pageant of soaring jets and singing schoolgirls that lasted hours, Mr. Sisi on Thursday inaugurated what he called ‘the new Suez Canal’ and portrayed it as the cornerstone of his plans for an economic turnaround. … On Friday, every imam in Egypt is expected to preach about its benefits and cite the example of a trench dug by the Prophet Muhammad that led to a battlefield victory, according to instructions from the religious authorities.  The ‘new canal,’ however, is in reality a parallel side channel running about one-third the length of the existing waterway.  And Mr. Sisi’s promises about its rewards, economists and businessmen say, will depend on the resolution of the same problems holding back the rest of Egypt’s economy, including poor government and a lack of transparency, dependability and public security.  The hype about the canal, some analysts say, does little to ease the doubts of investors. …Mr. Sisi’s government has told Egyptians that the canal’s expansion aims to add $100 million a year to the economy and create a million jobs, and ‘those numbers are just totally impossible,’ said Reem Abdel Halim, an Egyptian economist.  The president set a one-year deadline for digging the new channel, greatly increasing the cost, which came in at more than $8 billion, according to Egyptian officials.  But the rush provided only symbolism and no tangible payoff, economists said.  The existing canal is operating well below maximum capacity, in part because shipping volumes remain below their peak eight years ago.  Transport volumes are sagging again this year because of the economic downturn in China and reduced Western demand for Persian Gulf oil.”

Quickie analysis:  Sisi is once again taking steps to put himself in a long Egyptian political tradition going back to Nasser by making a very big deal out of the Suez Canal.  As usual, though, Sisi has managed to buy himself a very expensive white elephant.

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