Suez Canal crisis : Jerk in the lifeline
Even as the grounded ‘Ever Given’ was set afloat, one can go through the lanes of history to see the recent crisis from a much wider perspective; write Suraj Kumar & Arif Mohammad
The world heaved a sigh of relief Monday as the gigantic Ever Green container ship started floating to clear the passage for hundreds of ships stuck in the Suez Canal. A week before, the ship blocked what could be called the lifeline of maritime trade — the Suez Canal — as it got diagonally stuck between the two ends of the canal.
Whatever be the reason(s) of the container ship getting adrift — the effect of wind or human error — it is certainly an eye-opener. Ascertaining of the accurate cause of the accident holds immense significance, not only to have a takeaway to avoid such accidents in future but also in concrete terms to lay the onus of tens of billions of dollars lost on the responsible party.
The accident is certainly not the first of its kind but it brings to fore two important aspects: 1) the vulnerability of modern maritime trade in wake of the growing size and number of ships and 2) centrality of the Suez Canal in the popular perception. There is no doubt that the passage between the Red Sea and the Mediterranean has been seen as a natural route through centuries dating back to the Before Christ era. Nature has many a time, undone the passage; and humans each time have sprung up to action to reclaim what they see as their natural sea route. But wait! Let this not sound like a tale of valiant protagonists because this is also the story of repression, of the death of thousands of people who invested their lives, mostly against their will.
The relevance of the Suez Canal comes from its central location which is linked with Europe, Middle East, Africa and the Indian subcontinent. This is one of the most dynamic collections of regions where each player is diversely specialized in particular kinds of resources. The trade through Suez Canal covers an extensive area including the Mediterranean, Black sea, America, north and east Europe and the UK in the north of the canal; and the Red Sea, East Africa, Australia, south and south-east Asia in the south of the canal. Even historically, this set of regions had been a hotbed for international trade. Among the three major available routes of the time— the Cape of Good Hope, Isthmus of Egypt and the canal route — the last was most preferred in ancient times.
The canal has been updated and expanded regularly parallel to the advancements in shipping technologies. It was broadened from 60 metres in 1956 to 205 metres in 2015, now allowing the passage of the largest of the ships. The maximum loaded ship capacity has also increased from 30,000 Deadweight ton (DWT) in 1956 to 2,40,000 DWT in 2015 — an eightfold increase. The trapezoidal cross-sectional area of the canal has also increased four times from 1,200 sq km in 1956 to 4,800 sq km in 2015. In light of these expansions, it can be said that increasing container ships is not an obvious threat to the functioning of the canal; facilities of which have been updated from time to time.
The Suez Canal website puts the date of the first attempts of linking the Mediterranean Sea to the Red Sea some 4,000 years back. The first canal was dug under Senaurset III, Pharaoh of Egypt (1887 BC to 1849 BC). Since then sand blowing from deserts has covered the canal multiple times, and as many times, humans have uncovered the silt.
The canal was reopened for navigation by Sity I in 1310 BC which again underwent silting. It is recorded that as Pharaoh Necho-II tried to explore a new canal route between the Nile and Bitter Lakes in 609 BC, more than one lakh workers lost their lives due to starvation. A major contribution in this series was made by Ptolemy II Philadelphus in 285 BC. The Ptolemaic canal, though comparatively narrow, connected the Red Sea to the Mediterranean in true sense.
Then came the Roman occupation of Egypt during the 30 century AD. Initially, Romans used the route to expand their trade by appropriating resources from Egypt. The canal, however, gradually came to be abandoned over the next century and was reopened by Emperor Trajan in 117 AD. It was again abandoned after a few centuries. The last attempt to reopen the canal during ancient times was made in 640 AD after the Islamic conquest of Egypt. The canal was closed by Caliph El-Mansur in 767 AD to tackle the resurgent groups in Medina.
The relentless efforts to revive the canal are indicative of its vitality. A millennium of dormancy was not strong enough to eliminate the urge for the shortest route connecting the East to West. With the advent of industrialization and a growing capacity for trade, humans started looking for their lost gateway towards the start of the 19th century. It was the relentless ambition of French engineer De Lesseps, blended with cunningness that led to the construction of the Suez Canal in 1869 in the similar form that we see it today.
Lesseps made a detailed study of Le Pierre's assessment about the possibility of construction of a canal between the Mediterranean and the Red Sea. Le Pere was part of Napoleon's convoy to Egypt following the invasion of Egypt in 1798. Le Pere had ruled out the possibility of the canal because his calculations showed a 30 feet difference in the level of the two seas, Lesseps was far from being convinced of his findings.
He approached the contemporary Egyptian ruler Ottoman Turk Muhammad Ali who remained unmoved against the global pressure for allowing the construction of a canal through Egyptian land. Lesseps built a strong connection with his son, Prince Saeed Ali. Immediately after the prince got control of the empire, Lesseps used his friendly ties to leverage the gullible nature of Saeed to persuade him. The result was the formation of the Suez Canal Company in 1854 on a concession for 99 years to use Isthmus for the purpose. The company was entrusted with the task of constructing the Suez Canal.
Britain decided to act as a wall to these developments as it perceived its dominance to decline with shifting of trade centre to the middle-east and access of other nations to the Indian subcontinent. Britain almost blocked the financial options of Lesseps through its influence in financial markets. Lesseps had an answer to it in the form of selling stocks of the newly-found company to the public. It is said that nearly half of the shares were bought by Viceroy Saeed Ali.
The construction of the canal had great implications on the economy of Egypt as Saeed Ali spent lavishly. He even provided over 60 thousand Egyptian workers for the digging of the canal. Working under inhuman conditions, thousands of workers died. As the
construction was completed in 1869, Lesseps's promises realized, the canal had a lot to offer to the world. It was, however, a different saga for Egypt which went bankrupt and its economy touched the bottom. To add insult to the injury, it had to sell its share in Suez Canal Company to Britain — the very country that opposed its construction all throughout.
The nationalization of the Suez Canal in Egypt on July 26, 1956, was a watershed moment for the country because it could see the possibility of regaining what it had lost some hundred years back. The construction of the canal in the second half of the 19th century took all that Egypt had. Now it was time to gain under President Gamal Abdel Nasser. He signed the nationalization decree with these resounding words:
"The Suez Maritime Canal Company, S.A.E. is nationalized. All money, rights and obligations of the company are transferred to the State. All organizations and committees now operating the company are dissolved. Shareholders and holders of constituent shares shall be compensated in accordance with the value of the shares on the Paris Stock Market on the day preceding the enforcement of this law. Payment of compensation shall take place immediately the State receives all the assets and property of the nationalized company."
But it was not all. The nationalization of the Canal would redefine the entire global order, signalling the decline of the grand British Empire.
These developments in Egypt have to be seen in the context of the Cold War where the US was holding one side of the string in balancing global order, leaving the other for the USSR. Also, Britain had recently lost the precious Indian subcontinent and was still recovering from the ravages of World War II. It was during this sensitive time that Britain sensed a wrong opportunity presuming the unpopularity of Nasser in Egypt, and made a historical blunder of entering into the war against Egypt. Its allies were Israel and France. While France and Britain were former partners in Suez Canal Company, the Israeli's had no less relevant reason to initiate the war. Egypt had denied the passage of Israeli ships through the canal. Israel conquered a few areas of Egypt in the first few days of the war. But this was the post-War era!
On initiatives taken by the Canadian government, the UN intervened on the eighth day of the war. Israel had to return the conquered territories. For Britain, besides embarrassment at the global level, political turmoil was waiting at home. Prime Minister Anthony Eden who had succeeded Churchill and was said to be a staunch believer of British supremacy, had to tender his resignation. Following these developments, Suez Canal was blocked again for eight long years — the longest ever since. This, however, should not be compared to the recent blockage as things have changed completely now and Suez Canal has a different role in today's maritime trade order.
Effects of the recent blockage
Now the world faces a critical question of whether we can expect more of such blockages? The ship was back to business after around a week and has caused losses amounting to tens of billions of dollars. What if these blockages are for longer periods?
Experts have been flagging warning signs since long that increased size and weight of ships can lead to enhanced losses in cases of accidents such as collision, grounding, oil spill etc. However, a directly proportional increase in the frequency of such incidents due to increased size or weight is not clearly established. It is true that canals are also expanding in parallel to advancements in shipping technology but these two may not be in the same proportions. The Suez Canal has seen 25 grounding incidents, like that of Ever Given, in the past 10 years. This number still doesn't look that bad if we consider that, on average, 51.5 ships pass the canal every day.
If these blockages occur for longer periods in future, there could be two major repercussions: 1) prices of most of the items will increase if oil supply is affected in the process and, 2) items that are perishable will be destroyed resulting in complete losses; a similar condition applies to livestock as well. The ships, of course, have the option to choose the alternative route of Cape of Good Hope. But, this route is more time-taking and expensive as an additional 9,000 km is added to the journey. In light of these facts, it is better to ensure the building of sustainable shipping vessels and match the safety standards and shipping routes requirements.
The blockage of the Suez Canal heavily disrupted the maritime trade, the exact value of which is not ascertained. The blockage came at a time when global trade had not yet fully recovered from the grip of the pandemic. Besides the 2.2 lakh tonne loaded container ship Ever Green, there were more than 350 small and large ships stuck in the region. The perishable items present on these ships have been wasted. The German insurer Allianz analysed that the blockage could slow down the global trade by 0.2 per cent to 0.4 per cent annually. On daily basis, the Lloyds list put that Suez Canal was holding the trade value of USD 9 billion per day, which was subject to loss during the blockage period. Further, experts have suggested that the blockage could affect container trade for over months to come.
The Suez Canal is one of the most viable and important canals in the world. Its location and diversity of resources available in the surrounding regions are the factors that make it so important to the world. The recent grounding of Ever Given and the subsequent global response has just brought both the vitality and vulnerability of the Suez Canal to the surface. The importance of the canal can also be underscored by the fact that humans had been repeatedly trying to explore the region and nations have fought vigorously to ensure control over it. It is time that we read the warning signals given to us by EverGreen blockage and devise guidelines and legislations to check such event in future and minimize their negative impact.
Views expressed are personal