The Egypt crisis – A Pandora’s box?

Renee Horne –London       6 February 2011

Weeks ago it was Tunisia reaching boiling point, now the news flashes around the world see Egypt overheating, with Sudan hot on its heels. Is this a Pandora’s Box slowly opening with a domino effect for the rest of the world?   During recent research on this question, a prominent political economist said “Ahh, but let us not forget the Suez Canal”.  Yes, the canal is the highway of super tankers, with strategic importance since it’s opening in 1856; it serves as the shortest ocean link between the Indian and the Mediterranean, and it was used during times of war and peace, as a conduit for military ships and petroleum. There have been bitter fights over the Suez Canal. Let’s not forget 1956, when notably Russia, the US, the UK and Israel invaded after Cairo’s efforts to nationalise the Suez and then the eight year blockade by the Egyptian military after the 1967 war with Israel. However, since 1988, despite notable interruptions, ships carrying any flag may use the canal.

Today its strategic importance still stands, as many using this canal as their superhighway stand to lose millions. This is due to ships finding an alternative route i.e. around South Africa which will take at least 15 days of the voyage time which may result in delays or cancellations of export orders and higher freight costs. The Suez Canal handles 8 per cent of the world’s seaborne cargo and 2 per cent of the world’s oil and it is crucial to Russia, the US, much of the EU, Israel, China and India.  These statistics may not seem much, but the unrest in Egypt coupled with the possibility of regime change and thoughts of a Suez Canal closure have been met with nervous questions about whether the geopolitical risk is the new threat to the global economic and financial market recovery.

To read the full article click here

To have your say, click here