April 18, 2021

Insider Release

Geopolitical Blog

“Ever Given”- The Strategic Importance Of The Suez Canal

The “strange case” of the container transport vessel “EVER GIVEN” and the blocking of the Suez Canal was reason of great worry and frustration for the world. The ship has been stranded diagonally in the canal, preventing the passage of all other vessels, since Tuesday 23 March 2021.

Today, 29 March 2021 is the news of the unbundling of the ship. Many tugboats from all over the world took part in resolving this crisis, which has had strong economic repercussions.

To date, about 400 ships have been stuck at the ends and centre of the canal connecting the Mediterranean Sea to the Red Sea. Many of them were oil tankers and this also affected the price of crude oil, which has undergoing various fluctuations.

Ever Given - Suez Canal
Ever Given – Suez Canal

Consequences of the accident

The economic consequences of the accident have been enormous, considering that more than 10% of world goods pass through the Suez Canal. The Bloomberg agency has calculated a loss of more than $9 billion a day, clearly due to the trade freeze.

To give a concrete example, the value of the goods in the vessels stuck in the canal alone amounts to about 8 billion dollars (Lloyd’s List data).

To remedy the problem, during this blocking period, many companies decided to circumnavigate the whole of Africa, increasing delivery times by at least a week. As a result, the cost of delivering goods has obviously increased, as it takes 9000 km more per journey. Indeed, it is estimated that the cost of fuel for an oil tanker to circumnavigate Africa alone amounts to $300,000.

Putting aside some conspiracy theories that question the causes of the accident, we must realize how important this canal is at a strategic and geopolitical level. The interruption of the transit flow has immediate repercussions not only on trade and the global economy but also on the whole balance between States. Any short or prolonged interruption of the flow of ships in the Suez Canal risks calling into question the delicate balances reached by the powers that have the main interest in the area.

In order to understand this concept better, it is necessary to retrace a short historical journey.

Ever Given - Suez Canal
The blockade in the Suez Canal after the Ever Given ship accident

Brief history of the Suez Canal

The current incident underlines once again the strategic importance of the canal. This importance is highlighted by a brief historical analysis.

The Suez Canal was inaugurated in 1869. It was designed by the Italian engineer Luigi Negrelli, with a grant from the French Diplomat and entrepreneur Ferdinand De Lesseps. This project saw the light of day on a territory belonging to the Ottoman Empire at the time. It lost control of the canal in 1882 during a revolt. From then on, the Suez canal was defended by British troops. This control was formalized in 1936 in the Anglo-Egyptian Treaty.

After the end of the Second World War, Egypt began to distance itself more and more from the previous agreement with UK. This in sufferance was evident when, in 1948, after the Arab-Israeli war, the defeated Egypt began to block the passage of Israeli ships.

1956 was the height of Egyptian hostilities, which led to the decision of Egyptian Prime Minister Gamal Abd El-Nasser to nationalize the canal company. Thus, began the Suez Crisis which led to the joint Anglo-French-Israeli armed intervention against Egypt. The crisis was resolved when it became clear to Europeans and Israelis that the United States did not support it, and especially when the Soviet Union threatened to intervene on Egypt’s behalf became a reality.

Following the conflict, access to the canal was placed under the aegis of the UN. However, it was later closed during the Arab-Israeli wars in 1967 and 1973. In the following years, UN troops were again deployed and in 1979 following the peace treaty between Egypt and Israel, the passage of Israeli ships was again allowed.

This treaty created the Multinational Force and Observers (MFO), which is still responsible for enforcing the peace agreements.

Suez Canal Crisis
Suez Canal Crisis – Source: Wikipedia

CONCLUSION

Historical events in the Suez Canal show shaky balances of power and alliances. The Canal is not only an ingenious project made more than 150 years ago but a bridge of equilibrium between different blocks: the Arab world, the Asian world and the Western world. It is also a symbol of the decline of European imperialist policies and a symbol, as well as an economic and strategic lever in the hands of the Arab world and its allies. Given its fundamental importance, many more decisive chapters of history, where this site will be the protagonist, have yet to be written.

The “EVER GIVEN” incident also highlights the fragility of the global trade machine, which still today, in 2021, despite its complexity, can be easily hit and damaged or even interrupted, with cascading repercussions on the entire globe.

Adriano Margarone

for Insider Release

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INSIDER RELEASE is an informative blog. This blog discuss various topics. It is emphasized that the ideas and concepts, although based on research from official sources, are the result of free evaluations by the writers. The BLOG, in full compliance with the principles of information and freedom, is not classified as a press site.

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