Egypt .. What is behind the continued reduction in the Suez Canal traffic fees?

In continuation of the policy of reducing traffic fees, the Egyptian Suez Canal Authority decided to reduce the transit fees of oil tankers with loads of more than 250 thousand tons by 48%.

A statement issued by the authority stated that the reduction in transit fees took effect on the first of December and will continue until May 31, and the authority decided to continue working on the reduction granted to LPG carriers (loaded or empty).

The authority justified the successive reduction decisions that it comes within the mechanisms of encouraging LPG carriers to cross the canal, as it grants reduction rates ranging between 24 and 75%.

Is this the only reason for reducing transit fees from the most important shipping artery in the world?

The Suez Canal had decided, for the fourth year in a row, to grant ships transiting the Suez Canal substantial discounts on traffic fees, in order to face the sharp competition from the alternative navigation routes of the canal.

But the decisions carry more concerns than the advertiser, according to economists and politicians. Israel has not stopped thinking about finding alternatives to the Suez Canal since 1948, and it was only lacking in expanding the base of Arab normalization, which was achieved in the following decades until it recently included the UAE, Bahrain, Sudan and Morocco. .

According to the American Foreign Policy, trade traffic in the Suez Canal is expected to decrease by more than 17%, with the operation of the "Eilat-Ashkelon" pipeline, according to the Emirati-Israeli agreement.

The Suez Canal is one of the most important shipping lanes in the world to transport oil from the Persian Gulf to Europe instead of circulating ships around Africa, and it is the second largest source of foreign currency to Egypt after tourism.

The Suez Canal revenues decreased to $ 5.72 billion in the 2019-2020 fiscal year, from 5.75 billion the previous year.

President of the Suez Canal (right) with Sisi during the opening of the new branch (communication sites)

Emirati-Israeli rapprochement

On August 13, the UAE and Israel reached an agreement to normalize relations between them, which was signed on September 15 in Washington.

All these concerns were indicated by other international newspapers, as Foreign Policy magazine stated that the Eilat-Ashkelon pipeline will be the main beneficiary of the Emirati-Israeli normalization agreement.

The magazine said in a report last September that Tel Aviv is about to play a much larger role in energy trade and oil policy in the region, after the UAE agreement with it strengthened a pipeline that was secretly built between Israel and Iran during the Shah's era.

It quoted the directors of the Asia Pipeline Company that runs the line as saying that the 254 km canal from the Red Sea to the Mediterranean provides a better and cheaper alternative than the Egyptian Suez Canal and an option to connect to the Arab Pipeline network that carries oil and gas not only to the region, but to the ports. The Navy that supplies the world.

These reports have been reinforced on the ground. Last October, the Israeli Pipeline Company (EAPC) announced that it had signed a preliminary agreement to help transport oil from the UAE to Europe via a pipeline linking the city of Eilat, overlooking The Red Sea, and the port of Ashkelon on the Mediterranean coast.

Currently, Gulf oil tankers, bound to the west, pass through the Strait of Hormuz in the Gulf, and from there to the Bab al-Mandab Strait (south of the Red Sea), to the Suez Canal and from there to European and American markets.

The Globes website - a specialist in the Israeli economy - also indicated last September that "exporting oil to Europe via a land pipeline linking Israel and the Gulf states will help bypass the dangerous and costly shipping routes of the Strait of Hormuz and the Suez Canal."

Real concerns

In reality, however, the Egyptian authorities are wary of this frequent and disturbing news about its navigation channel, which lays golden eggs, which was expressed by the head of the Suez Canal Authority, Lieutenant-General Osama Rabie, last September with the continuing momentum of these news and reports.

Lieutenant General Rabie warned, during an intervention on a private satellite channel, of the consequences of the Israeli-Emirati agreement, saying that the construction of the Israeli "Eilat-Ashkelon" oil pipeline to the Gulf threatens Egyptian national security and the Suez Canal.

According to the Egyptian official, the Suez Canal acquires 66% of the total quantities of crude likely to cross from the Suez Canal, amounting to about 107 million tons, compared to 55 million potential through the "Eilat-Ashkelon" line, meaning that the pipeline will account for 51% of the quantities of oil that cross the canal. Suez currently.

Rabei added that the matter comes within the framework of regional arrangements affecting the national security of Egypt.

Forcing no selection

Regarding the reasons for reducing the continuous traffic fees in the Suez Canal, Eng. Mohamed Farag, a member of the Transport and Communications Committee of the former Egyptian parliament, told Al-Jazeera Net, "There are purely material reasons related to the decline in oil prices and the decline in demand for it, and thus the lower cost of using the Cape of Good Hope is the luckiest alternative to the Suez Canal. Egyptian now. "

But if we delve a little deeper, according to the Egyptian MP, there are other reasons already related to the proposal to export oil to Europe via a land pipeline linking Israel and the Gulf states, despite the fact that the line between Israel and the UAE is removed on paper, and therefore there is no need to reduce fees for this reason only. .

Farag pointed out that showing flexibility in imposing transportation fees is an important thing in managing the Suez Canal facility, and unless the authority’s management takes into account the urgent changes in the international arena, and the fees change according to these changes, the Suez Canal will lose its importance over time.

Letters to Abu Dhabi and Tel Aviv

Economic expert Muhammad Kamal Okdeh, residing in the United States, ruled out that the Emirati-Israeli line is behind the reduction of fees at the present time because it is not present on the ground now, despite talking about cooperation between the two parties in this regard, but it is not without messages addressed to those in charge of the line.

In his speech to Al-Jazeera Net, Knot explained that the matter has two sides: One of them is related to the government's desire to increase the passage of ships and increase the volume of cargo through the Suez Canal, in light of the decline in global trade and the international economy.

He continued, "The other matter (the decision to reduce fees) is a message addressed to the UAE and Israel that Egypt is able to reduce the Suez Canal fees to the furthest extent that makes it a strong competitor to any lines that may exist and have the ability to compete in the future."