The ceremony for the opening of what is being called the New Suez Canal was full of pageantry and grandiose visions for Egypt's economic future. The Suez Canal, Egypt's most strategic national asset, links the northern Atlantic with the broader Indo-Pacific Basin and is the dominant transport corridor between East Asia and Europe. But the narrowness of the canal in places has meant that for long stretches, traffic could proceed in only one direction
The completion of a new 72-kilometer (45-mile) waterway will not accommodate continuous parallel traffic throughout the entire canal, but it should improve the situation enough to reduce the wait time for vessels from 11 hours to three hours in the optimal case. This has been accomplished by widening one of the narrowest parts of the canal and by deepening and widening the Bitter lakes and the Ballah bypasses.
Despite these advancements, at least in the short term, the New Suez will not alleviate Egypt's economic woes. Egypt can widen the canal but it cannot conjure increased global trade, which is the basis for the revenue derived from the canal. The East Asia-Europe route will likely see continued cargo growth in the coming years because of unidirectional growth in trade from Europe to a growing East Asian consumer market, but that will be dampened by Europe's economic recession. Moreover, Asian trade to the East Coast of the United States will face stiff competition because of low fuel prices and the renovation of the Panama Canal, which is set to be complete in April 2016. Egyptian projections are therefore optimistic, especially considering that the approximately $8 billion financed by Suez Canal Authority bonds will have to be paid back before increased revenue starts to pay dividends for Cairo.
The administration of Abdel Fattah al-Sisi is hoping that the completion of such a significant construction project, even with the numerous challenges ahead, will raise Egypt's estimation in the eyes of foreigners. $8 billion is a lot to spend for simply reducing wait time in the canal by a few hours, but it is a small sum if it means foreign powers will look at Egypt as a place for viable investment and if Egyptian citizens feel that after years of chaos, their government is capable of delivering on a promise aimed at the betterment of Egypt.
