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The Suez Canal incident may be a preliminary indicator of the crises of the Cold War – Arab and international economics


After a stormy year dominated by a catastrophic pandemic, economic crises and international tensions, it is comforting in one way or another that we are faced with a global threat that appears as if it were a mockery.

Writers David Fekilling and Anjani Trivedi say in a report published by Bloomberg News that one of the largest container ships in the world is stranded in the Suez Canal, and its closure of a very important global waterway, has become a matter of conversation on the Internet faster than it disrupts international cargo flows.

Nevertheless, it is wrong to underestimate the gravity of the event. The closure of important corridors of global shipping represents an economic threat that has been behind the competition between major powers for centuries. It is now a major factor in the growing tensions between Washington and Beijing, which include everything from China’s “Belt and Road” initiative, to the deployment of a naval fleet off the coast of the Philippines and the hype that poses a threat to Taiwan’s status.

The authors say that the flow of goods through the sea represents 70% of the total volume of international trade, and the shipping lanes included in this network are behind conflicts and international trade for thousands of years.

Despite all the transformations that the use of aircraft and wireless communications have resulted in for global trade over the past decade, controlling the lanes through which global navigation passes may be considered more important than ever before. About two-thirds of the international crude oil trade and 80% of all petroleum products are transported by sea.
According to data from the US Energy Information Administration and S&P Global Intelligence, about 10% of the total oil transported by sea, 8% of global LNG and 20% of the container volume passes through the Suez Canal alone.

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The pandemic made sea lanes more important. Navigational charges have increased along with volumes. With the disruptions in supply chains – due to weather conditions and sudden and excessive demand, which results in shortages in various sectors – obstacles such as the Suez Canal accident become even more important.

According to the figures, the Suez Canal remains one of the most important trade lanes in the world, especially for Asia and Europe. In 2019, about 19,000 ships passed through the corridor – or 1.25 billion tons of freight. Every week, the canal crosses hundreds of thousands of containers on board ships from Asia to Europe, carrying machinery, electronics, other intermediate goods and raw materials.

South Korea’s exports to Europe jumped by more than 48% in February, led by healthcare-related goods and cars, for example. Demand for such commodities has already faced problems with container shortages.

The tonnage that passes through the Suez Canal has increased mainly due to the increase in the size of the ships. The Evergiven, one of the largest categories of container ships and the capacity to carry 200,000 tons, is very large and it is not easy to pass through any lane that is not suitable for it.

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It is worth noting that the average daily traffic through the canal has been on the increase since the second half of last year, with the increase in freight rates and container volumes significantly.
Shipping companies are looking for alternative routes between Asia and Europe, such as the longer Cape of Hope and the faster Arctic Sea Route. Global warming and thawing ice have allowed easier passage across seas in northern Serbia, but there are regulatory and geopolitical hurdles.

But it can be said that the seas are so shallow that it cannot allow the size of container ships of the Evergiven to pass through. For China, this is a unique weakness. Unlike the United States, which is an oil-exporting country these days, China imports about three-quarters of what it consumes of oil, as well as about four-fifths of the iron ore it uses to carry out its hectic pace of building basic facilities, not to mention most of its commodity exports to obtain hard currency to pay for these goods. . This makes it more vulnerable in relation to any sea lane closures.
The geography of East Asia means that the Straits of Malacca and Singapore, as well as the semi-straits that pass through the navigable stretches of the South China Sea and those separating Taiwan from the Philippines, are all vulnerable to disruption in the event of conflict.
Vikiling and Trivedi argue that much of China’s foreign policy over the past decade has been a way to overcome these weaknesses. Chinese companies hold a 65% stake in the world’s most active ports, according to research firm Gavical Dragonomics. A corridor through Pakistan, an oil pipeline through Myanmar and a multi-modal railway across the Malay Peninsula – all key elements of China’s Belt and Road Initiative – aim to reduce China’s dependence on the Straits of Malacca and Singapore.

Even the national pressure on Taiwan has an economic component, as about half of China’s shipping is transport between local ports along the coast, and a large part of it takes place in the waters separating Taiwan from the Taiwanese island of Kinmen, which is about six kilometers from the city of Kiamin, which is located on the mainland. the main.
The two writers conclude their report that all this is an important reason to seriously consider the Suez accident, even if, within a few days, things have returned to their normal state. If history repeats itself, it is hoped that the current comic events will not be a “dress rehearsal” for a more tragic event.

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Source site www.emaratalyoum.com

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