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Sharp drop in Suez Canal revenues adds to Egypt's woes

Sharp drop in Suez Canal revenues adds to Egypt's woes

Egypt's already considerable economic problems took a turn for the worse last month as revenues from transit of shipping through the Suez Canal dropped by half as a result of security problems in  the Red Sea and the Gulf of Aden. Attacks by Houthi rebels on commercial vessels forced major shipping companies to divert away from the key global trade artery. Income from the international strategic waterway last month dropped to $428 million, compared to $804 million in January 2023, Osama Rabie, chairman of the Suez Canal Authority, said in an interview with Egyptian television channel ON TV. The total number of ships through the Suez Canal last month fell to 1,362 vessels, down 36 per cent from the 2,155 vessels navigating the canal during January 2023, he said. Houthi militants in Yemen began attacking commercial vessels in October in solidarity with the Palestinians in the Israel-Gaza war, and show no signs of retreating despite the US and Western allies attempting to deter the Iran-backed group with air strikes, which began on January 12.  Many shipping companies have rerouted their vessels away from the Red Sea to avoid the attacks, opting instead for the longer and more expensive route around the Cape of Good Hope at the southern tip of Africa. The Suez Canal is the shortest sea route between Asia and Europe. With about 12 per cent of the world's shipping traffic passing through it, the waterway is a major facilitator of global trade. The canal is also a crucial source of foreign currency for Egypt. The North African economy, already grappling with record inflation and a heavy debt burden was further impacted by the Israel-Gaza war, which has slowed tourism and decreased shipping through the Suez Canal. Egypt is "particularly exposed" to the Red Sea shipping crisis as the country generates about 2.2 per cent of its gross domestic product in annual balance-of-payment receipts and 1.2 per cent of GDP in fiscal revenue from Suez Canal dues, the International Monetary Fund said in its regional economic outlook in January.
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Opinion
Opinion: Roadblock to peace: the geopolitical quagmire of the "Zangezur Corridor"

Opinion: Roadblock to peace: the geopolitical quagmire of the "Zangezur Corridor"

This year marks the 30th anniversary of the 1994 ceasefire agreement that put fighting between Armenian and Azerbaijani forces over the Soviet-era mainly ethnic Armenian Nagorno Karabakh Autonomous Oblast (NKAO) on hold – or at least until it escalated into war in 2016 and more devastatingly in 2020. Despite the involvement of international mediators, peace remained elusive despite occasional claims to the contrary. The sides were said to have gotten close, but never enough to prevent tens of thousands dying in over three decades of conflict.
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Maersk and Hapag Lloyd re-route shipping away from Red Sea

Maersk and Hapag Lloyd re-route shipping away from Red Sea

Denmark's Maersk and German rival Hapag-Lloyd said their container ships would continue to avoid the Red Sea route that gives access to the Suez Canal following a weekend attack on one of Maersk's vessels. Both shipping giants have been rerouting some sailings via Africa's southern Cape of Good Hope as Yemen-based Houthi militants attack cargo vessels in the Red Sea. The disruption threatens to drive up delivery costs for goods, raising fears it could trigger a fresh bout of global inflation. Maersk had on Sunday paused all Red Sea sailings for 48 hours following attempts by Houthi militants to board the Maersk Hangzhou. U.S. military helicopters repelled the assault and killed 10 of the attackers. "An investigation into the incident is ongoing, and we will continue to pause all cargo movement through the area while we further assess the constantly evolving situation," Maersk said in a statement. "In cases where it makes most sense for our customers, vessels will be rerouted and continue their journey around the Cape of Good Hope." Maersk had more than 30 container vessels set to sail through Suez via the Red Sea, an advisory on Monday showed, while 17 other voyages were put on hold. Hapag-Lloyd said its vessels would continue to divert away from the Red Sea — sailing instead via Africa's southern tip — until at least January 9, when it will decide whether to continue rerouting its ships. The Suez Canal is used by roughly one-third of global container ship cargo. Redirecting ships around the southern tip of Africa is expected to cost up to $1 million extra in fuel for every round trip between Asia and northern Europe.
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New maritime task force to patrol Red Sea following Houthi attacks on shipping

New maritime task force to patrol Red Sea following Houthi attacks on shipping

The United States has announced the establishment of Operation Prosperity Guardian, an important new multinational security initiative under the umbrella of the Combined Maritime Forces and the leadership of its Task Force 153, which focuses on security in the Red Sea. A Pentagon statement said that "Operation Prosperity Guardian is bringing together multiple countries to include the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain, to jointly address security challenges in the southern Red Sea and the Gulf of Aden, with the goal of ensuring freedom of navigation for all countries and bolstering regional security and prosperity.” The conflict between Israel and the Palestinians in Gaza has spilled over into the Red Sea as Houthi rebels in Yemen, who control parts of the country including its capital and some of its Red Sea coastline, intensify their attacks on shipping passing through the Red Sea. BP on Monday, became the latest of a number of global companies that announced the suspension of use of the vital Red Sea route which connects the Gulf region and the Indian Ocean to Europe through the Suez Canal. The United States has condemned the attacks and promised decisive action to deal with them.  The Pentagon announced on Monday the formation of a new international mission focused on countering attacks on commercial vessels in the Red Sea.