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Egypt Suez Canal
The French played a significant role in the building of the
Suez Canal, which links the Red Sea and the Mediterranean. French
engineer Ferdinand de Lesseps designed and supervised the
construction of the project. In addition, the French, who, like
other European powers, sought to shorten the trip between Europe
and Asia, funded most of the construction. Completion of the 160-
kilometer long waterway, however, took ten years of excruciating
and poorly compensated labor by Egyptian workers, who were drafted
at the rate of 20,000 every ten months from the ranks of the
peasantry.
The canal was opened to navigation in November 1869 under a
concession to Britain and France scheduled to expire in 1968.
Although the French were the force behind the project, Britain
stood to gain the most because of its extensive possessions in
Asia. In the 1870s it "bought" the shares of the Egyptian khedive.
The canal remained under the control of both powers until Nasser
nationalized it in 1956; it has since been operated by the Suez
Canal Authority
(see Abbas Hilmi, 1848-54 and Said, 1854-63
, ch. 1).
The canal was closed to navigation twice in the contemporary
period. The first closure was brief, coming after the tripartite
British-French-Israeli invasion of Egypt in 1956, an invasion
primarily motivated by the nationalization of the waterway. The
canal was reopened in 1957. The second closure occurred after the
June 1967 War with Israel and lasted until 1975, when Egypt and
Israel signed the second disengagement accord.
The tonnage passing through the canal increased consistently
except for a short interruption after 1985-86, when the Iran-Iraq
War hampered oil production and navigation in the Persian Gulf.
Between 1976 and 1983, net tonnage rose from 187 to 378, increasing
at the rate of 10.5 percent annually. Traffic in the canal depended
partially on oil shipments. Tanker tonnage made up more than 40
percent of total traffic in 1976, and about 36 percent of the total
in 1983.
Revenues increased throughout the period, growing at an annual
rate of 8.7 percent between 1979 and 1985. They were expected to
reach US$1.3 billion in 1988. The canal thus emerged as the third
major source of foreign exchange after workers' remittances and oil
exports. Receipts from the canal continued to climb, in spite of
the reduction in tonnage, partly because the canal toll was raised
from 2 to 6.5 percent annually between 1981 and 1985. Also, because
the toll was evaluated in SDRs of the IMF, revenues did not suffer
in terms of the United States dollar value in 1986 although the
dollar depreciated that year against the SDR.
Growth in canal revenues was likely to remain modest. The
canal's size limited the volume of traffic that could pass through
it, and if tolls were raised beyond certain limits, tankers and
other vessels could opt for other routes. Economists accordingly
estimated that future receipts would perhaps grow in line with
world trade at the rate of 4 to 5 percent annually.
Data as of December 1990
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