Why an upsurge in terrorism in the Sinai Peninsula raises fears for the Suez Canal…Almost 150 years after it was dug out of the Egyptian desert, the Suez Canal matters more than ever to both Egyptian state coffers and the global economy. Egyptian revenues from the canal total about $5 billion a year, dwarfing the annual aid provided by the United States and amounting to about 2 per cent of Egypt’s GDP…But the canal’s importance to global trade is also huge. In 2012, the last full year for which traffic statistics are available, nearly 3 million barrels of oil per day passed through the canal — or roughly 7 per cent of all the crude oil traded by ship…
The growing and sophisticated insurgency in the Sinai Peninsula, along with its declared emphasis on attacking the Egyptian regime’s economic lifeblood, has raised fears over the security of the Suez Canal, one of the world’s principal arteries for trade, and especially for moving oil and gas between Asia and Europe. Late last summer, after militants filmed themselves launching a rocket attack on a cargo ship that was making its way through the canal, worries over the channel’s vulnerability to a terrorist attack began to proliferate. In January, West Point’s Combating Terrorism Center published an article on the Sinai insurgency and possible threats to the canal. The Suez Canal serves as the main transit point for the U.S. Navy to move ships between the Eastern Mediterranean and the Red Sea.
The group behind the rocket strikes, the al-Furqan Brigades, threatened further attacks on the canal, but most analysts dismiss the group as a ragtag group of jihadists. However, in the months since, the sophistication of terrorism in the Sinai has only grown. Ansar Bait al-Maqdis, an al Qaeda-inspired jihadi group based in the region, has taken credit for deadly bomb attacks at Egyptian police stations, blowing up several gas pipelines on the peninsula, shooting down an Egyptian Army helicopter, andother acts of terrorism.
While many of Ansar Bait al-Maqdis’s attacks have focused on parts of the Egyptian security apparatus — the Army and the police — the group has made clear in its statements that it seeks to impose the greatest possible economic pain on a regime it sees as apostate. The group justified a January attack on a pipeline that exported gas to Jordan as part of a campaign to “target the regime’s economic interests.” Another attack on a pipeline, one that fueled a cement factory owned by the Egyptian military, was justified in similar terms.
“If they’re really serious about targeting the economic interests of the Egyptian Government, the Suez Canal would be near the top, if not at the top of the list,” David Barnett, a research associate at the Foundation for Defense of Democracies who specializes in Sinai insurgent groups, told Foreign Policy.
Almost 150 years after it was dug out of the Egyptian desert, the Suez Canal matters more than ever to both Egyptian state coffers and the global economy. Egyptian revenues from the canal total about $5 billion a year, dwarfing the annual aid provided by the United States and amounting to about 2 per cent of Egypt’s GDP. That’s one reason that Egyptian authorities, under Hosni Mubarak’s Government, then under President Mohamed Morsi, and today again under military tutelage, have spared no expense to secure the canal against threats in the Sinai.
But the canal’s importance to global trade is also huge. In 2012, the last full year for which traffic statistics are available, nearly 3 million barrels of oil per day passed through the canal — or roughly 7 per cent of all the crude oil traded by ship, according to the U.S. Energy Information Administration. The boom in liquefied natural gas (LNG) trade in recent years has given the canal even more importance for the global energy economy: About 13 per cent of the global LNG trade passes through the canal.
The canal’s importance as an energy corridor is especially noteworthy for Europe and the Mediterranean basin. In the first nine months of 2013, oil and petroleum products made up about one-quarter of all northbound tonnage passing through the canal. Northbound crude oil shipments rose 25 per cent through September compared with the first three quarters of 2012. Southbound energy shipments, which carry goods from Europe and the Mediterranean to the Red Sea and on to Asia, declined in 2013, due in large part to oil-supply disruptions in Libya and Egypt’s own difficulties in exporting natural gas.
Here’s the problem: The canal itself is flat, dug out of the desert at sea level, and seemingly accessible to evildoers. The al-Furqan video from September, for instance, shows a couple of jihadists simply walking from behind a low shrub and taking potshots at a cargo ship with a rocket-propelled grenade. But those kinds of small-scale attacks, while visibly arresting, aren’t the real threat to canal traffic. “An RPG isn’t going to shut down the canal. They’d need to do a bombing, something along the lines of the USS Cole,” said Barnett, referring to the 2000 suicide bombing of a U.S. warship docked in Yemen.
Ships transiting the canal move at a slow but steady pace, though there are a couple of places they pause to let other vessels pass. Ships on either end of the canal, though, are stationary as they wait their turn to convoy through the largely one-way transit. Disabling a ship inside the canal would essentially block traffic in both directions, given how narrow the channel is. And while maritime terrorism isn’t as widespread as or easy to carry out as attacks on land, they have been part of jihadi playbooks in the past. In addition to the Cole, the Limburg, an oil tanker, was attacked by suicide bombers in 2002, and a Japanese cargo ship was attacked in theStrait of Hormuz in 2010.
“The fact remains that the canal is vulnerable — and due to its symbolic and high impact event potential, it will remain a desirable target for extremist elements,” the Soufan Group, a security consultancy, wrote in December. The economic implications of an attack would likely be severe — and not just for Egypt. Rerouting ships around Africa would add thousands of miles to the voyage, increasing costs and also requiring ships to transit more pirate-infested waters. The last time the Suez Canal was closed for any length of time — between 1967 and 1975 — global trade was less, canal traffic was less, the shipping container revolution had barely yet begun, and global seaborne LNG trade was anecdotal.
“You would see a huge spike in transportation costs, in rerouting, if there was a serious closure issue,” Douglas Burnett, a lawyer with Squire Sanders who specializes in maritime and energy issues, told FP. To be sure, other than those late-summer rocket attacks, there have been no actual attacks on shipping in the canal despite the big uptick in Sinai insurgency. The Egyptian military has bolstered the perimeter security of the canal, even as it has intensified counterinsurgency operations in other parts of the Sinai Peninsula. Steven Cook, an Egypt specialist at the Council on Foreign Relations, said that Egyptians have increased security for the canal by using a lot of different elements of their armed forces, but “they admit it is hard to be 100 per cent when you are playing defense.”