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Egypt: Suez Canal revenues plunge by almost half following Red Sea attacks

Attacks by the Houthis in support of Gaza have forced major shipping firms to avoid the waterway, dealing a blow to a major source of income for cash-strapped Egypt
A photo shows tugboats pulling the Marshall Islands-flagged bulk carrier M/V Glory in the Suez Canal on January 9, 2023 (AFP)
A photo shows tugboats pulling the Marshall Islands-flagged bulk carrier M/V Glory in the Suez Canal, 9 January 2023 (AFP)

Revenue for Egypt’s Suez Canal has dropped by almost half in January after Yemen’s Houthis launched a series of attacks on ships in solidarity with Palestinians in Gaza, according to a top official.

The attacks have forced major shipping firms to avoid the waterway, causing income to drop to $428m last month, in comparison to $804m for the same period in 2023, the Suez Canal Authority chief Osama Rabie said on Friday.

Rabie added, in an interview with an Egyptian TV talk show, that the number of ships navigating the canal fell by 36 percent.

Despite the US and UK launching air strikes on Yemen to put an end to the attacks, there is no sign of them stopping.

The Houthi attacks have pushed numerous commercial vessels passing through the Suez Canal and the Bab al-Mandeb Strait to take alternative and much longer routes around South Africa’s Cape of Good Hope, causing major changes and delays.

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Rabie, however, said that the Suez Canal remains "the best, fastest and safest" route, pointing out that the Cape of Good Hope route is "unsustainable, without services, and navigation on it is very difficult".

The Houthis, officially named Ansar Allah, say they are attacking what they consider to be Israeli-linked ships in solidarity with Palestinians in Gaza since the war there started on 7 October.

"These attacks will not deter us from our moral, religious and humanitarian stance in support of the steadfast Palestinian people in the Gaza Strip, and will not go unanswered and unpunished," they said in a statement on Sunday.

Economic crisis in Egypt

In December, the US announced a 10-nation force to counter the Red Sea Houthi attacks, including Canada, France, Italy and the UK.

However, the Houthi Red Sea attacks have not stopped, severely affecting the Suez Canal, which is a major source of national income and foreign currency for Egypt. 

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The drop in revenue comes as Egypt grapples with a growing economic crisis, as the currency last week dropped to an unprecedented low of 72 pounds to the dollar in the parallel market. That rate is significantly below the official exchange rate, which stands at around 31. 

Traders on Monday, however, reported the rate went down to 60 after a series of government measures against the parallel market and rumours of imminent UAE investments worth $22bn to buy land on Egypt's north coast.  

The drop in currency has caused prices to soar in Egypt, leaving people desperate to make ends meet and afford everyday basics. 

Egypt is on the verge of agreeing a new financial package with the IMF, according to multiple reports.

Cairo already has a $3bn IMF package in place, but has received very little of it. That is due to slow progress in the sale of state assets, in exchange rate flexibility and in other economic reforms spelt out by the fund. 

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