the first victim of Houthi attacks is ultimately Egypt and its Suez Canal

In their attacks on merchant ships, the Houthi rebels officially wanted to attack only ships linked to Israel. But, since mid-December 2023, the entire merchant fleet has avoided the Suez Canal and it is Egypt, already in the midst of an economic crisis, which is suffering.

Initially, the Houthi rebels wanted to weaken Israel’s economy through piracy actions on merchant ships in the Red Sea linked to the Jewish state. But these attacks have discouraged the largest shipping companies. Since mid-December 2023, cargo ships no longer pass through the Suez Canal but through the Cape of Good Hope. Thus 10% to 15% of global maritime transport finds itself disrupted. Egypt, deprived of the income from rights of passage, is ultimately the big victim of this security crisis in the Red Sea and President Sissi is put to the test.

The damage could quickly prove catastrophic for the Egyptian economy. The consequences are immediate: the Suez Canal is the second largest source of liquidity in the country. Normally, the annual income is 7.5 billion euros. Every month, 450 million euros fell into the state coffers, thanks to transit taxes imposed on maritime freight companies. Since mid-December, traffic has slowed considerably, the International Monetary Fund (IMF) has just noted a 35% drop in the volumes usually transported.

Stabilize the area and regain a level of confidence

The Egyptian economy really didn’t need this. In 2023, the country came close to defaulting on payments. In 2024, the debt is expected to swallow up nearly 70% of state revenue. The Egyptian currency has just been devalued and Sissi’s government has suffered a series of hard blows in recent years, notably with the Ukrainian wheat crisis. Egypt is one of the largest exporters in the world and already in 2021, the obstruction of the Suez Canal by the Ever Green container ship caused the country to lose a lot of money.

This incident had only blocked the passage for two weeks, but this time the situation is different. David Des Roches, professor at the National Defense University in Washington, said on Al Jazeera: “The big loser here is Egypt, which will lose 30% of the revenue, in dollars, that the Canal brings to it. Moreover, in this kind of context of security threat, it will take time to stabilize the area and regain a level of confidence.”

Dependence on Operation Guardian of Prosperity

For the moment, all the experts are talking about a “temporary crisis” but some consider that if the Egyptian economy has the capacity to collect for a month, beyond that, it will be significantly more complicated. Egypt is therefore today dependent on Operation Guardian of Prosperity, the military operation carried out in the Red Sea by the Americans and around twenty allies to dissuade the Houthi rebels from attacking.

We note that Egypt is not participating in this operation. This may seem surprising, given the economic stakes for the country. The option was far too dangerous politically, the Egyptian street being predominantly pro-Palestinian. Abdel Fattah al-Sissi has already refused to consider welcoming the Gazan population on his territory; he prefers to keep his distance from the conflict in the Middle East, even if it means exposing himself to a crisis on his own territory. More than 60% of Egyptians today flirt with the poverty line and, without money from the Suez Canal, their president will have difficulty subsidizing the daily bread of the population, the first barometer of the country’s social stability.