Suez Canal revenue halved by Houthi attacks, straining Egypt's economy
5:29 AM EDT, March 26, 2024
Revenues from the Suez Canal have plummeted by more than 50 percent due to Houthi attacks in the Red Sea, announced Egypt's Prime Minister Mustafa Madbuli during discussions with a delegation from the US Congress. Concurrently, despite an agreement, Russian and Chinese vessels are still subjected to attacks.
On Thursday, March 21, a meeting in Oman saw Russian and Chinese diplomats engage with Mohammed Abdel Salam, a prominent figure from the Yemeni Houthi movement. This encounter was documented by Bloomberg, which cited sources present at the discussions.
These sources revealed that the militants had pledged not to target Russian and Chinese ships, allowing them safe passage through the Red Sea. In exchange, the Houthis anticipate political backing, such as obstruction of further UN resolutions against their movement.
However, despite these assurances, Bloomberg reported a Houthi assault on a Chinese tanker last Saturday. The militants launched four missiles close to the tanker Huang Pu, owned by China. A fifth missile struck the vessel, causing damage and igniting a fire, which was subsequently extinguished, as confirmed by the US Central Command.
Egypt’s economy reels from Houthi assaults
The attacks have severely disrupted trade along this pivotal route, previously responsible for 12 percent of global trade. As a result, primarily Western ships are now forced to navigate a longer path, circumventing Africa from the south. Nevertheless, according to Bloomberg, many Chinese and Russian vessels continue to brave the journey through the Red Sea.
Prime Minister Mustafa Madbuli, in his conversation with the US Congress delegation, highlighted the dire impact of these assaults on his country. The Suez Canal's revenues have sharply declined by more than half due to the ongoing Houthi attacks on the Red Sea.
Just last year, the Canal generated a record-breaking $9.4 billion, a crucial boost for the Egyptian economy amidst financial turmoil. In response to the crisis, at the start of March, the Central Bank of Egypt escalated interest rates by six percentage points and decided to cut infrastructure spending.
Recent statistics show that the annual inflation rate exceeded 31 percent in January, with the cost of unsubsidized bread doubling over the past year, as indicated by Global Finance. Furthermore, the conflict in the Gaza Strip has drastically diminished tourist arrivals to Egypt.
