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Egyptian officials make conflicting statements over threat to Suez Canal from Israel-UAE pipeline

The Suez Canal is a major shipping route for oil tankers [Getty]

Date of publication: 3 February, 2021

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Amid continuing uncertainty, the director of Egypt’s Suez Canal Authority has backtracked on statements that a proposed UAE-Israel oil pipeline could significantly affect the Egyptian economy.
Egyptian officials have expressed concern over the possible economic impact on the country from a planned pipeline and railway transporting oil from the UAE via the Israeli ports of Eilat and Ashkelon.

Contradictory statements have been made by the head of the Egyptian Suez Canal Authority (SCA), Osama Rabie.

Last week, Rabie told the Egyptian TV channel Sada Al-Balad that the Israeli-UAE pipeline project could decrease traffic through the Suez Canal - an important source of revenue for Cairo - by as much as 16 percent.

However, on Tuesday he backtracked, saying that "there was absolutely no truth" to reports that global trade passing through the Suez Canal would decrease by this figure, in a sign of official confusion over the matter.

On Wednesday, however, the Lebanese newspaper Al-Akhbar quoted anonymous Egyptian sources saying that economic damage from the pipeline was a real possibility and that Rabie had downplayed the danger in order not to upset relations between Egypt and the UAE.

The UAE, along with Saudi Arabia, has been a major provider of aid and loans to the government of President Abdel Fattah Al-Sisi, who seized power in Egypt in a military coup in 2013.

The UAE normalised relations with Israel in August 2020.

Later that year, the Israeli Europe-Asia Pipeline Company (EPAC) and the Israeli-Emirati RED-MED Land Bridge announced a partnership to build the pipeline between Eilat and Ashkelon, which will allow oil to be transported from the Gulf without passing through Egypt’s Suez Canal.

A railway will be built alongside the pipeline, allowing the transport of other goods.

In his initial interview with Sada Al-Balad, Rabie said that the Egyptian government was "monitoring" projects that could rival the Suez Canal as a trade route and would work on "incentives, projects, and new services" to ensure it remains the best way to transport goods.

He added that while in the immediate future, there was no threat from the Ashkelon-Eilat pipeline, the pipeline was expected to be completed within five years and could reduce the volume of trade passing through the Suez Canal by 16 percent.

Contradiction

However, in a later interview with Sada Al-Balad, Rabie said there was "absolutely" no truth to the 16 percent figure, adding that only 0.7 percent of the UAE's oil exports currently passes through the Suez Canal and just 7 percent of the Gulf state's oil exports will be channeled through the Ashkelon-Eilat pipeline when it is completed.

He also said that the Ashkelon-Eilat pipeline would take 7 percent of the total oil exports from Gulf countries - including Saudi Arabia and Kuwait - currently passing through the Suez Canal, predicting that this would only mildly affect trade for Egypt.

In his later interview, Rabie did not discuss the possible effect of the railway accompanying the pipeline, which can transport non-oil goods.

On Wednesday, anonymous Egyptian sources told Al-Akhbar that the more reassuring statements in Rabie's second interview were "not true".

"[They were] linked to a media campaign in which higher authorities ordered that the negative effects of the [pipeline] project be concealed so that there would be no diplomatic crisis between Cairo and Abu Dhabi," the source said.

Currently, about 66 percent of Gulf oil exports to Western countries pass through Egyptian territory, either via the Suez Canal or the SUMED oil pipeline which links the Red Sea to the Mediterranean port city of Alexandria.

Last September, Wael Kaddoura, a former board member of the Suez Canal Authority, told Al-Monitor that the Eilat-Ashkelon pipeline "would create competition [for Egypt] in the transportation of oil from the Gulf to Europe", pointing out that "17% of the [Suez] canal's revenues come from oil tankers".

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