By John Q. Hosedrinker 
In 2024, the Suez Canal experienced a dramatic 60 percent revenue decline, resulting in a $7 billion loss. This downturn is primarily attributed to Houthi attacks on Red Sea shipping, prompting rerouting around the Cape of Good Hope and disrupting global trade. These attacks, in response to the Israeli-Gaza conflict, have severely impacted Egypt’s already fragile economy, which is grappling with inflation, currency devaluation, and political instability. The economic crisis further exacerbates Egypt’s existing political tensions and human rights concerns.
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Egypt’s Suez Canal, a vital artery of global trade, is facing an unprecedented crisis. Revenue has plummeted by over 60% in 2024, representing a staggering $7 billion loss. This dramatic downturn is inextricably linked to the ongoing tensions in the Red Sea region, primarily stemming from the conflict in Yemen.
The significant drop in revenue is not simply a matter of fewer ships transiting the canal. The cost to traverse the Suez Canal, which can range from $400,000 to $700,000 per container ship depending on size, hasn’t deterred all vessels. However, the heightened risks associated with the unstable security environment in the Red Sea are clearly a major factor. The ongoing conflict, coupled with the increased threat of attacks, has made shipping companies wary of using the canal.
This situation presents a complicated challenge for Egypt. The suggestion to deploy the military to enhance security in the area has been raised, yet this poses significant difficulties. While Egypt possesses a substantial air force and some capacity for power projection, its military isn’t optimally structured for extended overseas operations. Past attempts at military intervention in Yemen, notably in the 1960s, resulted in a catastrophic loss of life and resources without achieving meaningful gains. The mountainous terrain, home field advantage, and ample weaponry possessed by Yemeni factions make any military intervention exceptionally risky and costly. The sheer scale of losses suffered during the earlier conflict in Yemen – a staggering 26,000 Egyptian soldiers dead out of roughly 130,000 deployed, a 20% casualty rate – acts as a stark warning.
The political landscape also adds another layer of complexity. Egypt’s own internal political realities heavily influence the military’s priorities. Its primary role is seen as maintaining domestic stability rather than engaging in large-scale foreign military engagements. This focus on internal security, coupled with the bitter experience in Yemen, explains the reluctance to directly engage in the Red Sea conflict, even though it directly impacts one of Egypt’s most important economic assets.
Adding to this already tense scenario is the emergence of alternative routes. Russia’s investment in Arctic shipping routes, utilizing new icebreakers and port facilities, offers a potentially attractive bypass for some vessels. This development further reduces the already dwindling traffic through the Suez Canal and amplifies the economic pressure on Egypt.
The situation raises questions about the efficacy of Egypt’s current strategies. The idea of simply “opening the doors to Gaza” as a solution is simplistic and overlooks the complex geopolitical realities. The suggestion ignores the significant humanitarian and security challenges such a move would entail, not least the lack of willingness among other Arab nations to accept Palestinian refugees. This underpins a broader reluctance to engage with the conflict in Yemen, seemingly motivated by concerns about regional stability and the potential influx of Hamas-affiliated individuals alongside genuine refugees.
In the meantime, Egypt continues to grapple with the severe economic consequences of the Suez Canal’s revenue shortfall. The $7 billion loss is a significant blow to its national budget, representing more than just a drop in shipping fees. This shortfall impacts the overall economy, creating ripple effects throughout various sectors dependent on the canal’s economic activity.
Ultimately, Egypt finds itself in a precarious position. Addressing the situation requires a multifaceted approach that goes beyond simply increasing security presence or focusing on alternative solutions. It necessitates a careful consideration of the political, economic, and military complexities of the Red Sea region, recognizing the limitations of a purely military solution and acknowledging the need for regional cooperation and diplomacy to achieve lasting stability. The long-term implications of the Suez Canal’s revenue nosedive will undoubtedly shape Egypt’s economic and geopolitical strategy for years to come.