Suez Canal revenue halved due to Houthi attacks amid geopolitical tensions
26 March 2024 10:11
Revenues of the Suez Canal have plunged by more than 50 per cent due to Houthi attacks on the Red Sea, Egypt's Prime Minister Mustafa Madbuli announced during a meeting with a delegation from the US Congress. Meanwhile, despite a signed agreement, Russian and Chinese ships continue to be targeted.
On Thursday, 21 March, reports emerged of a meeting in Oman between Russian and Chinese diplomats with Mohammed Abdel Salam, a key political figure of the Yemeni Houthi movement, Bloomberg reported, citing witnesses of the discussions.
According to these sources, the militants assured that attacks on Chinese and Russian vessels would cease, allowing them safe passage through the Red Sea. In exchange, the Houthis expect political backing, such as opposition to further UN resolutions against their movement.
Despite these assurances, Bloomberg reported a Houthi assault on a Chinese tanker last Saturday. The militants fired four missiles near the tanker Huang Pu, owned by China, while a fifth missile struck the vessel, causing damage and starting a fire, which was later extinguished - as announced by the US Central Command.
Egypt's economy hit hard by Houthi assaults
The attacks have severely disrupted trade along this vital route, which until recently handled 12 per cent of worldwide trade. Ships, mainly from the West, now face the prospect of navigating a longer path, sailing around Africa from the south. Despite this, Bloomberg notes that many Chinese and Russian ships continue to take the risk through the Red Sea.
As conveyed by Egypt's Prime Minister Mustafa Madbuli in discussions with a US Congressional delegation, his country is bearing the brunt of these disruptions. Revenues from the Suez Canal have dropped by over 50 per cent due to Houthi activities in the Red Sea.
Last year, the Canal generated a record sum of nearly £7.1 billion, funds crucial for the Egyptian economy, which is grappling with a financial downturn. In early March, the Central Bank of Egypt hiked interest rates by 6 percentage points and signed off on cuts in infrastructure spending.
According to official figures, the annual inflation rate exceeded 31 per cent in January, and the cost of unsubsidized bread doubled over the past 12 months, as reported by Global Finance. Moreover, the continuing conflict in the Gaza Strip has led to a decline in tourist arrivals to Egypt.
