SUEZ CANAL BLOCKADE

IN NEWS:

• The Suez Canal has been blocked after a large cargo ship ran aground while passing through it, bringing traffic to a complete halt.

SUEZ CANAL:

• The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez.
• The canal divides the continents of Africa and Asia. It provides the shortest maritime route between Europe and the lands lying around the Indian and western Pacific oceans.

• Constructed between 1859 and 1869 under the rule of Ottoman Empire, following the efforts of French diplomat and engineer Ferdinand de Lesseps. The canal officially opened on 17 November 1869.
• There are three shallow water-filled depressions: Lake Manzala, Lake Timsah, and the Bitter Lakes in the isthmus of Suez.
• The original canal did not permit two-way traffic, and ships would stop in a passing bay to allow the passage of ships in the other direction.
• In August 2015, as part of Egypt’s expansion project, a new 35-km expansion running parallel to the main channel was opened, enabling two-way transit through the canal.

Ownership:

• The Suez Canal Company was incorporated as an Egyptian joint-stock company with its head office in Paris. The French held 52 percent of the shares and the remainder was taken up by Sa??d Pasha of Egypt.
• In 1875, financial troubles compelled Egypt’s ruler to sell his holding, which was bought by the British government.
• In 1956, the canal was nationalized by Egyptian President Gamal Abdel Nasser, precipitating the Suez Crisis. Since then, the Egyptian government has exercised complete control through its Suez Canal Authority (SCA).

SIGNIFICANCE OF SUEZ CANAL FOR INDIA:

• Shortest Trade route: The geographical position of the Suez Canal makes it the shortest route between East and West as compared with the Cape of Good Hope. The Canal route achieves saving in time, fuel consumption and ship operating costs.

• Economic choke point: About 12% of world trade passes through the canal each year and about 90% of India’s trade is done through sea. The Canal provides a crucial link for oil, natural gas and cargo being shipped from the global consumers in the West and the suppliers in the East.
• All year access: It is the longest canal in the world without locks and the number of accidents is almost nil compared with other waterways. Hence, they are used year-round.
• Geopolitical: The canal’s location makes it a key link for shipping crude oil and other hydrocarbons from the oil rich countries of Middle East to India. India, being heavily dependent on crude oil imports can be severely affected by any blockade in the canal.

INDIA’S 4 POINT STRATEGY:

• The plan was chalked out in a meeting convened by the logistics division, Ministry of Commerce.
• It includes
  1. Prioritization of cargo
  2. Freight rates
  3. Advisory to ports
  4. Re-routing of ships

CONCLUSION:

A prolonged blockade will see ramifications in India's crude oil sector. The resultant impact will show up in the form of higher crude prices. In addition, even if the blockage is removed soon enough, the domino effect it will have will sustain for a while, experts fear. However, India has taken some precautionary measures which could be useful in the upcoming days, such as the recently developed strategic petroleum reserves.

PRACTICE QUESTION:

Q. Discuss the significance of Suez canal to India, with special reference to India’s oil imports?