Egyptian government privately fears a downturn in revenues from the canal
The rise in piracy off the coasts of Somalia has shaken confidence in the Suez Canal as a safe passage linking the Red Sea and the Mediterranean Sea and has prompted shipping companies to seek out alternative routes that avoid the dangerous East African Horn waters.
The Egyptian government privately fears a downturn in revenues from the canal, which along with tourism, oil and gas receipts, is a hefty foreign currency spinner.
Analysts at the London-based Chatham House foreign policy think tank have warned that if strong measures are not immediately taken, safe shipping through the Suez Canal could effectively be cut off. They called for further maritime reinforcements to be deployed in the seas around the Horn of Africa in order to preempt piracy, which has risen to record levels.
Egypt earns up to $500 million a month from ships passing through the water corridor that links the Indian Ocean with European markets via the Red Sea and Mediterranean.
If the piracy problem deteriorates further, analysts say, the Cape Horn route ? a 20-day voyage around the southern tip of Africa ? could become the main passageway for cargo.
Somali pirates have hijacked more than 30 vessels since the beginning of this year. However, September has been particularly bad for shipping, with 17 vessels attacked near the Gulf of Aden in the first two weeks of the month alone.
Still, the number is small when considering that more than 16,000 ships pass through the Gulf of Aden annually, with nearly 2,000 in August.
The bounty collected by pirates is high, though: a total of $30 million in ransom payments has been handed out so far this year.
And ransom demands are rising. Pirates who took a Ukrainian vessel, the MV Faina, hostage three weeks ago are demanding no less than $20 million for its release along with the 20-man crew. One crew member is dead.
A U.S. naval destroyer, the USS Howard, is now stationed nearby, along with other NATO naval ships and aircraft to monitor the situation.
The pirates are heavily armed with an impressive arsenal of weapons, which includes rocket-propelled grenades and sniper rifles.
The Chatham House report said insurance premiums for shipping through the Gulf of Aden have increased tenfold, and the combined danger and cost, it said, could "mean that shipping could be forced to avoid the Gulf of Aden/Suez Canal and divert around the Cape of Good Hope."
"This would add considerably to the costs of manufactured goods and oil from Asia and the Middle East," the report said.
It also warned that serious damage to an oil tanker in a pirate attack could result in a "major environmental disaster."
The Gulf of Aden/Suez Canal route for international transport trade is the leading choice for European companies who want to get their products quickly through to Middle Eastern and Asian markets. But the dizzying increase in premiums is prohibitive to some companies and is newly adding to Cairo's frustration ? although public officials are loathe to admit it.
Head of the Suez Canal Authority Captain Ahmed Fadl has denied the effects of the new dangers and high costs, saying they have no bearing on Suez Canal business.
"The Somali piracy does not and will not affect navigation in the Suez Canal," he recently told.
Fadl justified his confidence by saying, "most passing ships are the big vessels that are committed to the safe navigation course, and the pirates with their small boats can't board them ? they are too weak."
However, the Ukrainian vessel, a roll-on/roll-off cargo ship is carrying tanks and other armored vehicles and weapons and is not small by anyone's standards. And according to various reports it was stormed by between 50 and 100 pirates.
Reports also say that shortly after the boarding three pirates were killed in a shootout over what to do with the ship's cargo. Since then, they have tried to transport some of the goods to land in small boats via the port of Eyl.
Somali authorities say they are powerless to confront the pirates. The war-torn country has been without a functioning government since 1991.