Ellen R. Wald Ph.D. is back for Wald Wednesday.
For over a week, the container ship Ever Given was stuck sideways in the Suez Canal. The entire canal was closed while excavators worked to free the ship, causing a backlog of over 400 vessels on both sides of the canal and spawning hundreds of bad jokes and internet memes. Analysts surmised that everything from higher oil prices to toilet paper shortages might be blamed on this incident, though analysts are not always right (since the price of oil has actually dropped).
Almost overnight, everyone suddenly became hyper-aware of the precariousness of global shipping routes. The truth is, the Suez Canal is just one of several very important chokepoints around the world. While the visual of a small excavator trying to dislodge a 200,000-ton container ship captured the attention of social media users worldwide, the impact of this incident on the global economy will be transient. But historically, past closures of the Suez Canal have not been so trifling.
The Suez Canal is a narrow, man-made waterway of 100 miles, stretching between the Gulf of Suez in the Red Sea and Port Said in the Mediterranean Sea. It was built in the 1850s and 1860s to simplify travel for westerns to and from India, Asia and the Persian Gulf. It was especially important to the British and French to reach their colonies in Southeast Asia. By 1956, the British no longer sought colonies, but the canal remained a prominent fixture. It had become the primary vehicle through which oil left Iraq, Saudi Arabia and Iran and reached refineries in Western Europe.
In November 1956, the President of Egypt, Gamal Abdel Nasser, nationalized the Suez Canal, taking control of it from the company that was jointly owned by the British and French governments. Britain and France were incensed, and they conspired with Israel to try to overthrow Nasser. While Israel occupied Egyptian forces in the Sinai, Britain and France launched airstrikes against Egyptians in the Canal and froze Egyptian assets in their countries’ banks. Nasser responded by closing the Suez Canal to all shipping. He ordered 30 Egyptian ships sunk at various points throughout the waterway. Nasser also convinced Syria to demolish three pumping stations from the Iraq Petroleum Company’s pipe
line from Iraqi oil fields to ports in Syria and Lebanon to complete the strangulation of European oil supplies.
However, the Americans and the British had prepared for such a situation. European countries would have to ration their oil supplies, but joint committees had prepared tanker schedules and alternative shipping routes to redirect oil supplies from the U.S., Canada and the Caribbean to Europe. The plan to alleviate Europe’s fuel shortage was set, but, ultimately, President Eisenhower decided not to put act. Instead, he directed the Justice Department to withdraw anti-trust immunity granted to U.S. companies which they would need to engage in oil shipping coordination with other companies. He did this so that oil shortages would compel Britain and France to withdraw their forces from Egypt.
A month passed before severe oil shortages, in part, compelled Britain and France to agree to withdraw their forces from the Suez Canal Zone. Following this decision, President Eisenhower approved the participation of American companies in coordinated efforts to alleviate oil shortages in Europe without violating U.S. antitrust laws.
Even after the crisis abated and once Egypt was secure in its ownership of the canal, transit through the canal still did not immediately resume. It took several more months to clear the sunken ships. It was not until April 1957 that the canal reopened.
The Suez Canal Crisis was a significant event in the history of international relations, because it signified the end of British colonial power in the Middle East. Moreover, the resolution of the Crisis marked the rise of Nasser as the de facto leader of the Arab world after he successfully defied the European colonial powers. It also revealed lines of dissension between the U.S. and its old allies, Britain and France.
Oil companies learned a different lesson from the closure of the Suez Canal in 1956 and 1957. To mitigate the risks posed by a canal closure, they invested in the supertanker, a ship that would more efficiently transport oil to Europe by circumnavigating Africa. Before the Crisis, Supertankers seemed too expensive to build and maintain, because they were too large for the Suez Canal. But supertankers made sense once the industry realized that it could not blindly rely on the Suez Canal or other shipping chokepoints.
Even though the Suez Canal was only blocked for a week this time, the incident should refocus the attention of transportation and logistics personnel on the perils of relying on the openness of chokepoints. During its colonial period, the British government considered these chokepoints so important that they were continuously devoting strength and resources to fortify British ownership and influence in these regions. Perhaps last week’s fiasco will focus the global community and raise its level of concern about China’s influence over the Straight of Malacca in the South China Sea. That is the hot spot to watch.