February 2, 2011

AND COULD HARDLY HELP EGYPT:

Q&A: Suez Canal (Graeme Wearden, 2/01/11, guardian.co.uk)

Q: What would happen if the canal closed?

Sailing around Africa would add around two weeks to journey times, which could lead to some short-term supply issues – and potentially nudge up prices.

A long-term closure would have major implications for the world economy. The canal was shut between 1967 and 1975 following the Arab-Israeli War, which left Egyptian troops on one side of the waterway and Israel's forces on the other. World trade declined steadily through most of this period, according to research by James Feyrer, Professor of Economics at Dartmouth College.

Barclays Capital has also analysed the impact of the eight-year closure, and discovered that Asian countries suffered the most.

"Much of the exports earmarked for Asia found their way into western European markets, which in turn were attempting to cope with both the obstruction to oil transport from the Middle East and a brief Arab oil embargo … The overall impact of the total eight-year closure was largely negative. Deliveries to Asia, in particular, suffered the most."

Posted by Orrin Judd at February 2, 2011 5:56 AM
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