Suez Canal chief responds to fears over bid to form $4bn private fund

The draft law on the fund has been vehemently opposed by several MPs, many of whom are worried about foreign involvement

Osama Rabie, Chairman of the Suez Canal Authority, at a news conference in March 2021. Reuters

Egypt’s government does not have the right to transfer ownership of the Suez Canal to any foreign entities, the waterway’s chief said on Thursday.

Admiral Osama Rabie held a special news conference in response to mounting public outrage over a draft law submitted by the government to parliament on Monday seeking to allow the waterway's authority to launch a 100-billion-Egyptian-pound ($4 billion) private fund to increase its revenue.

The draft law, which was preliminarily approved in parliament pending a final vote at a later date, was strongly opposed by several MPs, many of whom expressed concerns over the involvement of foreign entities in the fund’s projects and the possible privatisation of business activities related to the canal.

If approved, the fund would allow the authority — whether independently or in partnership with third parties — to use its capital to establish companies and invest in securities and private ventures.

The Isthmus of Suez with the plan of the Canal of two Seas and of the diverted auxiliary canal of the Nile. From the pilot study of Misters Linant Bey and Mougel Bey, engineers of viceroy of Egypt, 1855. In 1809 topographical data on the Suez Canal was published by French academics in Description de l'Égypte. Contained one of the first maps of the Suez Canal, and formed the basis for an early French plan to construct a canal, later abandoned. Fieldwork was conducted during Napoleon's 1798 – 1801 military campaign in Egypt. Napoleon's surveyers incorrectly believed that the Red Sea was 9 metres higher than the Mediterranean sea, making construction impossible. Roger Viollet Collection / Getty Images

The inaugural ceremony of the Suez Canal in 1869. Frederic-Auguste Bartholdi pitched the Suez Canal Company on a large copper statue, modelled after the Colossus of Rhodes, of an 80 foot woman wearing Egyptian peasant robes and bearing a torch which would double as a lighthouse. The Suez Canal Company wasn't interested – but the French government and New York state were. Bartholdi's project became the Statue of Liberty. Getty Images

English statesman and novelist, Benjamin Disraeli, (1804 - 1881) created Earl of Beaconsfield in 1876. In 1876, Ismail Pasha, Khedive of Egypt, declared bankruptcy, and put his controlling stake in the Suez Canal Company up for sale. Disareli, the British prime minister, bought the Khedive's stake. The canal became a major trade route and strategic waterway for Britain, and helped to facilitate the British Empire's conquest and rule over its colonies in India and East Asia. Jabez Hughes / Getty Images

A picture dated 1869 shows machinery during the construction of the Suez Canal in Egypt. AFP

An aerial view of the Suez Canal zone near Ismailia, Egypt taken in May 1953. Jim Pringle / AP Photo

The Egyptian president Gamal Abdel Nasser announcing the nationalisation of the Suez Canal to a crowd of 250,000 people during a celebration of the fourth anniversary of the July 26, 1956 revolution. He also announced that the property of the Universal Suez Canal Company would be sequestrated. Britain, France and Israel launched a combined assault on the Suez Canal and Sinai in a bid to return the waterway to Western control and force Nasser to resign. The invasion was successful, but US pressure leads the three countries to withdraw. Keystone-France / Gamma-Keystone via Getty Images

An aerial view of the southern entrance of Egypt's Suez Canal taken in 2007. Jack Guez / AFP

In August 2014, the Government of Abdel Fattah El-Sisi ordered the beginning of construction of the New Suez Canal – which adds a parallel route to part of the canal's length, and widens and deepens some of the existing canal. The $8 billion project, funded by bonds issued to Egyptian citizens, was to be completed in a year, and would see traffic through the canal increase to 97 ships per day by 2023 – up from 49 ships per day currently. Amr Abdallah Dalsh / Reuters

The first container ship to use the New Suez Canal. The opening of the New Suez Canal, after exactly 12 months of construction work "was an epic," said Admiral Mohab Mamish, chairman of the Suez Canal Authority, in reports. "It was a very hard job. We invited experts of dredging and we had no time to waste and we feel that we have succeeded.” Courtesy NMDC

A dredger at work on the New Suez Canal. Courtesy NMDC

A dredger at work on the New Suez Canal. Courtesy NMDC

Work on the New Suez Canal continues. Courtesy NMDC

Yasser Zaghloul, CEO of NMDC. The company worked alongside Belgium’s Jan De Nul and Dutch companies Boskalis and Van Oord on the dredging works. Courtesy NMDC

Bulldozers and trucks work on a new section of the New Suez Canal in Ismailia, Egypt. Hassan Ammar / AP Photo

A dredger works on a section of the New Suez Canal during a media tour in Ismailia, Egypt. Hassan Ammar / AP Photo

“The fund has nothing to do with the canal or the authority,” Admiral Rabie said at Thursday’s press conference, adding: “It is an entirely independent entity with its own budget and operation plan.”

Since Monday, Egypt’s social media channels have also been flooded with posts from people worried that one of the country’s most important patriotic symbols is being privatised.

The creation of the fund would reduce the financial burden on the state’s coffers, Admiral Rabie said, as the authority would only be transferring whatever was left over from its annual budget into the fund each year, after giving the lion’s share to the central bank and paying its operational costs.

“This is the portion of our budget that President El Sisi said we should set aside or possibly grow into a fund for a rainy day,” Admiral Rabie said. “We wouldn’t need to resort to state funds for anything, the fund would have a separate budget.”

He said the authority intends to use the fund to launch mega projects to benefit the canal, including a plant to build giant container vessels.

Thursday’s conference, broadcast live on television and online, was also attended by Diaa Rashwan, the head of Egypt’s journalists’ syndicate and the general co-ordinator of the National Dialogue, a forum set up by Mr El Sisi as a means of conversing with the country’s disgruntled opposition parties, many members of which are imprisoned or in pretrial detention.

The dialogue was convened following repeated complaints from western governments about Egypt’s human rights record.

Rashwan said: “Just 48 hours after parliament discussed the matter, President El Sisi directed us to convene an open meeting about the fund which would be broadcast live.” He added that indicated the President could appreciate that the canal concerns all Egyptians.

The issue of the large number of private funds that exist in Egypt, which many see as an impediment to financial transparency on state and private-sector spending, was also addressed on Thursday.

“Some economists in the country feel that private funds are not included in the national budget and other economists feel that they are,” Rashwan said. “Disagreements on the issue emerge from this difference in economic perspective.”

Admiral Rabie and Rashwan both spoke passionately about the importance of the canal to Egyptians’ national identity, since it was dug up in the 1850s by 1 million Egyptians, at that time about 25 per cent of the country’s population.

Admiral Rabie noted on Thursday that 120,000 Egyptians died digging up the waterway.

“To anyone who has doubts that establishing the fund will diminish Egypt’s sovereignty of the canal, I will respond with what is plain as day, at least to me — there is not a single inch of Egyptian land being relinquished to anyone,” Rashwan asserted.

“President El Sisi, like the leaders who came before him, is the custodian of the canal and the blood that was spilt to dig it.”