The Med-Red Agreement Is Signed: Israel’s New Suez Canal

UPDATE 10 am Israel time:

At 6:46 am, there were incoming rocket sirens for Israeli communities along the Gaza border. It was later reported that a Grad rocket or mortar shell was fired by Palestinian terrorists at Israeli citizens in the Eshkol region.


A monumental agreement was forged earlier this week between Israel and China–one likely to change the face of trade in the Middle East.

It concerns the revival of an old trading route that has been used for over two millenia by merchants in Asia and India. Originally, these merchants transported their spices, incense, and goods overland in camel caravans that traversed the northern Arabian peninsula and traveled through the land of Israel to the Mediterranean Sea.

One of the old Nabatean camel trading routes along Nahal Zin in Israel's Negev Desert--close to Ein Avdat (note the road that follows the same route).

However, as the number and carrying capacity of sailing ships increased, camel caravans were eventually replaced by ships which traveled around the tip of Africa and then northward to markets in Europe.

In 1869, this journey was dramatically shortened by the construction of the Suez Canal (whose nickname “The Highway to India” hearkens back to days of the caravans). Today, the Suez Canal handles almost 10% of global seaborne trade with an average of about 80 million net tons per month.

Nevertheless, using the Suez Canal is very expensive to shipping lines in terms of demurrage as ships must wait to gain permission to enter the canal and then slowly transit the canal. This demurrage has been a constant source of complaint from Chinese and Indian shipping companies.

More than this, the Suez Canal has always been a focus of contention between Egypt and Israel and played a major role in the 1956, 1967, and 1973 wars between the two countries. With the coming of an Islamic government to Egypt, it doesn’t take much forecasting ability to foresee a day when Egypt again cuts off the Suez Canal to Israel.

Three days ago in Beijing, Israel and China signed an agreement to build a 180 km railway from Eilat on the Red Sea to here in Ashdod on the Mediterranean. The route of the railway will run through the Arava Valley and Nahal Zin (see picture above).

Currently cargo vessels come up the Red Sea and go either toward Suez where they must traverse the Canal (or) to Eilat where they offload their cargo onto trucks where it is driven to Ashdod.

It is expected that work will begin within a year, take five years to finish, and cost some 20 billion shekels (about $4 billion dollars).

Because the Chinese believe that it is critically important to strengthen and stabilize trade routes, the agreement calls for financing part of the cost through the Chinese government-owned China Development Industrial Bank. And because Israel wants the railway built quickly, it is considering awarding Chinese companies construction of the project thereby allowing the government to bypass the usual years of bidding on such projects.

At first, the railway is expected to mainly handle cargo but with Netanyahu’s stated goal of cutting land travel time between Tel Aviv and Eilat to two hours, it is projected that passenger trains may soon be in operation–in what could be a boon to development of the Negev.

By the way, China and Israel have also reached an understanding about building an “inland canal port” in Eilat.  One wonders if a long considered canal between the Red Sea and Dead Sea (the Dead-Red) might not be in the wind for the future.

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