- U.S. President Donald Trump asked Egypt and Panama to allow American ships, both commercial and military, to pass through the Suez and Panama Canals without paying fees.
- This request aligns with his broader economic goals, such as reducing production and trade costs while making U.S. goods more attractive globally.
1- Economic/Political Implications:
Exempting American ships would likely have a minimal economic impact on Egypt.
U.S.-flagged vessels account for less than 1% of global shipping, and Egypt's revenue loss from exempting these ships is estimated at just $40 million (based on 2024 statistics).
Yet, Egypt receives around $1.5 billion annually in U.S. military aid.
** Therefore, Egypt's potential political and strategic benefits may outweigh the financial trade-off of exempting U.S. ships.
2- Legal Considerations:
The Suez Canal Authority operates under "Law No. 30 of 1975," which prohibits discriminatory policies and derives its regulations from the 1888 Constantinople Convention.
- Granting such an exemption could violate the 1888 Constantinople Convention, which mandates that the Suez Canal remains open to all ships without discrimination.
Egypt has long adhered to this treaty, and providing preferential treatment to the U.S. could lead to similar demands from other nations, weakening Egypt's financial revenues.
Despite the legal challenges
- Egypt's sovereignty over the canal allows it to make exceptions if it believes the political and strategic gains outweigh the risks.
This move could further align with Trump's "America First" policy, though the cost of refusing may be significant.
*** Egypt may find it best to grant the U.S. exemption, balancing economic and diplomatic considerations.
- This request aligns with his broader economic goals, such as reducing production and trade costs while making U.S. goods more attractive globally.
1- Economic/Political Implications:
Exempting American ships would likely have a minimal economic impact on Egypt.
U.S.-flagged vessels account for less than 1% of global shipping, and Egypt's revenue loss from exempting these ships is estimated at just $40 million (based on 2024 statistics).
Yet, Egypt receives around $1.5 billion annually in U.S. military aid.
** Therefore, Egypt's potential political and strategic benefits may outweigh the financial trade-off of exempting U.S. ships.
2- Legal Considerations:
The Suez Canal Authority operates under "Law No. 30 of 1975," which prohibits discriminatory policies and derives its regulations from the 1888 Constantinople Convention.
- Granting such an exemption could violate the 1888 Constantinople Convention, which mandates that the Suez Canal remains open to all ships without discrimination.
Egypt has long adhered to this treaty, and providing preferential treatment to the U.S. could lead to similar demands from other nations, weakening Egypt's financial revenues.
Despite the legal challenges
- Egypt's sovereignty over the canal allows it to make exceptions if it believes the political and strategic gains outweigh the risks.
This move could further align with Trump's "America First" policy, though the cost of refusing may be significant.
*** Egypt may find it best to grant the U.S. exemption, balancing economic and diplomatic considerations.
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