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Bypassing the Suez Canal: Israel to Have China Construct The Eilat Railway

Transport Minister Yisrael Katz and China's Minister of Transport Li Shenglin signed the memorandum of understanding in Beijing.

by Rhonda Spivak, July 11, 2012

The biggest piece of news that emerged from Israel this past week (July 3) is one you may have heard nothing about--but it is a game changer in terms of elevating Israel's economic/strategic position in the Middle East.

For decades, Egypt has been able to potentially isolate Israeli and strangle trade to the Israeli posts of Ashdod and Haifa by threatening to/ and or closing the Suez Canal to marine traffic.

But this is about to change. Last week, as reported in the Globes, Israel and China signed historic cooperation agreements to build the Eilat railway, linking the port of Eilat to the ports of Ashdod and Haifa. This will enable cargo boats to dock at Eilat, bypass the Suez Canal altogether and then the cargo will travel by high speed rail to the port of Ashdod, or Haifa--this route will be far faster than the same boat having to reach the Mediterranean through the Suez canal. Once cargo reaches Ashdod or Haifa it can travel from there onwards to the European mainland.

This means that if ever the Egyptian government in the future tried to block Israeli access to the Suez Canal, the Israeli economy will not miss a beat.

In the town of Ashdod, where I visited earlier in the year, this news is creating excitement--the port of Ashdod, which is not that large, is likely to experience increased activity. "We are anticipating an economic boom once the cargo rail is built. Ashdod could become a major hub of activity," an Ashdod resident said.

Since the Arab spring in Tahrir Square, Egypt's relations with Israel are expected to be on less solid footing and as another Ashdod resident said, "It's important that we have this new rail route which enables Israel to be at the heart of a trading route, not dependent on others."

"Given that since the fall of Mubarak, the gas pipeline from Egypt to Israel has been blown up several times by terrorists in the Sinai, the need for Israel not to be dependent on Egypt has become clearer and clearer."

Near the port of Ashdod, there are plans to build new apartment blocks with views to the sea, and real estate prices are expected to rise. Once the railway is completed it will only take two hours for a person to travel by train from Tel-Aviv. Currently, it takes approximately five hours to drive. There are plans for a new university to be built in Eilat--all part of the promised economic boom that will be the consequences of the new trade route.

The co-operation between Israel and China for the building of the Eilat railway may also apply to other future related projects. Israel's Minister of Transport Yisrael Katz and China's Minister of Transport Li Shenglin signed the memorandum of understanding in Beijing.

After the construction of the cargo rail line that will link Israel's Mediterranean ports in Ashdod and Haifa with the Eilat Port, there are also plans to extend the line to Jordan's Aqaba Port.

Prime Minister Netanyahu is likely to be popular in Ashdod because of this new route. "Bibi has understood the importance of this, it has strategic and policy significance.

Israeli sources told "Globes" that the Chinese also consider the project to be important, as it fits in with China's global strategy to strengthen critical trade routes. The 180-kilometer line will run through the Arava Valley and Nahal Zinn.

The estimated cost of the line is at least NIS 20 billion. The Chinese have proposed financing part of the cost through the government-owned China Development Industrial Bank, and that Israel handle the project's operations.

According to the Globes, Israel is considering awarding construction of the project to Chinese companies, because of their rapid work, and is therefore considering a government-to-government agreement to bypass the Tenders Law in awarding the franchise. A cabinet decision from February instructed Prime Minister's Office director general Harel Locker to recommend to the government ways of financing the project.

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Rhonda Spivak, Editor

Publisher: Spivak's Jewish Review Ltd.

Opinions expressed in letters to the editor or articles by contributing writers are not necessarily endorsed by Winnipeg Jewish Review.