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Alexey Grivach in the “Expert’s Opinion” show: Diversification is the foundation of security of the world trade

“The accident involving container ship Ever Given in the Suez Canal has become a big and unexpected event last week. However, at the same time it was not able to make and would have hardly made any fundamental changes in the market”, said Deputy General Director for Gas of the National Energy Security Fund Alexey Grivach during the “Expert’s Opinion” show.

A recording to the event is available on the YouTube channel of the Gorchakov Fund.

The Suez Canal is one of many bottlenecks of the global transportation system. The efforts to expand those bottlenecks are being made, but they are accompanied by significant investments. Thus, for example, expansion of the Panama Canal (2015-2016) created problems for the current traffic: it reduced volumes and increased time of cargo deliveries. However, it was done with consideration of the cargo traffic which dictated those requirements.

There are more radical ways – construction of additional, alternative canals. China wants to build a route through Nicaragua and Turkey wants to dig a canal in parallel to the Bosporus and the Dardanelles.  The Northern Sea Route can also be used to transport cargo from the Atlantic to the Pacific region. Availability of various routes and diversification provide foundation for security of the world trade.

According to Mr. Grivach, certain opinions that it will not be possible to restore the ship traffic for a relatively long time are causing alarm. The global community was able to adapt to the 8-year closing of the canal during the Arab-Israeli conflict. The stop of the traffic for a week, even under the current conditions, will not result in any tragic consequences.

The most serious geopolitical conflicts were behind the control over the Strait of Hormuz and Bab el-Mandeb Strait. After oil had become “black gold”, those points on the map assumed special importance. “Calls from the Middle and Near East to limit the traffic often represent elements of a diplomatic and political game, efforts to put pressure. However, threats have remained threats because otherwise it would mean a move from local confrontations to a more serious conflict, for which the parties are not prepared”, believes Alexey Grivach.

When answering a question about alternatives to the Suez Canal, the expert mentioned that the major alternative had already existed before the canal – the route of Vasco da Gama around Africa. However, without doubt, it is longer and more expensive. If speaking about Northeast Asia and China, then passage through the Northern Sea Route controlled by Russia is a possibility. There is another problem though – technical preparation of the ships for ice conditions. According to Mr. Grivach, there will be no quick reorientation from the Suez Canal to the Northern Sea Route, however, there is potential for that. Global warming might play a positive role in decreasing the annual ice layer.

“Looking for an alternative is rather systematic work targeting search and diversification of new opportunities for optimization of routes and reducing risks. The situation with ship Ever Given demonstrated that it was not just a nuisance and there is work that needs to be done”, believes Alexey Grivach.