Tag Archives: Trade

When the Suez Canal Was Blocked for Eight Years

As the Suez Canal, chokepoint for 15% of world shipping, was cleared today, I thought of another time it was blocked. Not for a week, but for 8 years.

Following the Six Day War in 1967 between Egypt and Israel, Egypt blocked the canal to prevent Israel from using it. They placed old ships, debris, and even explosives in the canal. And it stayed that way, for eight years.

Thousands of workers rotated on and off the ships over the years to protect these valuable pieces of equipment. They organized joint social events and even created their own postage stamps, which have since become hot items for collectors.

The closure also had a serious effect on world trade, especially for countries that relied heavily on the canal. Seventy-nine country pairs saw the effective distance between them increase by 50% or more:

For these pairs, the closure caused an average fall in trade of over 20% with a three to four year adjustment period. Trade between these pairs recovered completely after the canal reopened eight years later with a similar adjustment period.

By the time the canal reopened, most of the ships in the Yellow Fleet could no longer make the trip:

The canal had remained closed so long that most of the Yellow Fleet ships had decayed and needed to be towed. But two of them—the German ships Münsterland and Nordwind—made it out on their own steam.

We had the benefit of peace this time, so the canal could be unblocked quickly. These episodes really emphasized to me the importance of peace and the free flow of goods to our prosperity.

For more on current events and the world economy, check out these posts:

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Photo: “File:Israeli Tanks Cross the Suez Canal – Flickr – Israel Defense Forces.jpg” by Israel Defense Forces is licensed under CC BY-SA 2.0