Report

Egypt's Sea of Troubles

Why an upsurge in terrorism in the Sinai Peninsula raises fears for the Suez Canal.

The growing and sophisticated insurgency in the Sinai Peninsula, along with its declared emphasis on attacking the Egyptian regime's economic lifeblood, has raised fears over the security of the Suez Canal, one of the world's principal arteries for trade, and especially for moving oil and gas between Asia and Europe.

Late last summer, after militants filmed themselves launching a rocket attack on a cargo ship that was making its way through the canal, worries over the channel's vulnerability to a terrorist attack began to proliferate. In January, West Point's Combating Terrorism Center published an article on the Sinai insurgency and possible threats to the canal. The Suez Canal serves as the main transit point for the U.S. Navy to move ships between the Eastern Mediterranean and the Red Sea.

The group behind the rocket strikes, the al-Furqan Brigades, threatened further attacks on the canal, but most analysts dismiss the group as a ragtag group of jihadists. However, in the months since, the sophistication of terrorism in the Sinai has only grown. Ansar Bait al-Maqdis, an al Qaeda-inspired jihadi group based in the region, has taken credit for deadly bomb attacks at Egyptian police stations, blowing up several gas pipelines on the peninsula, shooting down an Egyptian Army helicopter, and other acts of terrorism.

While many of Ansar Bait al-Maqdis's attacks have focused on parts of the Egyptian security apparatus -- the Army and the police -- the group has made clear in its statements that it seeks to impose the greatest possible economic pain on a regime it sees as apostate. The group justified a January attack on a pipeline that exported gas to Jordan as part of a campaign to "target the regime's economic interests." Another attack on a pipeline, one that fueled a cement factory owned by the Egyptian military, was justified in similar terms.

"If they're really serious about targeting the economic interests of the Egyptian government, the Suez Canal would be near the top, if not at the top of the list," David Barnett, a research associate at the Foundation for Defense of Democracies who specializes in Sinai insurgent groups, told Foreign Policy.

Almost 150 years after it was dug out of the Egyptian desert, the Suez Canal matters more than ever to both Egyptian state coffers and the global economy. Egyptian revenues from the canal total about $5 billion a year, dwarfing the annual aid provided by the United States and amounting to about 2 percent of Egypt's GDP. That's one reason that Egyptian authorities, under Hosni Mubarak's government, then under President Mohamed Morsi, and today again under military tutelage, have spared no expense to secure the canal against threats in the Sinai.

But the canal's importance to global trade is also huge. In 2012, the last full year for which traffic statistics are available, nearly 3 million barrels of oil per day passed through the canal -- or roughly 7 percent of all the crude oil traded by ship, according to the U.S. Energy Information Administration. The boom in liquefied natural gas (LNG) trade in recent years has given the canal even more importance for the global energy economy: About 13 percent of the global LNG trade passes through the canal.

The canal's importance as an energy corridor is especially noteworthy for Europe and the Mediterranean basin. In the first nine months of 2013, oil and petroleum products made up about one-quarter of all northbound tonnage passing through the canal. Northbound crude oil shipments rose 25 percent through September compared with the first three quarters of 2012. Southbound energy shipments, which carry goods from Europe and the Mediterranean to the Red Sea and on to Asia, declined in 2013, due in large part to oil-supply disruptions in Libya and Egypt's own difficulties in exporting natural gas.

Here's the problem: The canal itself is flat, dug out of the desert at sea level, and seemingly accessible to evildoers. The al-Furqan video from September, for instance, shows a couple of jihadists simply walking from behind a low shrub and taking potshots at a cargo ship with a rocket-propelled grenade. But those kinds of small-scale attacks, while visibly arresting, aren't the real threat to canal traffic.

"An RPG isn't going to shut down the canal. They'd need to do a bombing, something along the lines of the USS Cole," said Barnett, referring to the 2000 suicide bombing of a U.S. warship docked in Yemen.

Ships transiting the canal move at a slow but steady pace, though there are a couple of places they pause to let other vessels pass. Ships on either end of the canal, though, are stationary as they wait their turn to convoy through the largely one-way transit. Disabling a ship inside the canal would essentially block traffic in both directions, given how narrow the channel is.

And while maritime terrorism isn't as widespread as or easy to carry out as attacks on land, they have been part of jihadi playbooks in the past. In addition to the Cole, the Limburg, an oil tanker, was attacked by suicide bombers in 2002, and a Japanese cargo ship was attacked in the Strait of Hormuz in 2010.

"The fact remains that the canal is vulnerable -- and due to its symbolic and high impact event potential, it will remain a desirable target for extremist elements," the Soufan Group, a security consultancy, wrote in December.

The economic implications of an attack would likely be severe -- and not just for Egypt. Rerouting ships around Africa would add thousands of miles to the voyage, increasing costs and also requiring ships to transit more pirate-infested waters. The last time the Suez Canal was closed for any length of time -- between 1967 and 1975 -- global trade was less, canal traffic was less, the shipping container revolution had barely yet begun, and global seaborne LNG trade was anecdotal.

"You would see a huge spike in transportation costs, in rerouting, if there was a serious closure issue," Douglas Burnett, a lawyer with Squire Sanders who specializes in maritime and energy issues, told FP.

To be sure, other than those late-summer rocket attacks, there have been no actual attacks on shipping in the canal despite the big uptick in Sinai insurgency. The Egyptian military has bolstered the perimeter security of the canal, even as it has intensified counterinsurgency operations in other parts of the Sinai Peninsula.

Steven Cook, an Egypt specialist at the Council on Foreign Relations, said that Egyptians have increased security for the canal by using a lot of different elements of their armed forces, but "they admit it is hard to be 100 percent when you are playing defense."

Khaled Desouki - AFP - Getty

Report

Oil Pirates and the Mystery Ship

Forget Somalia, the world's new epicenter of piracy is on the other side of Africa.

On January 18th, a Greek shipping firm lost radio contact with one of its vessels, a Liberian-flagged, 75,000-ton oil tanker named Kerala, when it was just a few miles off the port of Luanda, Angola. What happened next is still in dispute. But maritime experts think the Kerala's disappearance marks a dangerous new escalation of the oil-driven piracy that has increasingly tormented mariners across the infamous Bight of Benin.

Maritime hijackings off of Somalia and the rest of Africa's eastern coast are in sharp decline. But pirate attacks in West Africa have crept upward, turning the waters around the Gulf of Guinea into one of the centers of global piracy. About one out of every five reported pirate attacks last year took place in the Gulf of Guinea, the International Maritime Bureau reported, but it estimates that only about one-third of West African attacks are actually reported.

The piracy on the western coast of African bears little similarity to piracy off the east coast, however. In short, it's even more aggressive. And oil companies operating in the area, West African countries dependent on energy revenues for their fiscal well-being, and regions that rely on sub-Saharan crude such as Europe and China worry that this new breed of pirates may turn the region into a no-go zone for shippers and operators.

The Kerala's sudden disappearance came just after maritime security firms began warning of a suspicious, 200-ton tugboat prowling the waters off the Angolan coast. The Kerala's owner, Dynacom Tankers Management Ltd., began to suspect it was again a victim of piracy. A Dynacom ship was the last ship successfully taken by Somali pirates; the ship and crew were released after 10 months of captivity in March 2013.

But never before had the criminal gangs that trawl the Gulf of Guinea struck so far south, raising questions about just what had happened to the Kerala. Angolan navy officials said last week they were searching for the vessel, and warned about the threat of piracy to Angola's energy-dependent economy.

Finally, on Sunday, Jan. 26, Dynacom re-established contact with its vessel: It had indeed been hijacked, the company said. One crewmember was hurt, and "a large amount of cargo had been stolen" from the vessel, Dynacom added. International investigators were set to examine the ship, which headed for port in Ghana, to gather forensic evidence to try to use against the suspected pirates.

But the plot thickened. Angolan Navy officials now contend that the Kerala's crew faked the hijacking and headed to Nigerian waters of its own volition. The suspicious tug was just a "replica" of one used in another pirate attack nearby. "It was all faked, there have been no acts of piracy in Angolan waters," Angolan Navy spokesman Capt. Augusto Alfredo told Reuters.  Angolan officials later said the Kerala, which carried 60,000 tons of diesel, was found "empty." (The Atlantic just took a look at the conflicting claims of hoax or hijacking.)

Maritime security experts, however, question the Angolan Navy's version of events. They note with alarm that the incident appears to be a clear extension of the piracy that was once confined to the Gulf of Guinea and waters around the Nigerian Delta. It's a different brand of piracy than that which plagued the waters off Somalia: more violent, and laser-focused on stealing oil and other petroleum products that fetch millions on the local black market.

West African pirates don't usually seize vessels to hold them and their crews for multi-million dollar ransoms. The lack of a lawless coast, such as the one that still prevails across most of Somalia, makes it tough to hide massive oil tankers and their crews for months at a time while ransom negotiations are carried out.

Instead, most Gulf of Guinea piracy is essentially a maritime extension of the onshore oil theft that has plagued Nigeria for years: pirates are after cargos of refined oil products, such as the 60,000 tons of diesel in the hold of the Kerala. Ian Millen, director of intelligence at the British-based Dryad Maritime, told Foreign Policy that pirates took about 13,000 tons of diesel off the Kerala.

"This incident bears all the hallmarks of Nigerian-based refined product cargo theft," Millen added.

Indeed, some experts believe that the uptick in the number and geographical reach of pirate attacks is due in part precisely to the 2009 government amnesty for the Nigerian militants in the Niger Delta who had justified their attacks on oil infrastructure and their widespread theft of crude oil as a political protest. "With the political pretense lost, there is no longer any need for oil thieves to limit themselves to targets in the Delta," a United Nations study said.

Dryad Maritime's Millen says that in most attacks, pirates offload relatively small amounts of refined product onto costal vessels once the hijacked ship is back in Nigerian waters; the Kerala theft amounts to about 4 million gallons. That U.N. report estimates that pirates could net as much $30 million per year from black-market of the stolen oil.

The spotlight on the fate of the Kerala, and West African piracy in general, comes in part because global pirate attacks are at a six-year low, Captain Phillips notwithstanding. Attacks have fallen about 40 percent since the 2011 peak, largely because of a successful campaign against Somali pirates, which has included better industry practices, greater use of armed guards, and a robust international naval presence.

Fighting Gulf of Guinea piracy will likely be harder than the effort that has nearly shut down Somali gangs, paradoxically because countries on the West Coast of Africa are not failed states. Each country in the region can defend its territorial waters. That rules out the kind of extraordinary, U.N.-sanctioned international naval cooperation inside and out of Somali waters that marked the anti-piracy campaign in the Indian Ocean. It also rules out the use of armed guards on board ships, one of the keys to successfully limiting Somali pirates' success rate.

Still, there are some things that can be done. Nigeria's new navy chief has pledged to tackle oil theft and piracy. The European Union, which imports more oil than anyone else from the region, now has its anti-piracy program with regional states up to cruising speed; the idea is to bolster the law-enforcement abilities of regional states with under-resourced coast guards. European navies, such as the Dutch, French, and British, have also carried out training and exercises with some of their counterparts in the region. U.S. ships took part in one training mission for Nigerian commandos last fall. The U.S. Marine Corps also has a rapid-response team based in Spain that could be used to respond to piracy off West Africa.

But two of the biggest customers for sub-Saharan oil, the United States and China, aren't likely to send in their navies in the same way they have in the Indian Ocean, dispatching frigates and forming standing task forces. That's partly because much of West African piracy takes place within territorial waters, not the high seas, as in the Indian Ocean.

China, which is the biggest single importer of sub-Saharan crude, made major steps in its naval operations in 2008 when it sent ships halfway around the world to fight Somali pirates around the Gulf of Aden. That on-going deployment is seen as a crucial proving ground for China's hopes of creating a blue-water navy. But despite China's reliance on crude from the region, especially from Angola, there's little chance of another Chinese anti-piracy task force heading for the Gulf of Guinea, naval experts say. Somali piracy, in other words, may be coming to an end. Angolan piracy may just be getting going.

Yasser al-Zayyat - AFP - Getty