Anyone looking at a map will initially see the Suez Canal as a waterway connecting Europe and Asia. Its true geopolitical significance, however, becomes apparent only when we look beyond nautical charts and warships and consider insurance premiums, transit times, and the calculations of the world’s major shipping companies.
At the southern entrance to the Red Sea lies the Bab el-Mandeb, the narrow strait separating the Arabian Peninsula from Africa. Since the Houthis in Yemen began attacking commercial vessels in the region, this passage has become a significant economic risk. Ships do not have to be sunk on a regular basis to disrupt global trade. It is enough to create a level of uncertainty that forces insurers to raise premiums and shipping companies to reconsider their routes. Europe, the so-called Old Continent, is particularly exposed to the consequences. As long as the Suez Canal and the Red Sea remain reliably navigable, delivery times and transportation costs remain reasonably predictable. Once the route becomes a high-risk zone, however, insurance and security costs rise. If shipping companies choose to reroute around Africa, voyages become considerably longer. Ships, crews, and cargo remain at sea for more time, capital stays tied up longer, and transportation capacity becomes unavailable elsewhere. Eventually, those additional costs reach manufacturers, small and medium-sized suppliers, and ultimately consumers. So far, the logic is straightforward.
But after a difficult or delayed passage through the Red Sea, shipping companies face another question: Does it still make economic sense to carry cargo across the entire Mediterranean, through the Strait of Gibraltar, and onward to the major ports of Germany, the Netherlands, Belgium, or the United Kingdom? Under certain conditions, it may become increasingly attractive to unload containers earlier, at ports in the eastern Mediterranean, and move them onward to Central and Western Europe by feeder vessels, rail, or road. Earlier unloading can save valuable time and allow a large container ship to return to service sooner. The higher the insurance, charter, and operating costs, the greater the economic value of every day saved. This is where recurring crises in the Red Sea acquire an additional geopolitical dimension.
The Greek port of Piraeus is one of the Mediterranean’s most important container ports. China’s state-owned COSCO holds a majority stake in the port. At the same time, Beijing has spent years investing in transportation and infrastructure projects across the Balkan Peninsula as part of its Belt and Road Initiative. The logic behind these investments is relatively simple: Goods from Asia enter Europe through the eastern Mediterranean and can then move north and west by rail and road toward the major markets of Central and Western Europe. If higher costs and longer transit times encourage shipping companies to unload a larger share of their cargo earlier in the Mediterranean, ports such as Piraeus could gain importance relative to the traditional gateways of Northern Europe. Every additional container unloaded there generates more than port fees and revenue for the operator. It also increases the importance of the transportation corridors behind the port—including routes through the Western Balkans that China has helped develop and continues to support. This creates an interesting geopolitical constellation.
Houthi attacks increase risk and insurance costs in the Red Sea. The resulting pressure on time and costs can make earlier Mediterranean transshipment points more attractive. In turn, infrastructure and transportation corridors in which the People’s Republic of China has already invested may benefit. This should not be turned into a conspiracy theory. There is no credible evidence that Beijing is directing Houthi attacks in order to provide Chinese investments in Europe with a competitive advantage. The more interesting geopolitical point is a different one: China does not have to create a crisis in order to benefit from some of its consequences.
China itself has no serious interest in a permanently closed Suez Canal. Its export economy depends heavily on functioning trade routes to Europe. A complete breakdown of the route would hurt Chinese companies as well. But a route that remains fundamentally open while becoming more expensive and less predictable could gradually alter the economic geography of European trade. That distinction matters. Infrastructure investments made years earlier can acquire a very different strategic value when geopolitical conditions change. A port, railroad, highway, or logistics hub that initially appears to be primarily a commercial investment can become considerably more important once global trade routes come under pressure.
Egypt is also directly affected. The Suez Canal is one of the country’s most important sources of foreign currency. When transit traffic declines, government revenue falls with it. For a country of well over 100 million people facing substantial economic challenges, this is more than a fiscal problem. Growing financial dependence can also create opportunities for greater external influence. Under such circumstances, loans, investments, and infrastructure projects can quickly acquire a strategic dimension. Europe therefore faces a fundamental question: How much is it prepared to invest to reduce its own vulnerability? With Russian pipeline supplies having lost much of their former importance, Europe has become more dependent on flexible maritime trade routes. And this is by no means only about oil and liquefied natural gas. European industries also depend on maritime supply chains for raw materials, chemicals, intermediate goods, electronic components, and machinery. The answer cannot be to retreat from global trade. Europe needs alternatives. Additional energy import capacity, efficient rail connections between Southeastern and Central Europe that do not depend on Beijing, greater use of the Danube as a transportation corridor, competing port infrastructure, and limited strategic stockpiles of critical goods are no longer luxury projects. They should increasingly be regarded as elements of European economic and security policy. The difficulty is that this comes at a particularly challenging moment for the European Union. Major member states such as Germany and France are simultaneously facing economic, fiscal, and domestic political pressures. Investment in additional infrastructure therefore competes with numerous other political priorities. Yet saving money in this area today could prove considerably more expensive tomorrow.
The underlying problem can be reduced to a simple principle: Dependence becomes dangerous when there are no alternatives.
The Suez Canal is therefore far more than a shortcut between two seas. It is one of the lifelines of the European economy. What happens at the Bab el-Mandeb can influence the insurance premium paid by a shipping company, the port at which a vessel unloads its cargo, the strategic importance of a railroad across the Balkans, and ultimately the price a manufacturer in Central Europe pays for the components it needs. The Red Sea thus provides a useful illustration of how geopolitics works today. Military power, global trade, insurance markets, ports, railroads, and foreign investment can no longer be viewed as separate issues. They increasingly form parts of the same strategic equation. Europe must respond by becoming more resilient. More ports, more transportation routes, more energy options, and fewer one-sided dependencies will require substantial investment. But in an increasingly uncertain world, strategic redundancy may ultimately prove far less expensive than strategic dependence.