The Suez Canal shows that civilization is more vulnerable than you think


Part of that was just plain unfortunate: Egypt expanded parts of the canal to allow two-way traffic and accommodate the larger carriers. The vessel Ever Given veered off course and got stuck in a part of the still narrow waterway.

But it’s also a reminder that even an advanced civilization like ours has points of acute vulnerability. In the strategic and military realm, such bottlenecks are also known as “bottlenecks”.

System designers strive to avoid these single points of failure, so that transport, power and communications networks are able to withstand attacks or unexpected calamities. (The two crashes involving a Boeing 737 Max are an example of a flawed design – a single sensor gave erroneous readings to the aircraft’s automated flight system.) Advances in technology and globalization were also believed to make us less susceptible to this. type of problem. The internet, for example, was designed as a decentralized system that was pretty hard to break, just like Bitcoin.

But global infrastructure, broadly defined, still has a surprising number of pinch points. These can be difficult to fix, as creating backup options is expensive and thwarts economies of scale. In some cases, the problem is even getting worse: industries are increasingly concentrated due to company takeovers. In addition, much of our lives are now being publicized by a handful of tech companies. Nokia Oyj, Ericsson AB and the Chinese Huawei Technologies Co. Ltd, for example, control around 60% of the telecommunications equipment market.

The result is that governments are now more aware of the political and economic power held by those who control choke points. This is one of the reasons the United States is very concerned about Huawei’s involvement in building critical 5G networks.

But first, back to the canals. Our designer has done a great job with planet Earth, but if you were to nitpick, she may not have given enough thought to the needs of the marine and oil industries. The Panama Canal (which connects the Atlantic and Pacific Oceans), the Suez Canal (connecting the Mediterranean and the Red Sea) and the Strait of Hormuz (at the mouth of the Persian Gulf) are places where container ships and tankers are forced to navigate narrow passages. The alternative is a long detour or more expensive air freight.

For decades these waterways have been recognized as areas of great strategic importance and susceptible to attack by the military or terrorists. Iran has frequently used the Strait of Hormuz to put pressure on foreign powers. Various relief routes were discussed, but most did not materialize. Nicaragua has built a canal connecting the Pacific and the Caribbean Sea, for example, but the reported cost of $ 50 billion is prohibitive.

We can perhaps excuse the vulnerabilities arising from the natural world, but we should accept less those of the economic sphere over which we have more control.

Think about energy. Seeking to get rid of one pinch point – the fact that Europe obtains much of its gas through pipelines that cross Ukraine – Germany has created another: the twin Nord Stream pipelines which connect Russia and Germany under the Baltic Sea. The United States is concerned that this will weaken Eastern Europe and increase Germany’s dependence on Russia.

In the financial arena, trillions of dollars in financial instruments are tied to the London Interbank Offered Rate, which a small circle of banks have found incredibly easy to manipulate until exposed in financial markets. years after the 2008 financial crisis. Libor is now replaced. Likewise, Europe has long relied on the Swift payment system and the US dollar, but this dependence was questioned in 2018 because it disagreed with the US on sanctions against Iran.

In the tech realm, people have warned for years that the United States needs a backup for the Global Positioning System, the satellite navigation infrastructure that underpins much of the economy. modern digital. The system can be spoofed or otherwise disrupted. He still has to develop one.

Semiconductors are where the clearest pinch points emerge. A global shortage of computer chips during Covid has forced automakers to tear up their production plans. The hiatus is temporary, but it belies the real problem: very few companies are able to produce the most advanced chips, due to the technical challenges and the high cost of building foundries. The most important of these, Taiwan Semiconductor Manufacturing Co., is based on an island under constant threat of invasion from Beijing.

This is not the only example of the dangerous concentration of this industry: ASML Holding NV of the Netherlands has a monopoly on the machines necessary to make the best chips. Today, China’s inability to purchase the most modern equipment from ASML is dampening its own semiconductor ambitions.

None of these bottleneck problems are easy to solve. Not only are there geopolitical ambitions at work here, but there are also generally tradeoffs between building greater resilience and efficiency. Strengthening supply chains is expensive.

But because redundancy offers protection and is therefore a public good, there is an argument that governments should play a role in providing it. Antitrust policy, for example, can be used to challenge monopolies and foster greater competition.

Because having a back-up is quite practical. You learn this when the roof collapses or when a ship called Ever Given ascends the Suez Canal.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.

This story was posted from a feed with no text editing. Only the title has been changed.

To subscribe to Mint newsletters

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now !!


Leave a Reply

Your email address will not be published.