The
Red Sea
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The Red Sea
The geopolitical position of the Red Sea is important because it’s a natural border between the eastern coast of Africa and the western coast of the Arabian Peninsula and a vital route for the transportation of oil through the Bab el-Mandeb in the south to the Suez Canal in the North, as it connects the Mediterranean to the Indian Ocean.
The Red Sea has acquired vital importance for global commodity and containerised trade.
The Red Sea has played a pivotal role in global trade for millennia. In the time of the pharaohs, it was at the heart of the global spice trade. Today, it is an essential global artery, feeding Western demand for hydrocarbons and facilitating the flow of goods between Europe and booming Asian markets.
There is no reason that should continue to be the case. A regional effort to facilitate trade and build infrastructure has the potential to reposition the countries surrounding the Red Sea as destinations for global investment and international trade.
At present, around 80% of all global trade is transported along maritime routes and more than 12% of global seaborne cargo and 40% of Asia’s trade with Europe transits through the Red Sea. The Red Sea is central in the geo-politics and geo-economics of Saudi Arabia, and other GCC countries.
The Red Sea region, comprising the 20 countries that use the route as their primary trading corridor, is the largest, fastest growing, and least exploited emerging market in the world. Over the next 35 years, the United Nations expects the region’s population to rise more than twofold, from 620 million today to 1.3 billion. This population growth will be accompanied by one of the world’s highest urbanisation rates, creating a burgeoning middle class by 2050.
Over the same period, according to current projections, the region’s GDP will triple, from $1.8 trillion to $6.1 trillion, while trade will increase fivefold, from $881 billion to $4.7 trillion.
And yet, as encouraging as these numbers may be, the region has the potential to do much better. The private sector should be at the forefront of the effort to build the infrastructure and logistics links that form the backbone of global trade, install the technologies and systems that maximize efficiency, and provide the training and skills to boost performance.
And yet, as encouraging as these numbers may be, the region has the potential to do much better. The private sector should be at the forefront of the effort to build the infrastructure and logistics links that form the backbone of global trade, install the technologies and systems that maximize efficiency, and provide the training and skills to boost performance.
National governments will also need to participate, streamlining customs controls, border management policies, and regional trade regulations.
The Red Sea region has a unique opportunity to develop into a global centre of excellence in trade facilitation, strengthening economic ties throughout the region and building a new growth engine for the global economy. All that is needed is the will to seize it.
