Ahem... no. You can actually traverse the Nile-Red Sea-Channel.
It would be so cool if the faction that owned the Canal was able to invest money in keeping it open. That way, it either wouldn't be functional, or you could spend thousands of mnai to maintain it and thus have the advantage of being able to move between the Arabian and Mediterranean Seas at will.

It could be done with a very expensive and time-consuming building, I guess. Too bad it wouldn't work with the TW engine.