Thousands of Egyptians have been evicted from their homes without compensation to make way for a bypass to the Suez canal, one of the world's most important trade routes. The inhabitants of two villages in the path of the proposed bypass say that 1,500 homes have already been destroyed, with a total of 5,000 under threat.

The 45-mile bypass, dubbed the "new Suez canal" by the Egyptian government, will allow two-way traffic for a section of the canal's 120-mile length, creating room for more ships, and potentially more revenue for the cash-strapped country.

Announced last month, the project is hailed inside Egypt as the solution to the country's dire economy and unemployment crises, particularly for the communities that line the canal. But the villagers of Abtal and Qantara, a few hundred metres east of the existing channel, say they are the bypass's first victims.

A week ago, Ibrahim el-Sayed, a 25-year-old farmer with three small children, was evicted from his home by the army, which is supervising the project. The family is now living in a makeshift hut.

"We asked them: where should we go? This is our home, at least compensate us," said Sayed. "But they responded that the army does not compensate anyone. We told them that we'd have to live in the street but they answered that this is not our problem."

Suez canal map 0608 WEB

Asked by the Guardian for a comment, an army spokesman said he would look into the matter before issuing a response. Soldiers told evicted villagers they had no right to live on the land as it technically had always belonged to the army. Some of those who argued back were arrested, including Sayed's brother.

But villagers say it was the first time anyone had said they should leave since they settled in the area 30 years ago, following the peace deal that saw Israel return the Sinai peninsula to Egypt.

"If we are invaders, why did they leave us in this place for 30 years?" asked Sayed. "Why didn't they claim their right to the land before?"

The villagers are in an unenviable situation – homeless if they stay silent, and labelled unpatriotic if they speak out against a project and a military institution that are deeply entwined with Egypt's national identity.

In a telling statement, Sherine al-Haddad, the villagers' lawyer, criticised their treatment, but avoided blaming the army: "It's the army who is taking the action against those people, but it's not their fault – it's the fault of the Suez canal authority which gave the army maps saying that the area is an empty one."

The evictions are the latest of several developments that suggest the bypass was not planned as rigorously as it should have been.

The government says the project will triple the canal's revenues, leading local newspapers to call it "the project of the century" and to compare it to Egypt's surprise attack on Israel in 1973 – one of the proudest moments in modern Egyptian history.

But international shipping analysts say it is not yet clear whether the canal will have the financial impact that its makers desire. Neil Davidson, a senior analyst at Drewry, a maritime research consultancy, said the "level of use of the canal is primarily driven by macroeconomic trade factors on a global basis – ie well beyond Egypt." It remains to be seen how much Egypt will charge ships to use the bypass, and how efficiently it will deal with them as they pass through – two factors that will determine the popularity of the new channel.

Irrigation experts also warn that the bypass is being built far too close to the original canal, and the new building site has begun to fill with groundwater. This excess water needs to be drained at the unexpected cost of over $1m (£600,000) a day, according to Haitham Mamdouh, the head of irrigation, engineering and hydraulics at Alexandria University.

Mamdouh stressed the project's positive economic impact, in particular the work it has given to 50 Egyptian construction companies. "You're decreasing unemployment, and the money the companies are earning is now circulating in the Egyptian economy."

But he warned that the whole project had been rushed, and may yet have several unforeseen side-effects. "According to international engineering standards, you need to make an engineering study, an economic study, an environment study – and those studies should take one year. But the project has been declared without them."