The Geopolitical Conflict in the Red Sea

An International Economic Crisis and Future Repercussions on Yemen
Ali Mayas
March 5, 2024

The Geopolitical Conflict in the Red Sea

An International Economic Crisis and Future Repercussions on Yemen
Ali Mayas
March 5, 2024
Photo By : Hamza Mustasafa

The Red Sea has become the most prominent arena of conflict affecting the global economy at the present time, after the bloody battles expanded from the Palestinian territories to various parts of the Middle East, in a wide-ranging geopolitical conflict between the warring regional and international axes. While there are tangible fears of its future security and economic repercussions on Yemen, a country that has been reeling from the reality of armed conflict for a decade, and which suffers from a chronic backwardness in capabilities and a scarcity of opportunities for development.

In its recent war on Gaza, the Israeli occupation showed unprecedented brutality in contemporary history. Since October 7, 2023, the Israeli war machine, reinforced with surplus force, has caused heavy losses in civilian lives, in a witnessed war of genocide that goes beyond political calculations, and with unlimited support from the United States of America. More than 100,000 civilians, most of them children and women, were killed and injured. The widespread devastation and unprecedented brutality left a profound impact on the state of relative stability in the region.

The Palestinian cause has attracted broad global solidarity. Israel, along with its allies, the United States and Britain, has found itself increasingly isolated from the international community, which has repeatedly called for a ceasefire and access for emergency humanitarian aid, but Israel and its allies have remained defiantly resisting this international consensus. In an important step, South Africa took the initiative to submit a criminal file to the International Court of Justice in The Hague, accusing Israel of committing acts of genocide. This measure confirms the seriousness of the situation in occupied Palestine and the urgent need for accountability.

In the ongoing conflict in the Red Sea, the Iranian-backed armed Houthi group, Ansar Allah, has repeatedly confirmed that its missile strikes against Israel and ships heading towards it aim to break the stifling siege imposed by the Israeli occupation on Gaza. This siege comes within the framework of the policy of starvation and collective punishment, which led to the forced displacement of more than a million and a half civilians to the city of Rafah, a small geographical enclave in the southern Gaza Strip.

The international shipping route passing through the Gulf of Aden and Bab al-Mandab Strait has become the most dangerous in the world, as the United States and Britain have begun efforts to mobilize military forces and deploy military fleets north and south of Bab al-Mandeb Strait. Implementing an air campaign to bomb sites inside Yemeni territory, in a policy of complicity with the Israeli occupation, perpetuates the armed conflict in the region and exacerbates its long-term negative effects.

Geopolitical conflict in the Red Sea

After decades of relative stability in international waters, global shipping traffic in the Red Sea has been disrupted due to escalating geopolitical tensions in the Middle East. Bab al-Mandab is considered the waterway most affected by dangers. It is a narrow passage that has witnessed instability for several years, but is experiencing a sharp escalation during the ongoing conflict. . The use of anti-ship ballistic missiles and drones has increased the risks faced by ships navigating this choking route. Yemen's extensive coastal strip, which extends for more than 2,000 kilometers, gives it significant geopolitical and security importance on a global scale.

The current conflict in Bab al-Mandab is not the first. In 1973, during the Yom Kippur War, Egyptian ships imposed a blockade on the strait, forcing many oil tankers bound for Israel from Iran, then under the pro-Western rule of the Shah's regime, to change course. These events underscored the enduring geopolitical importance of the Strait and its crucial influence on global energy supplies.

The current conflict in Bab al-Mandab began on October 19, 2023, when the Houthi armed movement inside Yemen launched a barrage of missiles and explosive drones toward Israel. On Sunday, November 19, the Houthis seized the Israeli cargo ship Leader Galaxy in the Red Sea, issuing a warning that all ships linked to Israel would be considered legitimate targets for their forces. Video footage published by the Houthis showed masked armed individuals boarding the moving ship from a helicopter, and detaining the crew members at gunpoint. The ship is still detained off the coast of Yemen.

The Houthi armed group possesses a naval force capable of carrying out military operations within international waters. Its arsenal includes a range of weapons, such as missiles and attack drones, such as Qasef 1 and Qasef 2 drones, which have a range of up to 200 km, and others capable of covering distances of up to 1,800 km. In addition, its ground-launched missiles have a range of up to 800 kilometers, enabling it to target ships from long distances. The Houthis also tried to intercept the ships using small boats. And unmanned boats and small unmanned submarines. As a precaution, most major shipping companies have stopped using the Bab el-Mandeb Strait to trade with Europe via the Red Sea and the Suez Canal since December 15.

In December 2023, the United States announced the formation of an international coalition aimed at confronting the Houthi attacks. It was called the “Guardian of Prosperity.” However, most of the countries declared within the coalition withdrew from it, and the United States and Britain deployed warships to patrol the Red Sea. In order to take measures to deter and monitor the military activities of the Houthis and impose restrictions on weapons coming to Yemen from Iran. At the same time, other countries began conducting independent patrols from the coalition in the waters surrounding Yemen. On January 11, 2024, the United States and Britain began a series of missile strikes on several targets linked to the Houthi group on Yemeni territory.

The US-British coalition launches air strikes on an almost daily basis, and focuses its attacks primarily along the coastal strip of Al-Hodeidah Governorate. It also targeted areas including Sanaa, Taiz, Hajjah, Saada, Al-Bayda, and Dhamar. As a result, the Houthi group reduced its military presence in the open areas along the coastal strip, and shifted its intensive presence to the mountain range of highlands adjacent to parts of the Gulf of Aden and Bab al-Mandab. Such as the military presence in areas such as Al-Silw, Haifan, and Shamir in Taiz Governorate, as well as the high mountains in Hajjah, Raymah, and Al-Mahwit overlooking the Red Sea, and the strategically important port of Al-Hodeidah. In addition, they have established a military presence for these operations in Mukayras, Al Bayda Governorate, opposite the territorial waters of the Gulf of Aden.

The rugged mountainous terrain gives the Houthi group advantages that enable it to exercise greater control over the maritime spaces in front of Yemeni territorial waters. Military experts confirm that this terrain facilitates the concealment of radar platforms, ammunition, and launch vehicles, and according to reports, the Houthis receive intelligence information from the Iranian cargo ship MV Behshad, which operates under the guise of a cargo ship but is equipped with aerial surveillance and monitoring equipment. Which provides the necessary information to launch military attacks on ships crossing the Red Sea and the Gulf of Aden.

According to data from Embry Analytics, approximately 80 accidents involving cargo ships were reported in the Red Sea and Gulf of Aden between November 19, 2023 and February 9, 2024. However, no injuries were reported among the crews or sailors driving targeted ship.

On January 12, the day the US-British operations began in Yemen, the Houthi group announced the killing of 5 of its forces and the wounding of 6 others. On February 10, it announced the killing of at least 17 of its fighters in Al-Hodeidah Governorate. In addition, a US air attack in late December killed 10 Houthi fighters after targeting three boats in the Red Sea. US Central Command confirmed this incident.

However, the military operations carried out by the American forces showed a limited ability to deter the military capabilities to launch missiles at commercial ships passing through the Red Sea. There are several reasons why these operations did not have a significant impact on the Houthis. These factors include the existence of Saudi-Iranian understandings, the non-participation of Arab and European countries in the American-British alliance, the mountainous terrain on which the group depends, and its extensive experience in dealing with airstrikes and minimizing their effects.

Military air operations imposed heavy financial costs on the US and UK. Air campaigns that take a long time drain resources hugely, just as they drained the coalition led by Saudi Arabia and the UAE over a period of nine years. Moreover, these air operations often lead to widespread destruction of infrastructure without achieving any desired results.

One notable aspect of this geopolitical conflict is the decline of US influence in the region, while Chinese and Iranian hegemony continues to grow. The US presence in the region serves strategic purposes, including ensuring the transportation of oil to Western countries and providing security for American oil companies operating in the region. Thus, the US military zone acts as a control and command center for the flow of crude oil into Europe and beyond. In a meeting held last January, the US National Security Advisor urged Chinese officials to take advantage of their influence over Iran to put an end to the Houthi attacks in the Red Sea. However, China views the security situation in the region as a quagmire created by the United States.

The military weight of the Houthi armed group has increased, turning it into an international actor and a key player in the recent events in the region. It seems that Iran has reaped impressive results from its long-term investment in the Houthi group, and perhaps Tehran did not expect the group to become a winning pressure card against its enemies. The exceptional strategic importance of Yemen's location contributes to the effectiveness of the group's military operations.

The impact of the conflict in the Red Sea on the international economy 

Economic exchange between countries that depend on the water line of communication that passes through the Red Sea has become subject to the influence of the geopolitical battle in the Middle East. Bab al-Mandab and the Gulf of Aden assumed great importance to the global economy when the Suez Canal opened in 1869. These waterways serve as a crucial link between Europe and East Asia, facilitating the transit of approximately 12% of global trade and 30% of the world’s container traffic, as More than $1 trillion worth of goods are transported annually. It is noteworthy that this market value represents a very large economic exchange between the economies of East Asia and the countries bordering the Mediterranean Sea. An estimated 21,344 ships passed through the Suez Canal, with an average of 59 ships per day in 2023.

Prior to December 2023, 99% of container ships traveling between Europe and China were passing through the Suez Canal. The attacks by the armed Houthi group forced several cargo ships, including giant containers, to change their routes from the Red Sea to the Cape of Good Hope in South Africa, including those belong to Israel. As a result, delivery times are delayed and 3,000-3,500 nautical miles (6,000 km) are added to shipping routes. The transit of shipping containers through the Red Sea waterway has decreased by about 78% from the expected values in January 2024.

The East Asian economies, including China, India, Japan, South Korea, and the Association of Southeast Asian Nations (ASEAN), are major exporters of goods, while European and African countries bordering the Mediterranean are primarily consumers. These countries are particularly affected by economic damage due to the crisis in the Red Sea, in addition to shipping companies and the Egyptian Suez Canal. Egyptian President Sisi announced a decrease in Suez Canal revenues by up to 50%, while shipping prices increased by 100 to 300%. Reports indicate that in just one day, 158 ships with a trade value of $105 billion were rerouted from the Red Sea, carrying more than 2.1 million containers of cargo.

Although the current Red Sea crisis does not represent a global economic decline on the scale of the final stages of the Covid-19 crisis. However, it pose serious repercussions as long as uncertainty persists. Since shipping in the Red Sea accounts for between 12% and 15% of global trade, the impact is likely to worsen. War risk insurance companies raised insurance costs for American, British, and Israeli ships crossing the Red Sea by about 50%.

According to a Reuters report, tankers carrying “clean” fuel such as diesel and jet fuel were more severely affected than those transporting crude oil, also known as “dirty” due to its high toxicity. However, the movement of oil tankers through Bab al-Mandab Strait decreased by 38% during the period from January 6 to 10, and this decline increased by 58% compared to the middle of 2023 during the period from January 13 to 17, that is, after the US airstrikes on Yemen. Which means that the air attacks carried out by the American-led coalition on Yemen are futile.

In addition, nearly 8% of LNG passed through Bab al-Mandeb Strait in the first half of 2023, with a daily volume of 4.1 billion cubic feet, according to the US Energy Information Administration. The cessation of Russian gas supplies to Europe and the increasing dependence of European countries on the United States, Qatar and Oman to meet their energy needs have increased the importance of Bab al-Mandab Strait at the present time and in the foreseeable future. This is particularly evident in light of the expansion of Qatar's North Field natural gas project, which will boost Qatari production by 60% to reach an annual production of 126 million tons by 2027. At the same time, Qatar Energy Company recently concluded new agreements with several European companies. Moreover, the Sultanate of Oman has also entered into multiple agreements with international companies to enhance its supply of liquefied natural gas, with the aim of achieving an export capacity of 10.4 million metric tons per year by 2025.

The war on Gaza and the Red Sea crisis had negative impacts on the Israeli economy. In mid-December, Eilat, the only Israeli port on the Red Sea, announced an 85% drop in activity. The Israeli economy contracted by about 20% year-on-year in the last quarter of 2023, with imports of goods and services falling by 42% and exports falling by 18%. The decrease in the volume of imports to Israel has affected many countries that export goods to Israel, especially China and India, the largest exporters in East Asia.

In mid-January, some Chinese companies, including the Chinese company COSCO, whose truck was previously attacked by the Houthis, announced that they would reroute their ships around the Cape of Good Hope and stop delivering supplies to Israel. However, some ships continued to sail in the Red Sea after their connection to China was confirmed through special automated identification systems. Trade exchange between China and Israel reached about $17.62 billion in 2022, with heavy reliance on imports from China, including machinery for infrastructure and construction projects, consumer products, and automobiles. Likewise, economic exchange between Israel and India has also been affected, with bilateral trade reaching $7.5 billion in 2023. Israel has emerged as one of the largest arms suppliers to India.

In a recent development, on March 3, 2024, officials announced the cutting of three underwater cables in the Red Sea responsible for the Internet and global communications. The exact reason behind the damage to these cables is still unclear. There have been concerns that the Houthi campaign may target these vital lines of communication. The downed lines reportedly affect 25% of data traffic passing through the Red Sea. This act of communications sabotage will exacerbate the ongoing crisis that has been unfolding for several months. HGC Global Communications has already begun the process of rerouting data traffic, focusing on the critical role of the Red Sea Route in facilitating data movement between Asia and Europe. This interruption in data transmission will have potential economic impacts.

Searching for alternatives route to Bab al-Mandab Strait 

The escalating security risks in the Red Sea have forced major economies, especially those targeting high-consumption European markets, to explore cost-effective alternative routes. This includes consideration of overland trade routes. Prominent countries in this regard are China, India, and the Gulf oil exporting countries. The future of commercial shipping along the Red Sea and Suez Canal routes, as well as the economic feasibility of proposed “land” alternatives, have become topics of great debate.

The alternative sea route to Bab al-Mandeb is becoming increasingly cumbersome, with ships going around the Cape of Good Hope. Indian officials expressed concerns about heavy reliance on Bab al-Mandab Strait, as it could have negative impacts on their country's trade with the Middle East, Africa, and Europe. Reports have emerged that Indian experts are exploring developing alternative routes, including utilizing the deep-water port in Chabahar, Iran, to facilitate road transportation of goods to Europe.

In an effort to create an alternative land route to bypass Bab al-Mandab Strait, the United States of America, the Kingdom of Saudi Arabia, the United Arab Emirates, India and the European Union signed a memorandum of understanding during the G20 summit in New Delhi in September 2023. The agreement aims to create an economic corridor linking India to Europe via a railway line, This is done by using existing ports in the United Arab Emirates, passing by land through the Kingdom of Saudi Arabia, Jordan, and Israel, and then to Europe. This project includes power transmission pipelines and data transmission cables. It can be considered the American response to the “Belt and Road” project proposed by China in 2013. This land alternative, which passes through the ports of the UAE, then through land to Israel, has gained great importance during the current Bab al-Mandab crisis.

The Kingdom of Saudi Arabia also took measures to address Bab al-Mandab crisis, as it relied on its ports in the Arabian Gulf and the relatively safe Strait of Hormuz corridor to transport oil to China, India, Japan, and other East Asian countries, from the Ras Tanura facility owned by Aramco. The facility includes two large oil tanker yards, making it one of the largest oil shipping ports in the world. Regarding crude oil heading to Europe via Bab al-Mandab. Saudi Aramco CEO Amin Nasser said the oil giant company could bypass Bab al-Mandab by taking advantage of an oil pipeline that connects Saudi Arabia's eastern oil facilities to its western coast. And he added that exports of petroleum products may face diversions due to this crisis.

The conflict in the Red Sea and its repercussions on Yemen

Throughout the war, Yemen experienced the worst humanitarian crisis in the world in decades, with most of its population living below the poverty line, and the country's infrastructure was subjected to widespread destruction, making it difficult to meet the basic needs of its population. Yemen is currently facing severe challenges in meeting market requirements, which have been exacerbated by the escalating events in the Red Sea and the Gulf of Aden. These events coincided with the worsening financial crisis and scarcity of foreign currency, especially in areas controlled by the internationally recognized exile government. This has hampered the country's ability to meet market demands and finance imports. Yemen is particularly vulnerable to shocks during emergency crisis, as it relies on imports to meet more than 90% of its basic needs.

In mid-February, the Biden administration designated the Houthis as a terrorist organization, but using a special designation for the group under the title “SDGT.” They also gave the Houthis a 30-day warning. The SDGT designation targets an individual or entity's finances by cutting off access to financial or material support from the United States. However, from a legal perspective, the SDGT designation is slightly less restrictive than other designations, still allows entities to legally enter the country in question, and applies only to US citizens and within the territorial boundaries of the United States. However, international relief organizations fear the impact of this designation on the humanitarian crisis in Yemen.

There are fears that the sinking of a cargo ship could lead to an environmental disaster, especially if ships carrying highly toxic crude oil sink. This could have serious and even fatal consequences for marine life. The United Nations prevented the disaster of an oil spill in the Red Sea from the floating oil tanker “Safer” off the coast of Yemen on the Red Sea coast, which helped end a major environmental, humanitarian and economic disaster. The disaster would have left millions of Yemenis vulnerable to air pollution. There will also be no means of transporting food, fuel and vital supplies to Yemen, in a country where 17 million people need food aid.

On February 18, the Rubymar vessel suffered a devastating blow when it was struck by a Houthi missile, resulting in its sinking and causing an extensive oil slick spanning over 40 kilometers in the Red Sea. While the exact quantity of leaked oil from the Rubymar remains uncertain, the estimates suggest that it likely did not exceed 7,000 barrels. Concerns have arisen regarding the potential hazards associated with the sunken cargo of fertilizers, totaling 20,000 tons. The worst-case scenario involves these fertilizers unexpectedly floating to the water's surface, triggering algae growth, oxygen depletion, and the formation of what is commonly known as "dead zones", it will have a noticeable impact on marine life, as a large segment of Yemenis depend on the fishing profession.

On the political level, the Ansar Allah Houthi group is exploiting attacks on cargo ships in the Red Sea as a tool to install solid rules of control over the northern regions and gain legitimacy. These efforts come as a result of the brutal aggression launched by the Israeli occupation against Gaza and the West Bank several months ago. As the group began to confirm that its slogans now have real meaning, so military mobilization must be undertaken and the opportunity must be seized to defeat the foreign-dependent forces in Yemen. Opinion polls regularly show that almost all Yemenis strongly support the Palestinian cause, including a poll conducted in late December 2023. But not everyone agrees with the Houthis.

Yemen's strategic location has always represented a point of trouble that causes concern to the international community, but the recognized government is unable to impose its control over the country, and does not have military institutions that can deal with emergency changes, and thus dispel fears about the escalation of risks in the Red Sea region and address their effects. The absence of state institutions has created a large security vacuum, which has been filled by armed military groups, which depend on their decisions to be made by external parties. The international and regional renunciation of its obligations to build a Yemeni state led to the country being exposed to a space in which there is no state or institutions, as state institutions are a necessary for maintaining international peace and security. Such institutions can also provide a decent life for the population of Yemen, and push the country towards international integration and economic development.

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