Author: Marco Centaro – 16/01/2024
Monitoring the Red Sea: Washington’s Dilemma
Marco Centaro – Vision & Global Trends (“Società Italiana di Geopolitica” Project)
In a globalized context in which 80% of total trade is delivered through waterways, what we are currently experiencing in the southern Red Sea underlines the vulnerabilities of chokepoints and maritime routes.
Following an unprecedented barrage of missiles launched by pro-Iranian Houthi militants, a US/UK-led coalition has unleashed a fire power that struck several launch sites, training fields and military stocks in Houthi controlled territories.
This comes amid increasing tensions not only in the areas surrounding the Bab el Mandeb Strait, but in the much wider conflict that persists between Israel and Hamas, the latter largely relying on Iran and other Shiite militias spread in the MENA region.
The Yemeni group, in fact, expressed its solidarity with the Palestinian people after the events of October the 7th, and threatened to harm any Israeli-linked vessel that would have crossed the Red Sea. So far, the US Central Command has registered about 30 attacks conducted by Houthis against maritime shipping in the region. The preferred tools of the militants include drones, suicide boats and ballistic or cruise missiles. It is estimated that the pro-Iranian group has so far launched 125 artillery items, pushing military vessels in the area to intervene and prevent damages to ships in the Red Sea. Reportedly, the navies of France, United Kingdom and United States were involved in this effort[1].
In order to halt the threat, in late December Washington launched a coalition that was supposed to gather over 20 navies and patrol the southern Red Sea. Eventually, this initiative turned out to be a failure, as its defensive nature could not prevent Houthis from using their weapons against shipping lanes. Moreover, a second failure lies in the missed purpose of assembling allies from all over the world. Indeed, Many US partners backed out from their initial commitment, perceiving the operation Prosperity Guardian as a clear alignment with Washington and Israel, a fact that could have triggered even heavier escalations.
However, as demonstrated by the latest developments, the Houthis have become way more aggressive, prompting a harder response from the United States.
The soaring tensions around Bab el Mandeb have concerned even the leading shipping companies, which have decided either to stop shipments headed to this chokepoint or to reroute their merchants towards the Cape of Good Hope.
Global markets were not delighted by this decision. The combination of redirection costs and increased insurance premiums provoked impressive spikes in container prices.
As for January 11th, the average cost of a single container amounted to $3,072. Compared to the price registered on November the 30th ($1,382), the total average cost increased by 122%[2].
Fortunately for consumers, this inflationary effect is not targeting oil markets: apparently, and at the moment, hydrocarbon shipping companies prefer taking the risk of transiting the Bab el Mandeb Strait, while the global reserves of oil and gas seem replenished enough, making a demand increase unlikely[3].
However, since the balance in the region is unstable, it is not possible to consider the situation steady.
Furthermore, it must be considered that the recent strikes conducted against the Houthis’ stockpiles do not represent a definitive solution to the threat. The militia can still count on a huge part of its arsenal, and it must not be forgotten that its dangerousness comes also from more asymmetrical weapons (such as naval mines or drones).
Therefore, it is possible that in the next days or weeks we will experience an intensified exchange of missiles and strikes between the warring parties.
Indeed, the military naval presence in the area is increasing. Italy already had one vessel in the southern Red Sea, but last week decided to double the number; in the meantime, the Carrier Strike Group guided by the USS Eisenhower is firmly deployed in the Bab el Mandeb area, but other navies are present: India, France, Spain, United Kingdom, South Korea, and Japan are reportedly active, while also Iranian and Chinese ships are sailing through those waters.
The fact that such a military activity is underway will certainly make the markets more nervous. Even if it is not easy to outline scenarios, the giants of international shipping are still refraining from resetting the regular flows through the Red Sea.
The biggest difficulty that the American thalassocracy faces at the moment is that it cannot easily reduce the strength of the Houthis by simply striking some of the localized stocks and launch sites. The militia has been fighting Saudi Arabia and its Arab coalition since 2015, which makes it used to bear bombings and to quickly redeploy its weapons and settlements.
On the other hand, a wider and stronger offensive is clearly questionable, because it would prompt an escalation that no international actor would be pleased to witness, especially when negotiations are undergoing between the Houthis and the Gulf States.
In conclusion, there are few options that the United States has at its disposal. Its maritime supremacy is constrained between a local militia that threatens its global leadership, and the impossibility to undertake more serious countermeasures to restore maritime security in the region.
While this dilemma obsesses the Biden administration, the next moves of other involved actors are far from being predictable.
In a moment in which the outcomes of the situation are unclear, the best hope for consumers and stakeholders relying on maritime shipments is a solution obtained quickly and peacefully.
It must not be forgotten that, besides the military aspects of the situation, the priority for the international community is to reset regular flows through the Red Sea.
[1] https://rybar.ru/vojna-v-krasnom-more-chto-proishodilo-u-beregov-jemena-14-yanvarya/
[2] https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry
[3] https://www.nytimes.com/2024/01/05/business/red-sea-oil-houthis.html
RELATED LINKS
https://www.reuters.com/markets/commodities/oil-slips-investors-eye-mideast-developments-2024-01-15/
(https://rybar.ru/vojna-v-krasnom-more-chto-proishodilo-u-beregov-jemena-14-yanvarya/