Yemen's Rise: From Poverty to Power, The Big Kid on the Block

December 29, 2023
Recent raids by the Houthis on Israeli cargo ships have managed to destabilize international maritime traffic in the Red Sea. So much so that 299 ships have changed course or are planning to do so this week alone, accounting for 4.3 million containers, equivalent to 18% of global shipping capacity. Despite the safety provided by the US-backed coalition "Operation Prosperity Guardian," maritime traffic in the region has experienced a significant decline. On December 18, the US Secretary of Defense, Lloyd J. Austin, stated, “Operation Prosperity Guardian is bringing together multiple countries to include the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain, to jointly address security challenges in the southern Red Sea and the Gulf of Aden, with the goal of ensuring freedom of navigation for all countries and bolstering regional security and prosperity.” This is not an offensive operation as per the Pentagon Press Secretary, “It's a defensive coalition meant to reassure global shipping and mariners, that the international community is there to help with safe passage.” Since then, France, Australia, Italy, Spain, Netherlands and Norway have withdrawn, refusing to put their warships under US command. This happened after the US Navy admitted that they did not have enough ships to counter Yemeni drones and missiles. The US did not even bother to inquire whether Spain was willing to join the coalition before announcing it. In response, Spain declined. Spain has been a highly vocal critic of the UN, US, and Israel regarding the crisis. There is a growing distrust in US leadership amongst European nations due the role it is playing in the conflict by aiding Israel. Some analysts have gone so far as to label this a significant failure on the part of the Biden Administration. The Houthis have stated that any ship, going in or out of Israel, will be attacked as a response to the atrocities Israel is committing in the Gaza strip as well as the West Bank. Their spokesperson said earlier this month, “If Gaza does not receive the food and medicine it needs, all ships in the Red Sea bound for Israeli ports, regardless of their nationality, will become a target for our armed forces.” Yesterday, a senior Houthi leader said in an interview, “If the US says what they are doing in the Red Sea is to serve humanity, then the real humanity is to let aid into Gaza… But they are instead militarizing the Red Sea. If there is any confrontation, the region will burn and no ships will cross if there is war. We are ready for any provocation and direct confrontation.” These attacks have deterred significant players in both the container shipping industry and notable oil companies. Major shipping companies such as Maersk, CMA CGM, MSC, Evergreen Marine and Hapag-Lloyd have halted operations in the Red Sea. British oil giant BP is also avoiding the region. Ships transporting cargo to Europe are compelled to take detours, navigating around Africa to reach their destination, resulting in an estimated delay of 7-10 days. This, in turn, leads to an increase in transportation costs, potentially causing price hikes. Simon Heaney, senior manager of container research at Drewry, a maritime research consultancy, stated, “The impact will be longer transit times, more fuel spent, more ships required, potential disruption and delays — at least in the first arrivals in Europe.” There is a growing concern about global inflation if the Houthis persist in their attacks. While oil prices surged amid escalating tensions, US involvement appears to have stabilized prices to some extent. Meanwhile the presence of Iranian and Russian oil, along with Chinese cargo ships and non-Western vessels in the Red Sea, has increased since the Houthis began targeting vessels linked to Israel. Yemeni Houthis have granted Russia, Iran, and China unrestricted passage through their waters. The recent events in the Red Sea have inflicted a significant blow to the Israeli economy. Activities at the Eilat Port, the sole Israeli port on the Red Sea, have plummeted by 80%. Israeli media reports indicate that the city of Eilat is in decline; hundreds of people have lost their jobs, with settlers decreasing from 70,000 to 30,000. If this trend persists, a food shortage in Israel is imminent. Yemen, one of the poorest countries in the world, has emerged as a major player with its control of the Red Sea. Since the start of the conflict, no other groups or nations have had as much impact on Israel's economy as Yemen. As the global economy faces challenges, and tensions of regional escalation increase, signaling a rise in commodity prices, several European countries are speaking out against Israel and the US, urging for a ceasefire. It appears that the Houthis' plan is progressing as intended.

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