The Shiite political and armed movement known as the Houthis is attacking vessels bound for Israel, or with ties to the country, in the Red Sea. This is what is happening in the Red Sea with the Houthi attacks.
Since December 3, the United States has reported several attacks on its vessels, including its destroyer USS Carney. Which, in turn, assisted commercial ships that had been the target of attack from Yemen.
They also attacked the Unity Explorer, flying the Bahamas flag - and operating from the United Kingdom - as well as a grain transport ship flying the Panamanian flag and owned by Bermuda.
All of this is aimed at preventing Israeli ships from sailing in the Red Sea until the aggression against the "brothers" of the Gaza Strip ceases. Being supported by Iran.
They want to demonstrate to the local population their pro-Palestinian, anti-Israel and anti-American position.
They see the conflict between Israel and Palestine as an opportunity to unify Yemeni public opinion in favor of the Palestinian liberation cause domestically. They seek to distance themselves from Arab governments that have normalized ties with Israel, such as the United Arab Emirates.
Thus, the Houthis pressure other communities in the region to align with the pan-Islamic narrative; by which all Muslim peoples would unite against Israel.
But to understand the situation we must go further, and understand the conflict from a general point of view to get closer to the particular.
What are the Houthis
The Houthis are a Zaidi Shiite political and armed movement that emerged in the 90s as a reaction to the growing power of Saudi Arabia in the rest of the Arabian Peninsula, as well as to the government of Yemen itself.
Since the 90s they have repeatedly confronted the country's government; and, in 2011, with the Arab uprisings, they organized to start the Yemeni Revolution. By 2014 they had already managed to expel the Salafist groups from the north of the country, advancing towards Sanaa. In this year, they took the capital, dissolved parliament, and established a de facto self-government system.
Since 2016 they have controlled the northwest of the country. While the Sunni government controls the south, where in turn, Salafist organizations such as Al Qaeda dominate some areas.
Thus, the country's population is divided into the two main currents of Islam: 47% are Shia (current dominated by Iran and Iraq) and the remaining 53% are considered Sunni (dominated by Saudi Arabia).
Due to its magnitude, the conflict has been escalating from the local level to the regional level and the international level. Foreign powers have been positioning themselves in the conflict. On the one hand, Saudi Arabia and the United Arab Emirates support the Yemeni government and seek to return power to Al Hadi. For which it has carried out bombings and ground interventions.
On the other hand, Iran supports the Houthis due to their strategic interest in the region as a Shiite power.
Yemen is currently mired in the world's largest humanitarian crisis.
At the end of 2021 there were 377.000 deaths. And the Saudi Arabian coalition blockades Yemeni ports, preventing humanitarian aid from entering. Currently, twenty-four million people, 75% of the Yemeni population, need humanitarian aid and protection.
This year, in April, negotiations began between Saudi Arabia and the Houthis to end the conflict. However, they came to a standstill when the Houthis attacked Israel in October in retaliation for their siege of the Gaza Strip.
On December 3, attacks began in the Red Sea, a crucial route for world trade. With important consequences for international trade, and at the internal level of each country.
Let's see why.
Importance of the Red Sea as a trade route
The Red Sea is a body of salt water located between Africa and the Arabian Peninsula. It is bordered to the north by the Sinai Peninsula, the Gulf of Aqaba and the Gulf of Suez. The countries surrounding it are Egypt, Saudi Arabia, Sudan, Yemen, Eritrea, Israel, Djibouti and the West Bank.
It has two important strategic points: the Bab el-Mandeb Strait, which borders Yemen and Djibouti; and the Suez Canal. Which makes it an important geopolitical zone and a crucial trade route for global trade.
Bab Al-Mandeb Strait
Some of the most important issues in the Middle East and East Africa are concentrated at this point: the war in Yemen, the instability in Sudan and Somalia, the dispute between Iran and Saudi Arabia, and the maritime transit of oil and gas from the Persian Gulf. . Furthermore, in the same area, there are Americans, Chinese, Europeans and Japanese, who seek to increase their influence in a point of great strategic interest.
It is the natural separation between the African coast in Djibouti, and the Arabian Peninsula in Yemen: the bottleneck that gives access to the Red Sea from the Indian Ocean. The obligatory passage towards the Suez Canal and the Mediterranean, and therefore, one of the most important maritime communication nodes in the world, connecting European ports with Asia and the Persian Gulf.
About 10% of the world's oil transported by sea passes through here. Therefore, any incident in these latitudes has direct consequences on international markets.
However, it is already considered one of the most unstable and dangerous waterways in the world due to threats that hinder regular transit to the global market, particularly in the energy sector.
At the international level, the US and Iran, the US and China, and Iran and Saudi Arabia are "competing" in this area to achieve hegemony in Africa. This is because it is a strategic vehicle between the Mediterranean and the Indian Ocean.
Suez Canal
Decisive enclave in maritime transport.
4 million crude oil and refined products transit the Suez Canal. If closed, oil tankers would have to divert around the Cape of Good Hope, near the southern tip of Africa, which would increase transit from Saudi Arabia to the United States by about 2.700 miles, for example.
Therefore, as long as oil remains a primary source of energy for the world, this maritime route will continue to be a vital channel for its transportation.
Economic consequences of Houthi attacks in the Red Sea for global trade
Knowing the above, the conclusion would be that, to understand the possible economic consequences that this situation may bring, we must start from several fundamental premises.
- The first is the importance of the Red Sea for international commercial traffic.
- The second is its importance as a strategic area for the main international powers, such as the US or China; as well as for regional ones such as Iran or Saudi Arabia.
- The third is the escalation of the conflicts that are being resolved in the region.
- And the fourth is the importance of oil and international maritime traffic for international trade.
- Adding to all this is that, due to the globalized world in which we live, any local situation can become international and end up affecting us all.
All these premises translate into the Red Sea having two important points for international trade.
One of them is the Bab Al Mandeb Strait; which is the natural passage between the Red Sea and the Indian Ocean.
And the other is the Suez Canal.
In the case of Bab Al Mandeb, some of the most important issues in the Middle East and East Africa are concentrated, such as the War in Yemen, the instability in Sudan and Somalia, the dispute between Iran and Saudi Arabia, and the maritime transit of oil. and gas from the Persian Gulf. In addition to the international disputes between China, Europe, Japan and the United States, which seek to increase their influence in the area due to their strategic interest.
And to give us an idea of its importance, around 10% of the world's oil transported by sea passes through here, through Bab Al Mandeb. Therefore, any incident that originates in this area has direct consequences on international markets.
And, in the case of the Suez Canal, it is the point that connects the Mediterranean Sea with the Red Sea, allowing passage between Europe, the Middle East and Asia. It is where the majority of crude oil and refined products from international trade pass through, about 5 million barrels a day, heading towards Europe, the US and Asia. Therefore, if this channel is closed due to the situation that is occurring in the area, the oil tankers would have to be diverted around the Cape of Good Hope; which would increase transit from Saudi Arabia to the United States by about 2.700 miles, for example.
Therefore, if the Houthis continue to attack ships in this area, international trade may suffer.
Therefore, the direct consequence of this would be that the price of oil would rise.
Which would make all the products that depend on it more expensive, such as gasoline, natural gas or electricity. And, in turn, inflation would increase even more. And, with it, our shopping basket. That is, the products we buy daily; and gasoline.
We would also have problems with the supply chain. And therefore, a crisis could arise from the point of view of demand; due to stock problems.
And all this during Christmas time.
What does all of this depend on?
That the conflict continues to escalate. On the one hand, the Palestinian-Israeli conflict; and, on the other, the response of the US and Saudi Arabia to the Houthis.
In the end, the Houthis, who are perpetrating these attacks, as a Shiite political and armed movement are seeking to demonstrate to the local population their pro-Palestinian, anti-Israeli and anti-American position. They see in the Palestinian-Israeli conflict an opportunity to unify Yemeni public opinion in favor of the cause of Palestinian liberation internally. While they seek to distance themselves from Arab governments that have normalized their ties with Israel, such as the United Arab Emirates.
Likewise, they are pressuring other communities in the region to align with the pan-Islamic narrative; That is, that Islamic countries show solidarity with Palestine and act together.
Therefore, the threat of disruption to shipping in the Red Sea and its consequences on international trade will remain high as long as the war between Israel and Hamas continues. And the conflict in Yemen, which has become international in nature. Therefore, we are indeed facing a worrying situation.
LL.M in International Business Law and Law from ISDE and graduated in Law and International Relations from Loyola University. CEO and business internationalization consultant at Reáculoateypunto.
