When asked whether US strikes on Houthi targets in the Suez Canal were working, Biden cleverly responded, “No. Are [the strikes] going to continue? Yes” [1]. His comments, evidence of careful training by his PR team, only work to illustrate the irony of US intervention both in the Suez Canal and throughout the Middle East: while the US continues to try and try again, in its militaristic endeavors, conflict only continues to escalate.
Houthi rebels, a Yemini group backed by Iran, have attacked ships in the Red Sea in the past, but significantly increased attacks since the start of the Israel-Hamas war on October 7th, 2023. They mainly targeted Israel-linked ships, saying that their attacks will not cease until the Israel-Hamas war, and international support (primarily from the US) ceases.
As one of the most critical economic centers of the world, the Red Sea contains the Suez Canal. 40% of Asia-Europe trade, 30% of global container traffic, and over 1 million barrels of oil travel through the canal every day
The world knew the situation was bad when Tesla suspended activity at its Gigafactory near Berlin due to supply chain issues caused by the crisis [4]. But this was only the beginning: due to the increase in attacks, at least 90% of ships that previously traveled through the Suez Canal now have to go around the tip of Africa, causing massive delays in trade and exponentially increasing prices of shipping and insurance [2, 3]. If a ship were to go from the Persian Gulf to the Amsterdam-Rotterdam Antwerp petroleum trading hub, going through the Suez Canal would take19 days. If a ship went through the Cape of Good Hope (around Africa) instead, it would take a whopping 35 days [6]. Furthermore, it would cost up to $1 million in extra fuel for every round trip[9].
For companies that decide to risk traveling through the canal, global shipping costs have more than doubled and marine war risk premiums (a form of insurance) are up fiftyfold to an average of 0.7 percent of the value of the ship, with costs going as high as 1% in some cases. In other words, “For a ship carrying goods worth $100 million, that means an extra $700,000 for the few days necessary to go through the Red Sea area”[5].
These huge numbers (alongside Elon Musks’ crises) mean one thing: the potential of a major shock for the world economy. The attacks could stall the fight against inflation and the repercussions would last for months, having a domino effect on the supply chain [7]. The current chaos shares similarities with the 6-day blockage of the canal in 2021, where daily trade worth nearly $10 billion halted [8]. The impacts lasted for about four to six weeks after, raising the question of what would happen with an extended blockage [7]. A closure threatens to significantly raise energy prices, but for now, they have stayed constant [8]. However, every day the conflict gets worse, so too do the economic impacts, with analysts finding a strong risk for recession in the US, UK, and EU, if the conflict were to worsen[9].
Fortunately, the world is in a much less volatile situation than it was during the 2021 disruption. Although economic growth has slowed and the fight to lower inflation is at a critical turning point, things are getting better. On the other hand, in 2021, due to lockdown restrictions, global supply chains were already on the edge, with factories unable to keep pace [9].
In response to the attacks, the US has launched Operation Prosperity Guardian, a maritime task force with the goal of fighting back against Houthi attacks. Initially, they were able to halt attacks, stopping merchant ships from being hit by drone and missile strikes and allowing trade to continue. This gained a lot of support from Europe, with over 20 nations participating [10]. However, as Biden acknowledged, the Operation has fallen short. The conflict is steadily escalating, with US intervention allowing the Houthis to refine their capabilities and bolster their legitimacy. Rebels have even launched missiles at US warships, leading to increased escalation on both sides [11]. Ultimately, Houthis have turned from a small player to one of the Middle East’s most dangerous militant groups [12].
Unfortunately, this poses a threat not just in economic terms, but also in terms of conflict escalation. Due to the Houthi’s increasing legitimacy, strikes could increase the potential expansion of the Israel-Hamas war and could reignite the civil war in Yemen [10]. These attacks have also let the group hide from their own human rights violations while also working to expand their power. Analysts warn that eventually, the group could claim that they stopped the war in Gaza, using that to bolster their legitimacy even further.
Ultimately, if US military intervention continues to fail to address the issue, the US must look to a more diplomatic approach. That will likely come from pushing for an end to the Israel-Hamas war and allowing for ceasefires rather than sticking to the current trend of vetoing them in the UN [10]. Fortunately, this idea is already gaining momentum, with nearly 70 cities across the US passing resolutions on the Israel-Hamas war and most of them pushing for a ceasefire [13]. Although the US continues to defend its veto of the UN resolution, this provides hope that scenarios may change and that the US may reconsider its positions.
After all, Biden needs a better response when asked whether US policy is working. A curt “No”, simply isn’t going to cut it.
Sources:
[2] https://apnews.com/article/red-sea-yemen-houthis-attack-ships-f67d941c260528ac40315ecab4c34ca3
[3] https://www.aljazeera.com/news/2024/1/12/who-are-yemens-houthis-a-basic-guide
[4] https://www.politico.eus/article/musks-tesla-halts-berlin-production-over-houthi-red-sea-crisis/
[5] https://www.nytimes.com/2024/01/24/business/red-sea-attacks-shipping-costs.html
[6] https://www.eia.gov/todayinenergy/detail.php?id=61363
,https://www.washingtonpost.com/world/2023/12/21/red-sea-shipping-houthi-suez /]
[7]https://www.reuters.com/world/middle-east/suez-disruption-new-inflation-risk-horizon-2023-12-19
[9] https://www.voanews.com/a/no-sign-houthis-will-halt-red-sea-attacks-says-us/7418725.html
[10] https://www.foreignaffairs.com/africa/dont-bomb-houthis