International Analysis: Houthi Attacks – A New Phenomenon in the Geoeconomic Conflict

YNNEWS | Analytics

The selective attacks by the forces in Sanaa in the Red Sea have emerged as a significant development in the geoeconomic conflict. These attacks combine two factors: the use of low-cost, high-tech weapons capable of targeting and potentially sinking ships that traverse the ocean, and the control of strategically important coastal territories that overlook the Bab el-Mandeb Strait, one of the world’s busiest maritime chokepoints.

An analysis conducted by the Arab Center in Washington highlights these attacks as a novel and innovative means of leveraging deep international divisions surrounding the Israeli-Palestinian conflict. These attacks have disrupted global trade between Asia and Europe and resulted in material damage and a few casualties.

Consequently, shipping companies based in countries with connections to Israel have incurred substantial costs due to rerouting and additional expenses. However, the Houthis’ selective targeting has also allowed some companies to maintain access to the Red Sea and increase their profits. This distinction based on country of origin or ownership is viewed as a unique form of economically targeted sanctions driven by political grievances and implemented by a non-state actor.

The analysis emphasizes that the most concerning aspect of these attacks is their ability to undermine long-standing institutional norms related to the supervisory roles of major powers and the freedom of maritime navigation. This could potentially inspire other groups with similar grievances. Nevertheless, few actors possess the combination of asymmetric advantages, such as strategic geography and control over adjacent territories, along with access to low-cost advanced weapons.

Until late March, approximately 30 ships have suffered damage in incidents attributed by the Houthis to retaliation for Israeli airstrikes and the blockade on Gaza since October of the previous year. The Houthis claim that these attacks aim to escalate international pressure on Israel to cease its offensive in Gaza.

Despite these attacks, the Houthis have garnered support from many in the global South, particularly among citizens of Arab and Islamic countries. The Houthi campaign has exposed the ineffectiveness of countermeasures by the United States, its NATO allies, and the reluctance of Arab governments and regional organizations to impose costs on Israel or its supporters in the United States and Europe.

The impact of these attacks has led shipping companies based in countries supportive of Israel, as well as those transporting goods destined for Europe or America, to lose access to the shorter Red Sea route between Asia and Europe. Consequently, costs and journey durations have increased due to higher demand for alternative routes that bypass the Red Sea, leading to higher shipping fees.

According to the analysis, there has been a 151% increase in costs since early October 2023, with the most affected routes between Asia and Europe experiencing a 284% rate increase. European, American, and some Asian companies have faced around a 50% rise in costs to reroute their journeys to and from Asia around the Cape of Good Hope. While shipping prices have increased on the route between Asia and Europe, companies utilizing either route have seen increased profits. However, shipping companies capable of continuing to cross the Red Sea and avoid the longer African detour have been the primary beneficiaries of these price increases.

Several factors contribute to the rise in costs, including the expenses associated with longer journeys taken by ships traveling above the Cape of Good Hope. These extended routes reduce shipping capacity in the market, resulting in approximately a 10% increase in ship demand and higher prices in what could be a declining market. Additionally, shipping companies still utilizing the Egyptian Suez Canal face higher costs due to increased insurance and security expenses, particularly for onboard security personnel, as well as elevated hazard pay for sailors facing new risks.

Selective attacks by the forces in Sanaa in the Red Sea represent a new phenomenon in the geoeconomic conflict. This military leap has been achieved by combining two factors: low-cost, high-tech weapons capable of threatening and even sinking ocean-crossing ships, and gaining control over strategically important coastal territories overlooking one of the world’s most congested maritime chokepoints, the Bab el-Mandeb Strait.

In an analysis published by the Arab Center based in Washington, these attacks are seen as a new and innovative form of exploiting deep international divisions regarding the Israeli-Palestinian conflict. These attacks have disrupted global trade between Asia and Europe, while causing increasing material damage and a small number of deaths.

The attacks have led to costly rerouting and additional expenses for shipping companies based in countries with connections to Israel. At the same time, companies have benefited from the distinction targeted by the Houthis to effectively maintain access to the Red Sea and enhance profits, according to the analysis reviewed by Boqash.

The differentiation by the forces in Sanaa between ships and targets based on their country of origin or ownership is seen as a new and unfamiliar form of economically targeted sanctions by a non-state actor, based on political grievances.

The most concerning aspect, as stated in the analysis, is that the Houthi strategy has succeeded in undermining long-standing institutional norms regarding the supervisory roles of major powers and freedom of maritime navigation.

In this way, Red Sea attacks could serve as inspiration for other groups with similar grievances. However, it appears that few actors can combine the asymmetric advantage of strategic geography, including control over adjacent territories to a vital maritime point, with access to low-cost and advanced weapons.

Several incidents have caused damage to around 30 ships until late March, attributed by the Houthis as retaliation for Israeli airstrikes and the siege on Gaza starting from October of the previous year. The Yemeni movement states that these attacks aim to increase international pressure on Israel to cease its offensive in Gaza.

Despite this, the Houthis have managed to gain the support of many in the global South, particularly citizens of Arab and Islamic countries. The Houthi campaign has also exposed ineffective countermeasures by the United States and its NATO allies, as well as the reluctance of Arab governments and regional organizations, which have so far failed to impose costs on Israel or its supporters in the United States and Europe.

How have the attacks impacted?

Shipping companies based in countries supportive of Israel, as well as those carrying goods destined for Europe or America, have lost access to the shorter Red Sea route between Asia and Europe.

As a result, costs and journey duration have increased due to higher demand for ships, leading to higher shipping fees, including alternative routes that do not traverse the Red Sea. The disruption in global shipping indicates that the Houthis have succeeded in imposing costs on Israel’s supporters, although the campaign against ships has not had a notable impact on Israel’s offensive in Gaza.

The analysis points to a 151% increase in costs since early October 2023, with the most affected routes (between Asia and Europe) seeing a 284% rate increase.

The costs incurred by European and American companies, as well as some Asian companies, to reroute around the Cape of Good Hope in their journeys to and from Asia, have risen by around 50%. With increased shipping prices on the route between Asia and Europe, the companies that utilize either route have seen increased profits. However, the greatest beneficiaries of these price increases are shipping companies capable of continuing to cross the Red Sea and avoiding the longer African detour.

Several factors contribute to the price hike. Firstly, the costs associated with the longer passage for ships traveling above the Cape of Good Hope. Secondly, these lengthier journeys remove shipping capacity from the market, resulting in an approximate 10% jump in ship demand, alongside higher prices in what could be a declining market.

Thirdly, some shipping companies still using the Egyptian Suez Canal face higher costs in the form of increased insurance and security expenses, particularly for onboard security personnel, as well as increased hazard pay for sailors confronting new risks.

by: Boqash