How Yemeni rebels are wrecking the global economy

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Yemen’s #Houthi rebels have strangled one of the most strategic ocean waterways for international trade. Now, the world’s largest shipping companies have stopped using the #Suez Canal and the Red Sea.

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Conflict is The Crucible of change since early December houthi Rebels have strangled one of the most strategic ocean waterways for international trade vessels have been boarded missiles have been fired and drones have been deployed simultaneously the Navies of the world including the US Navy have been slow to

React as a result Global Maritime trade has been severely disrupted the world’s largest container shipping companies have stopped shipments through the Suz canal and the Red Sea the US Navy has moved a carrier strike group from the Persian Gulf into the Gulf of Aiden at the same time a new 10 country Naval

Task force is being set up to protect shipping in the region but the Americans don’t want to get tied up in the yemeni proxy conflict still worse the neighboring Powers have inconsistent interests Egypt’s economy is in pain Iran is looking for new leverage Saudi Arabia has a ceasefire with the houthis

China is gloating to see the US Navy stretched thinly and the UAE wants to escalate things but doesn’t want to get its hands dirty broadly speaking the Red Sea is a Confluence of geography economics technology and geopolitics the houthis have now declared American ships as targets and

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Later for the global economy to prosper trade must go uninterrupted around 80% of international AAL trade goes by sea and ships must reach their ports as expeditiously and as cost effectively as possible however ships are most vulnerable when passing through narrow passages the Red Sea is one such passage

It is defined by two choke points the Suz Canal to the North and the babal mandab straight to the South about 12% of global trade goes by this route accounting for about 20% of international container traffic also noteworthy roughly 10% of the world’s Maritime oil and 8% of liquefied

Natural gas is shipped through the same route however houthi Rebels from Yemen have put a stop to that by using missiles drones and fast attack ships at its narrowest point the babal mandab straight is about 29 km wide and that is where the raids have taken place so far

The houthis have directly targeted at least least 12 commercial vessels transiting the region firing over 100 drones and missiles at ships from more than a dozen countries the houthis who are backed by Iran say the attacks are in solidarity with the Palestinians but the maritime blockade is also a geopolitical leverage for Iran

Viav America and Israel for added context Iran’s other proxy Hezbollah has at least 130,000 rockets and missiles aimed at Israel but Iran cannot employ hezbollah’s Firepower to attack Israel since doing so would open Pandora’s Box and result in the American bombardment of Iran therefore instead of Hezbollah

Iran has chosen to retaliate by other means the Red Sea is a place where the Iranians have gained substantial power in recent years owing to the houthis so this is as close to the game of geopolitical chess As It Gets regardless of the Strategic maneuvering the houthi attacks are an affront to the

Freedom of navigation and compel economic powerhouses to reconsider Global Supply chains in response to the maritime blockade four of the world’s five largest container shipping companies have suspended shipping through the Red Sea these include Denmark’s marsk France’s CMA CGM Germany’s hang Lloyd and Switzerland’s MSC together these companies account for

More than 50% of global container shipping capacity multinational British Petroleum is stopping shipments through the Red Sea as well if other energy firms join the call oil and gas supplies could be in severe trouble container ships making runs between Europe and Asia are getting reacquainted with the

Cape of Good Hope which had been largely obsolete since the opening of the Suez Canal more than 50 years ago however this detour adds about 7,400 km and up to 14 days of travel time to the journey costing millions of dollars in extra Fuel and other insurance and auxiliary

Costs since the start of the crisis the US Navy has moved the Dwight D Eisenhower lead aircraft carrier and its task force into the Gulf of Aiden now Washington is mustering an international arm to reassure shipping companies and deter the houti blockade but Universal commitment is brittle Britain has agreed

To deploy ships but France Italy and Spain have rejected the operation Egypt Saudi Arabia and the United Arab Emirates are also notably absent China which has warships in its base in jibou is not part of the Coalition either what is left is not much of a task force

Each party has its own motives for rejecting the US Le operation one of the reasons is the costs Western Naval forces use highly expensive equipment to fend off cheap drones the French recently fired an aster 15 surfac to aair missile worth more than $1 million to shoot down a shaad type drone costing

Barely $20,000 that is not a sustainable way of combat when you employ a million dooll weapon to kill a budget drone it’s really the budget drone that makes the kill in some Western navies were not designed to repel the type of threat posed by the houthis then again a drone

Damaging a commercial ship would cost just as much as a million dooll weapon so there are considerations from all angles and that’s what makes this battle space so complicated overall America’s Naval task force dubbed operation Prosperity Guardian will increase security near the babal mandab strait as it escorts ships

Through the region but that’s still not good enough for commercial Enterprises escorting vessels through a narrow passage would bring forth logistical complications and dangers this is because joining a convoy would require ships to congregate in the Red Sea or the Arabian Sea which would make them easier Target targets for the

Houthis though relatively small the houthis possess formidable and cheaply manufactured anti-ip ballistic missiles capable of flying 1,400 km these types of missiles travel at higher altitudes and greater speeds than cruise missiles and therefore extend the range at which the houthis can strike ships as such flocking commercial ships into one space

Would make them an easy target like shooting ducks in a barrel moreover the shipping industry is currently still reeling from the co9 breakdown in logistics as a result Insurance costs for shipping in the Red Sea have jumped from 0.07% of a ship’s value to as much as

0.7% that is a tenfold increase in just one month plus considering that oil tankers are valued in the hundreds of millions of this increase in insurance premiums makes shipping in the Red Sea exceedingly expensive for instance a tanker valued at $130 million will have an insurance premium of $910,000 whereas before it was

$91,000 that is a steep climb to put it nicely so instead shipping Giants are considering going around the southern coast of Africa even if that route is longer the this workaround is simply deemed more practical and coste effective than risk damage through the Convoy to reassure shipping Giant and

Restore Maritime security the Biden Administration is considering more extensive military operations against houthi Targets on the mainland however doing so would come at the expense of power projection elsewhere China and Russia in particular would watch the conflict unfold gleefully to put things into perspect perspective the houthis are a minority

Shia Muslim sect in Northern Yemen they first emerged as a rebel group fighting the federal government in the 1990s however following the Arab Spring protests in 2012 Yemen’s federal government was overthrown the houthis received substantial funding and weaponry from Iran and moved swiftly to consolidate their Newfound power since

2014 they’ve controlled the capital sign but are generally not recognized by the International Community as Yemen’s legitimate government regardless the houthis control an estimated onethird of Yemen’s territory and about 70% of its population much of the International Community paid little attention to the conflict in Yemen and now it’s about to

Get a reality check Egypt’s cash strapped government will likely feel the brunt of the economic burden it earns nearly $10 billion annually from transit fees passing through the Suz canal with the houthi blockade in effect Maritime traffic along the Suez Canal has likewise come to a halt this hurts

Egypt’s economic stability and possibly its political stability meanwhile Saudi Arabia is noticeably absent from the ongoing crisis the Saudis have been combating the houthis since 2015 but as the rebel armaments have gotten louder and stronger the Saudis have backed down from the fight equally important the Saudis are resentful towards the

Americans for their half-hearted response to the hthi attacks on Saudi oil facilities in reply the Saudi leadership has hosted numerous rounds of peace talks with their houy counterparts as they look to detach themselves from the yemeni battle space so this time around the Saudis figure they’re going to be

Spectators instead on the other end of the peninsula the United Arab Emirates supports a different faction in the yemeni conflict and since the houthis are located at a comfortable distance the emiratis still consider Yemen as available real estate and are ready to fight for it they just don’t want to do

The fighting part instead emirati agents are lobbying lawmakers in Washington to Greenlight American military actions against houthi facilities and bases All is fair in business and War overall though International Maritime trade is a profoundly complex web the houthi blockade comes at a time when the European economies have moved away from

Russian oil and gas and instead increased their Seaborn energy Imports much of it coming from the Middle East and passing through the Red Sea so the longer the houthi blockade lasts the more severe consequences there will be for Europe and the commitments in Ukraine so far America’s International

Naval task force has left the houthis undeterred if only because of their physical distance from the fight and backing from Iran in all good chance the houthis will continue their attacks so long as there is no significant blowback in fact the houthis may feel empowered since the blockade has strengthened their geopolitical hand

The houthis and Iranians know that the United States doesn’t want to get dragged into the yemeni proxy conflict the houthis have a decentralized structure there is no single Target or asset that could degrade their capacity for Warfare so fighting the houthis would be an extended operation with no

End in sight that’s not something the Americans crave at this point in time if only because Russia and China are more urgent priorities and the United States will need all its strength to keep those two at Bay however things could quickly turn around if a hthy attack results in American

Casualties Biden would be forced to take severe retaliatory measures carrying unintended and unpredictable consequences but even short of that the houthi attacks in the Red Sea risk wrecking the global economy if left unaddressed the key to this crisis is Iran and it always has been the houthi funding weaponry and even tactics all

Originate from the Iranians they’ve been a loyal proxy for Iran and its cause the houthis literally adopted teran’s battlecry death to the US death to Israel as their official slogan however the trouble with loyalty to a cause is that more often than not the cause will betray its followers aor Chiron from

Caspian report thank you for watching and S